Russia pulls out of Black Sea grain deal

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Russia has formally withdrawn from a UN-brokered deal to export Ukrainian grain across the Black Sea, potentially imperilling tens of millions of tonnes of food exports around the world.

President Vladimir Putin’s spokesman, Dmitry Peskov, told reporters on Monday that the agreement had “essentially stopped” and Russia would no longer co-operate with the deal.

Russia has complained since the UN and Turkey first brokered the deal a year ago that western sanctions were holding up a parallel agreement to allow payments, insurance and shipping for Moscow’s own agricultural exports.

Peskov said Russia would resume participation “as soon as the relevant agreements are fulfilled”. A western diplomat and a UN official confirmed that Moscow had said it would withdraw from the deal.

The initiative has allowed about 33mn metric tonnes of food to be exported by sea from Ukraine since August, more than half to developing countries, according to the co-ordination committee set up to monitor its implementation.

Carlos Mera, head of agricultural commodities markets at Rabobank, said, without a Black Sea deal, Ukraine would have to reroute exports via its land borders and smaller ports on the river Danube. This would increase costs and reduce farmers’ profits, which could lead them “to plant less next season, placing further pressure on supplies going forward”.

Monday’s move is the second time that Russia has withdrawn from the grain deal. It exited briefly in November before rejoining a day later under pressure from Turkish president Recep Tayyip Erdoğan.

Yet people involved in the grain talks said Russia had appeared more set on derailing the deal in the run-up to Monday’s deadline.

Erdoğan said on Monday that he believed Putin wanted the grain deal to continue and that Ankara had “intensified” its diplomatic efforts. The Turkish and Russian foreign ministers were due to discuss the pact later on Monday, although Erdoğan’s recent embrace of the west in a bid to end Turkey’s economic troubles could limit his ability to broker an extension.

European Commission chief Ursula von der Leyen on Monday condemned “Russia’s cynical move” to quit the grain initiative, although an EU official said Moscow was “still leaving the door open” to continue negotiations.

“It looks like a suspension,” the official added.

Russia lost interest in the deal after efforts to ease pathways for its own food and fertiliser exports ran aground of western sanctions. Though the US and EU introduced carve-outs for Russia’s agricultural exporters and back doors to facilitate payments to a large Russian state bank, Moscow complained not enough had been done to allow its exports back on the market.

“Absolutely nothing has been done — I want to stress that. It’s one-way traffic. Not a single point linked to the fact Russia has its own interests has been fulfilled,” Putin said last week.

David Harland, director of the Geneva-based Centre for Humanitarian Dialogue, which helped broker the grain talks, said Russia “felt it wasn’t getting much in return, and might as well continue to squeeze Ukraine,” while adding that Erdoğan could still persuade Russia to return.

Russia’s complaints over the sanctions have been a key element in rallying sympathy for its position on the war from countries in the global south, particularly in Africa, which has been hit hard by the war’s impact on food and fertiliser prices.

The new threat to the grain deal comes ahead of next week’s Russia-African summit in St Petersburg, which a host of African leaders are set to attend. An African delegation led by South Africa’s Cyril Ramaphosa visited Kyiv and St Petersburg last month in an effort to mediate an end to the war and help secure agricultural supplies.

But, speaking to Ramaphosa over the weekend, Putin said barriers to Russia’s agricultural exports had not been lifted and complained that “the main goal of the deal, which is grain supplies to countries that need it, including in Africa, has not been realised,” according to a Kremlin readout of the call.

Mera at Rabobank said the Kremlin move would force countries in Africa and the Middle East to buy Russian wheat.

Benchmark Chicago wheat prices on Monday traded broadly flat at $6.60 a bushel, after an earlier rally in prices. Grain prices overall have fallen about a quarter since the Black Sea pact was initially agreed, according to Citigroup.