US official urges US banks not to be afraid of Russian grain

In an interview with Radio France Internationale (RFI) U.S. Secretary of State Anthony Blinken said that he urged banks in the U.S. not to be afraid of the Russian grain and sanctions as the U.S. government fully supports the export of Russian grain.

French journalist Mikaël Ponge recalled that Blinken had recently accused Russia of blackmailing the Black Sea Grain Initiative as the country demanded several conditions for its further participation. For instance, Russia wanted the West to lift its sanctions on the export of agricultural machinery and spare parts, make the Russian Agricultural Bank part of SWIFT once again, remove restrictions related to insurance of Russian vessels filled with grain, lift the ban on their access to Western ports, restore access to banking accounts of Russian companies involved in the production or transportation of food, and re-start operation of the ammonia pipeline from Russian Tolyatti to Ukrainian Odessa. According to Blinken, the U.S. government has done everything needed to restore the Russian exports of food products.

«Well, regarding specific points of potential problems, such as with banks, transportation, etc., we have done everything to ensure that these issues are resolved. For example, I have written letters to our banks, explaining that we absolutely support the export of Russian grain, and that there is nothing to fear from sanctions, which exempt Russian grain, transportation, insurance, etc.,» Blinken added.

He also noted that it’s not a question of concessions. Moreover, Russian claims that it had problems exporting its own grain were false.

«Russian grain exports over the past year far exceed what Russia was exporting prior to invading Ukraine. Moreover, Russian exports have reached a record level. Russia still has not responded. Well, actually, there was a response from Russia: they attacked the port of Odessa; they attacked grain in Ukraine; they destroyed 220,000 metric tons of grain in the past week. That’s their response,» Blinken underlined.

Over the period from July to December 2022, Russia exported 28.1 million tons of grain, which is a 12.4% increase over the same period in 2021. Experts from Rusagrotrans said that this rate is a record high and the Russian share in the global grain market is going to grow to 13% (11% in the 2017-2018 season). The Ministry of Agriculture of Russia estimated the country’s grain export potential at 39.5 million tons over the period from July 2022 to July 2023.

In response to the question about whether the U.S. is willing to negotiate, Blinken said that «the agreement became necessary because Russia decided to invade Ukraine. They blocked Ukraine’s grain exports to the world, particularly through the port of Odessa. While this agreement was in effect, Ukraine exported more than 30 million metric tons of grain. Since Russia tore up the agreement, prices have risen.

“It has a tremendous impact. Even countries that did not directly receive the grain — and, by the way, 50 percent of the exports, two-thirds of the global wheat exports, went to developing countries — but even the countries that did not directly benefit still enjoyed lower, more moderate prices. Since Russia tore up the agreement, prices have risen by 10 to 15 percent for everyone, and of course, we see the impact on the countries that previously imported grain directly from Ukraine,» he said.

In turn, Russian Foreign Minister Sergey Lavrov speculated that Ukrainian grain went to the West, not to poor countries, and that the Black Sea Grain Initiative «was no better than a commercial deal.» The Russian foreign ministry reported that poor countries received just 2.5% or 722,000 tons of 30 million exported from Ukrainian ports.

In July, President Vladimir Putin of Russia told his South African counterpart Cyril Ramaphosa that “the main goal of the deal, namely the supply of grain to countries in need, including those on the African continent, hasn’t been realized.”

Anthony Blinken also commented on Russia’s promise to supply 50,000 metric tons of grain to six African countries. According to the secretary of state, the Kremlin made this decision to mitigate the consequences of the termination of the grain deal.

«Under the agreement, which the Russians tore up, we exported 20 million metric tons to developing countries. So, 50,000 tons proposed by Russia versus 20 million tons exported under the agreement; there is no comparison. What Russia is proposing is a drop in the bucket. It does not address the problem. It won’t stop the rise in prices. It won’t change the fact that millions of tons of grain were removed from the market and are not available to those in need, especially in developing countries,» Blinken added.

He also noted that since the start of the Russian invasion of Ukraine, the U.S. has provided over $14 billion in additional funding for food security worldwide, especially in African countries. Last week at the United Nations, Blinken announced an additional $350 million in aid for eleven African countries and Haiti. So, the U.S. government is doing as much as it can, the U.S. official underlined.

«Take the World Food Programme, a very important United Nations program. We support 50 percent of its budget. Russia contributes less than 1%. Also, last week in New York at the United Nations, 91 countries signed a declaration to stop using grain and food as a weapon of war. Unfortunately, that’s what Russia is doing in Ukraine,» Blinked said.

In order to secure free access for Ukrainian grain to the global market after the full-scale Russian invasion of Ukraine, Turkey, the UN and Russia signed the so-called grain deal. It is also known as the Black Sea Grain Initiative.

Due to the war with Russia, Ukraine found itself in a situation where it could not export millions of tons of grain to the global market. As a result, grain prices sharply increased, while some developing countries reported shortages of food. In July 2022, Russia, Turkey and the UN established a joint coordination center in Istanbul. They also developed procedures for the safe transportation of grain and other food products across the Black Sea. Under the Black Sea Grain Initiative Ukraine was able to export grain from three of its ports: Odessa, Chernomorsk and Yuzhny.

Despite the fact that the deal was supposed to last 120 days, all its parties extended it on several occasions. Under the agreement, Russia wanted its agricultural products and fertilizers to get free access to the global market, which has never happened, according to the Kremlin. On May 18, 2023, Russia agreed to extend the deal for two months to better assess its efficacy.

In April, Turkish President Recep Tayyip Erdogan informed UN Secretary-General Antonio Guterres that Ankara was ready to take part in negotiations on unblocking the ammonia pipeline. In turn, Guterres offered the Turkish state bank Ziraat Banksi to conduct transactions with Russian grain and fertilizers. However, the bank replied that it would not work with Russia as long as there was no written permission from the U.S. and the UN.

In June, Putin said that Russia was thinking about withdrawing from the grain deal, as the corridors along which the ships go are «constantly used by the enemy to launch drones.» On July 18, Putin’s official spokesperson Dmitry Peskov announced that the grain deal was terminated. However, he noted that Russia would immediately return to the agreement when all conditions of the agreement are implemented.