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Russia ends participation in Ukraine grain deal

    Russia said on Monday it was pulling out of a war deal to allow grain exports from Ukraine through the Black Sea until its demands to ease sanctions on its own agricultural exports are met. of Africa and the Middle East.

    The agreement, known as the Black Sea Grain Initiative, was signed a year ago, brokered by the United Nations and Turkey, to alleviate a global food crisis following Russia’s full-scale invasion of Ukraine. Russia had blocked Ukrainian ports, preventing ships from carrying their grain and pushing world prices to record highs. The deal has been extended three times, most recently in May. The last extension expired on Monday.

    United Nations Secretary-General António Guterres said he was “deeply disappointed” by Moscow’s decision and that millions of hungry people, as well as consumers facing a cost-of-living crisis, “have come at a price will pay”. He also said he had sent proposals to Russia’s President Vladimir V. Putin last week to meet Moscow’s demands. Mr Putin never responded immediately, a UN spokesman said.

    Russia has repeatedly complained about the deal, calling it unilaterally in favor of Ukraine. Moscow has said Western sanctions imposed over Moscow’s devastating war have restricted sales of Russian agricultural products, and Moscow has sought guarantees to unfreeze those exports.

    In April, Russia’s Foreign Ministry also listed other demands to extend the grain deal: reconnecting the state-owned Russian Agricultural Bank to the international SWIFT messaging service essential for cross-border payments; lift restrictions on marine insurance and on the supply of spare parts for agricultural machinery; end sanctions against fertilizer companies and the people associated with them; and restore an ammonia pipeline that crosses Ukraine.

    Kremlin spokesman Dmitri S. Peskov, who announced on Monday that the Black Sea grain deal had been “stopped,” said: “Once the Russian part is fulfilled, the Russian side will immediately return to the implementation of that deal.”

    Russia’s announcement came hours after a deadly attack on the bridge across the Kerch Strait connecting the occupied Crimean peninsula to mainland Russia. Mr Peskov said the decision to suspend the grain deal had nothing to do with the attack.

    Ukraine is one of the world’s largest exporters of wheat, maize, sunflower seeds and vegetable oil. According to UN data, it has exported 32.9 million tons of grain and other food under the initiative. Under the agreement, ships are allowed to pass through Russian naval vessels that have prevented other ships from using Ukraine’s ports since the start of the Russian war. The ships are inspected off the coast of Istanbul, among other things to ensure that they do not have any weapons on board.

    The effects of the suspended grain deal were soon apparent. It shook wheat markets, rocked prices and exposed vulnerable countries in Africa and the global south to the prospect of another round of food insecurity.

    Chicago wheat futures, a barometer of world prices, briefly rose more than 4 percent as the Kremlin’s move jeopardized a key trade route to world markets for grain from Ukraine. Later, prices fluctuated to more than 1 percent lower for the day.

    Secretary of State Antony J. Blinken told State Department reporters on Monday: “I hope every country is watching this closely. They will see that Russia is responsible for denying food to people in desperate need around the world.”

    John Kirby, a spokesman for the US National Security Council, called Russia’s move a “military act of aggression” and said the United States was already seeing a rise in global wheat, corn and soybean prices.

    “We urge the government of Russia to reverse its decision immediately,” he added.

    Russia’s decision appears to be part of a broader effort by Mr Putin to reassert an aura of unassailable authority following a failed mutiny by the Wagner mercenary group, said Timothy Ash, a senior strategist at BlueBay Asset Management in London and an expert on Russia and Ukraine.

    “It will hurt specific countries that depend on these exports,” said Mr. Ash. But apart from that, “it shows how weak Putin is after Wagner’s coup: he is now desperate to exert any influence possible.”

    President Volodymyr Zelensky of Ukraine said Moscow had broken its agreement with the United Nations and with Turkish President Recep Tayyip Erdogan, rather than with his country, as Ukraine had made a separate deal with the two brokers over grain. In remarks to his press office, Mr. Zelensky added that Ukraine is ready to resume shipments if the United Nations and Turkey agree.

    With Black Sea ports closed again, Ukraine may have to make greater use of alternative routes, exporting grain by truck, train and river barge – journeys that take longer than sea shipping and cannot handle the same volume.

    Mr Blinken said the United States would help Ukraine find other means of export, but that “it is very difficult to replace what is now being lost due to Russia’s weaponization of food.”

    Mr Erdogan said he would speak to Mr Putin about the agreement and expressed hope that it could be revived. “Despite today’s statement, I believe that the President of the Russian Federation, my friend Putin, wants the continuation of this humanitarian bridge,” Erdogan said in Istanbul.

    The deal between Ukraine and Russia — which is also a major global supplier of grain, oil and other affordable food products — is especially important in 14 African countries that depend on the two countries for half of their wheat imports, according to the United Nations. . Food and Agriculture Organization. Eritrea is completely dependent on them.

    When the grain deal kicked off in July 2022, Célestin Tawamba, the CEO of La Pasta, Cameroon’s largest flour and pasta producer, said: “The noose was tightening, so the deal should help us breathe.”

    The original agreement allowed Ukraine to restart exports of millions of tons of grain, which had languished for months. According to the Food and Agriculture Organization’s Food Price Index, food prices are down more than 23 percent from their peak in March 2022. The deal will allow vital food items to be exported from Ukrainian ports to 45 countries on three continents, the United Nations said.

    But again and again, before each negotiated extension has come to an end, Russia has indicated that it may withdraw from the agreement. Last year, after Russia accused Ukraine of attacking its warships in the Black Sea port of Sevastopol with a swarm of drones, Russia backed down and stopped participating in inspections that were part of the agreement. Then it came back together in a few days.

    The failure of the grain deal dominated Monday’s UN Security Council session on Ukraine. China, an ally of Russia, stopped short of directly condemning Russia for withdrawing from the deal, instead calling on both sides to resume negotiations to restore the pact.

    Mr Guterres previously said that in order to help meet Russia’s demands, he had sent Mr Putin proposals to “remove obstacles” affecting his financial dealings. He said the United Nations had proposed to allow a subsidiary of the Russian Agricultural Bank — one of many institutions banned from SWIFT by Western sanctions over Russia’s aggression — back into the European Commission, and that the agency built a custom payment mechanism out there. from SWIFT for the bank via JP Morgan.

    The UN spokesman, Stéphane Dujarric, said Russia’s response to the letter apparently came in the form of an announcement on Monday. However, Mr Guterres said the United Nations was planning to negotiate a new grain proposal with Mr Putin.

    Despite Russia’s move, analysts say, some factors may prevent food prices from rising to the staggering levels just after Russia invaded Ukraine.

    First, the outlook for global commodity prices is weaker than a year ago due to a faltering economic recovery in China. A global cost-of-living crisis has eroded demand overall, said Mr Ash, the strategist. Supply chain tensions are also easing and production and production costs have fallen, according to an analysis by Oxford Economics, a research institute.

    Arlan Suderman, chief commodities economist at the financial services firm StoneX, said Russia is still dumping cheap wheat on the world market, “so we’re not out of wheat right now.”

    “This particular development today may not do much to risk world hunger,” he said, “but the continued escalation with no solution in sight means the risks are still mounting.”

    Reporting contributed by Michael D. Shave, Michael Crowley, Gabriela Sa Pessoa, Daniel Victor, Safak Timur, Cor Engelbrecht, Patricia Cohen, Abdi Latif Dahir And Eliane Peltier.