Russia and Ukraine move closer to extending grain deal

Russia and Ukraine are on the brink of extending a deal that would secure Kiev’s grain exports through its Black Sea ports despite the war, a crucial step in alleviating a conflict-triggered global food crisis.

Negotiators are confident the warring parties will agree to an extension of the deal before it expires on Saturday after reaching a compromise with Russia over payments for its own agricultural exports and the reopening of a pipeline for ammonia through Ukraine, according to four with the Matter familiar people.

The deal, first brokered in July by the United Nations and Turkey, will be automatically renewed unless either party objects.

The extension is being negotiated by the United Nations, a process that included bilateral meetings on the sidelines of the G20 in Bali, where UN Secretary-General António Guterres held talks with Russian Foreign Minister Sergei Lavrov.

Under the revised deal, Russia would be able to use the same Black Sea route that transports the bulk of Ukraine’s agricultural exports and provides Kyiv as an economic lifeline during the war.

In exchange for extending the deal, Russia will be able to use a pipeline that will transport ammonia through territory controlled by Ukraine before reaching a port near Odessa.

The pipeline, which carried about 2.3 million tons of ammonia before the invasion, could bring Moscow an additional $2.4 billion in export earnings at a time when Western sanctions have hampered its ability to sell its own grain and fertilizer.

Moscow has urged the US and EU to lift sanctions that banned the state-owned Russian Agricultural Bank, the main channel for payments for Russia’s agricultural exports, from the Swift payments scheme, the people said.

The US will likely help secure correspondent relationships for the Russian lender at US banks rather than restore them at Swift, two of the people added.

Lavrov told reporters that Guterres had written to assure him of the “good intentions” of the US and EU that would remove obstacles to Russian grain and fertilizer exports.

He said the UN passed promises that “all economic actors involved in Russian fertilizer, grain and supply chains” would face no sanctions for Russian grain trade. That would allow Russian ships to call at European ports, foreign ships to call at Russian ports, allow the Agricultural Bank of Russia to “work fully” and provide “decent insurance rates,” Lavrov said.

Ismini Palla, UN spokeswoman for the Black Sea Grain Initiative, said: “Discussions on the continuation of the Black Sea Grain Initiative are ongoing with all parties at different levels. We have nothing to announce at this time.”

She said the Russian exports were “a separate agreement” and that the
The UN and Russia had signed a separate memorandum of understanding
July to facilitate the export of food and fertilizer originating
Russia.

“The preliminary talks continue. . . The UN, Ukraine, Turkey and Russia
continue their contacts at different levels,” said one Turk
Official with knowledge of the talks.

The extension of the deal ensures Ukraine retains an economic lifeline during the war without fully complying with Russia’s demands.

“In the end, Russia blinked,” said a person familiar with the talks. “They moaned and ranted about banking arrangements, but in the end they really wanted the ammonia.”

But the opening of the ammonia pipeline is politically sensitive in Ukraine, as Russia is intent on making billions from its fertilizer sales, while Kyiv rakes in only about $100 million a year in transit revenues from the pipeline.

Ukraine and Russia are currently discussing a major new exchange of several hundred prisoners, two of the people said, although an exchange would not necessarily be conditional on or linked to approval of the ammonia deal.

Russia briefly withdrew from the grain deal in late October before rejoining it days later, underscoring Turkey’s increasing influence over Russia and Moscow’s lack of ability to torpedo the deal.

Russian President Vladimir Putin has complained that the sanctions are hampering buyers’ ability to pay for his country’s agricultural exports, even though they are not directly affected by Western sanctions and Russia has increased exports since the war began.

https://www.ft.com/content/85ffe3ea-c713-4c0d-8b6d-80da3c328c1f Russia and Ukraine move closer to extending grain deal

Adam Bradshaw

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