Fallout of Ukraine grain deal termination
Turkiye’s President Erdogan appeared optimistic about ironing out a fresh deal when he visits Moscow next month.
For the global economy struggling to pull itself out of the pandemic-induced inflation, Russia withdrawing security guarantees to Ukrainian wheat shipments on July 17 was a body blow. In July last year, a four-way accord between Russia, Ukraine, Turkiye and the UN facilitated the export of nearly 33 million tonnes of Ukrainian grains to the global markets through three Black Sea ports. Of them, 18.84 million metric tonnes were shipped to the developing world, part of which went to the poorest of the poor—7,25,000 metric tonnes to Afghanistan, the Horn of Africa and Yemen—through the UN-led World Food Programme. The deal was negotiated five months after the war broke out in February. Ukraine was the fifth-largest pre-war exporter of wheat and the biggest exporter of sunflower oil. A parallel UN accord with Moscow allowed shipments of Russian grains and fertilisers to the global markets navigating the maze of Western sanctions. But Russia claims that part of the bargain was not fully kept, so it terminated its accord. The Black Sea initiative had eased grain prices by as much as 23 per cent since March last year, per UN data. Moscow’s suspension of participation drew fiery rhetoric from Kyiv, which said it would not be intimidated, but the fact remains that the end of the pact would effectively halt shipments from its Black Sea ports.
Russia’s announcement is also bad news for leaders of nations going to polls like Joe Biden and Narendra Modi. India is already battling inflationary pressures from the ongoing monsoon after a cyclic cooling phase. The cost spiral of the food basket invariably adds to anti-incumbency despite the personal popularity of individual leaders. Prices of wheat and corn have already jumped on global commodities markets. If this drags on, major grain-producing nations could take drastic measures like reducing or halting exports, complicating the situation further. India must do whatever it takes to keep the ship steady, including talking to Russian President Vladimir Putin. If the matter isn’t resolved soon, it could become central to the G20 summit India is scheduled to host in a couple of months.
Turkiye’s President Erdogan appeared optimistic about ironing out a fresh deal when he visits Moscow next month. If that is the timeline, the stalemate could continue for at least a month. Weaponising food for military goals is a sign of weakness Putin could do without.