The Black Sea Wheat And Fertiliser Export Agreements: Will The West Keep To Its Side Of The Bargain?

The success or failure of the UN-Turkish initiative for grain and fertisliser exports though the Black Sea over the coming weeks is likely to have a profound impact on the world economy in the years to come.

The widely reported agreement on restarting grain exports from the Ukraine by way of the Black Sea can be seen as a triumph of diplomacy. Teams led by UN Secretary General Antonio Guterres and Turkey’s president Recep Tayyip Erdogan succeeded, over several months, in bridging the vast gulf between Russia and Ukraine, allowing the export of desperately needed food to be resumed. As of Saturday 20 August, 27 ships carrying about 650,000 tonnes of grain had already left Ukraine for Africa and elsewhere. Grain futures contracts through to 2025 have fallen to around US$260/tonne, potentially reducing world inflation pressures.

Russia is keeping to its side of the bargain. Its agreement with the UN provides for unhindered export of Ukraine grain for an initial, but renewable, period of 120 days. That is the agreement that has been widely reported in the world press.

There is, though, a second parallel or “mirror” agreement that provides for unhindered export of Russian grain and fertilizer by way of the Black Sea. The mirror agreement has been poorly reported, particularly in Western media; perhaps, in part, because the mirror agreement provides for the UN to “facilitate” the export of grain and fertiliser from Russia.

The mirror agreement is worded that way because export of grain and fertiliser from Russia is not technically sanctioned. Instead, the US and its allies have applied draconian sanctions on the practical ability of Russia to export its products. Those sanctions are primarily financial (like the suspension of Russia from the SWIFT international settlement system), logistical (like sanctions against shipping) and insurance (making shipping too risky). It seems the UN is working behind the scenes to meet its commitment to Russia under the mirror agreement. Both agreements are very much in the wider world interest whatever the US geopolitical objectives may be.

The UN has about 90 days left to finalise export facilitation and enable world food supplies and prices to be normalised. If the West (the US and its allies) do not support the UN commitment allowing Russian exports to resume, it is unlikely Russia will extend the Ukraine export agreement beyond the initial 120 days. And that would return the world to the situation that existed prior to the agreements being reached. The export of Ukraine’s remaining grain harvest from last year and its new grain harvest from this year would again be slowed to a trickle and Russia’s grain and fertiliser will continue to be excluded from world markets.

Whatever one’s view of the Ukraine war may be, the Black Sea grain export agreements do seem to pit resolution of the world’s economic, hunger, and inflation crises against the narrower geopolitical interests of the US and its allies. Whatever the twists and turns yet to come, the West is faced with a stark choice: its interests or the world’s interests. We know where the UN stands on that but what choice will the West make?

© Scoop Media