The recent news cycle has been flooded with news from the war-torn Black Sea region. According to Reuters, authorities in Bucharest quashed reports that Russia’s recent drone strike on the Ukrainian port of Izmail, across the Danube from Romania, allegedly hit NATO territory.1 The attack was on Ukrainian warehouses that were storing, not military supplies, but grain.2 So, why is Russia going out of its way to attack food storage so far from the front line? Unfortunately, this topic has been mired in very confusing reports from the media, which we’ll try to elucidate from a humanitarian perspective focused on the security of the global food supply.
On March 1, 2022 Terra published a piece titled “The Impact of the War in Ukraine on Farmers and Consumers,” about the risk of an impending crisis resulting from Russia’s invasion of Ukraine just a week earlier. At that time our focus was on how Western sanctions against Russia would cause spikes in fertilizer prices and result in food shortages. But another major consequence of the war was Russia’s cutting off of Ukraine’s grain exports through the Black Sea. This became a focal point of international negotiations and strategic maneuvering over several months, culminating in “The Black Sea Grain Initiative” in July 2022, commonly called the “grain deal.”3
Russia’s Withdrawal from the Grain Deal
The grain deal partially averted the crisis predicted by the media at the start of the war by successfully facilitating grain exports from Ukraine, while also selectively lightening up certain sanctions on Russian agricultural exports, such as fertilizer. However, in July 2023, Russia withdrew from the deal and began strictly enforcing its naval blockade on Ukrainian shipments in the Black Sea.4 Russia’s withdrawal from the deal sent shockwaves through international markets as the price of grain skyrocketed in anticipation of scarcity, despite the fact that Russia’s grain exports exceeded those of Ukraine before the war.5
The most recent attack on the Danube was carried out just before a meeting on Monday, September 4th, 2023, between the presidents of Turkey and Russia in Sochi, on the Black Sea coast, where they discussed potential terms for a renewal of the “grain deal”. But, according to various media outlets, Turkish president, Tayyip Erdogan, failed to persuade his Russian counterpart to return to the negotiating table with Western allies.6
Potential Alternatives
Ukraine recently turned to global insurers, asking them to cover grain shipments traveling to and from its Black Sea ports. The parties involved in these discussions include various ministries, local banks, and international insurers, including Lloyd’s of London. The initiative aims to provide coverage for five to thirty commercial vessels navigating the “danger spot” in Ukrainian waters by distributing the risk among multiple insurers, a local state-owned bank and Ukraine’s state road fund.7
Ukraine, the U.S. and European nations have been planning since July to reroute Ukrainian shipments both via railway and along the Danube River, offering alternative corridors (albeit, through narrower passages) in response to Russia’s blockade in the Black Sea. However, the recent attack on the Danube Delta is only the most recent in a series of targeted strikes on grain silos at Ukrainian ports. Russia has destroyed 60,000 tons of agricultural products, according to the BBC, who also speculates that railways could soon become the next target of strikes on food supplies.8
Global Implications: Scarcity, Demand, and Competition
Putin’s official statement on his refusal to renew the grain deal is quoted by The Wall Street Journal: “We are not against this deal; we are ready to immediately return to it as soon as the promises made to us are fulfilled. That’s all. So far no obligations toward Russia have been fulfilled.”9 According to official licenses published by the U.S. Treasury Department sanctions are not imposed on Russia’s grain and fertilizer exports.10 Yet Moscow claims their shipments are limited by restrictions on logistics, insurance and payments.
According to The Wall Street Journal, Ukrainian’s Foreign Minister, Dmytro Kuleba, confirmed that Russia may hope to earn more from exporting its own grain at a better profit margin.11 This seems to indicate that Russia hopes to fill the gap left from Ukraine’s shortfall, which would be problematic for the Western coalition’s efforts to support Ukraine militarily and economically. If sanctions are not being imposed on Russia’s agricultural exports, are other restrictions enough to prevent them from supplanting Ukraine’s exports?
Meanwhile, nations heavily reliant on these essential supplies could face an alarming prospect of scarcity due to reduced supply and increased demand at sky-high prices. And the question remains: which country will rise to the occasion of supplying the world with these essential resources – Ukraine or Russia? As much as this conflict is framed in the media as the Western coalition’s efforts to save the world from a global food crisis, the major motivating factor seems to be preventing Russia from capitalizing off of the war its waging against its neighbor, who just so happens to be a competitor in agricultural exports. In fact, the Associated Press reported that Putin has made repeated claims over the last month that Russia is arranging to provide “cheap” grain to Turkey and free grain to six African countries. 12
Source: UN/HDX data
Ukraine has long been a top exporter of essential commodities like corn and wheat, along with sunflower meal, sunflower oil and barley. They’ve provided this grain to large portions of the world from the Black Sea through the Turkish straits, a once reliable trade route that provided stable food prices around the world. Vulnerable nations rely heavily on these affordable exports and face potential famine if this issue is not addressed promptly.13 And Russia has recently escalated tensions by attacking both grain silos and commercial vessels attempting to circumvent their blockade in the Black Sea. Both Russia and Ukraine are threatening to treat commercial vessels as military targets.14
Photo by Mark Stebnicki from Pexels
Humanitarian Perspective
While Turkey is still attempting to bring Russia back into the fold, it’s also negotiating with Ukraine, the U.S. and Eastern European nations to reroute Ukrainian grain shipments.15 This demonstrates the determination of Western nations to shore up the Ukrainian economy and prevent a global food crisis, while also preventing Russia from getting the upper hand in this ongoing trade war. If the situation does not stabilize quickly, impoverished countries will bear the brunt of the deficit. According to data from the Council on Foreign Relations, those most reliant on Ukraine’s wheat are Lebanon (74%), Pakistan (59%), Libya (49%) and Ethiopia (45%).16 But the increased cost of insuring and transporting grain can have ripple effects across the global market in all stages of food production supported by grain, according to the U.S. Bureau of Labor Statistics.17
As of this publication, the long-term solution and the ultimate outcome remain uncertain. However, one thing is clear: this crisis extends far beyond economic and political borders. This is a dire humanitarian challenge involving the world’s top agricultural exporters who seem to have very little incentive to make economic concessions. In the words of Neville Chamberlain:
Sources:
- Reuters – https://www.reuters.com/world/europe/ukraine-says-russian-drones-detonated-romanian-territory-during-danube-strike-2023-09-04/ (September 4, 2023) ↩︎
- Reuters – https://www.reuters.com/world/europe/russian-drone-attack-odesa-region-hits-port-infrastructure-injures-two-2023-09-03/ (September 3, 2023) ↩︎
- Black Sea Grain Initiative | Wikipedia – https://en.wikipedia.org/wiki/Black_Sea_Grain_Initiative ↩︎
- The Guardian – https://www.theguardian.com/world/2023/aug/13/russian-warship-fires-warning-shots-at-cargo-ship-in-black-sea (August 13, 2023) ↩︎
- Food and Agriculture Organization of the United Nations – https://www.fao.org/faostat/en/#data/TCL ↩︎
- Forbes – https://www.forbes.com/sites/brianbushard/2023/09/04/putin-refuses-new-ukraine-grain-deal-unless-west-meets-russias-shipping-demands/?sh=5f8b00a31adb (September 5, 2023) ↩︎
- Financial Times – https://www.ft.com/content/6b9996cb-44a5-4074-b226-6176cf65cc2f (August 20, 2023) ↩︎
- BBC – https://www.bbc.com/news/world-europe-66328810 (August 17, 2023) ↩︎
- The Wall Street Journal – https://www.wsj.com/world/russia/putin-says-russia-wont-rejoin-ukraine-grain-deal-until-west-meets-demands-827261c9?page=1 (September 4, 2023) ↩︎
- Office of Foreign Assets Control – https://ofac.treasury.gov/media/930431/download?inline (January 17, 2023) ↩︎
- The Wall Street Journal – https://www.wsj.com/articles/why-russia-killed-the-ukraine-grain-deal-faf1f8c5 (July 20, 2022) ↩︎
- AP News – https://apnews.com/article/russia-ukraine-turkey-putin-erdogan-sochi-ac41cb453a6d6c597d543873850414eb (September 4, 2023) ↩︎
- Statista – https://www.statista.com/chart/27181/least-developed-countries-dependent-on-wheat-from-russia-ukraine/ (April 5, 2022) ↩︎
- Forbes – https://www.forbes.com/sites/davidaxe/2023/07/31/nato-planes-watched-as-three-civilian-ships-ran-russias-naval-blockade-of-ukraine/?sh=68553d361b72 ↩︎
- The Wall Street Journal – https://www.wsj.com/articles/u-s-in-talks-to-develop-ukraine-grain-export-routes-3e597c3 (August 15, 2022) ↩︎
- Council on Foreign Relations – https://www.cfr.org/in-brief/russia-killed-black-sea-grain-deal-these-countries-could-suffer-most (July 19, 2023) ↩︎
- U.S. Bureau of Labor Statistics – https://www.bls.gov/opub/btn/volume-12/high-grain-prices-rippled-throughout-the-economy.htm (April 5, 2023) ↩︎
