And how can this decision affect market pricesRussia reserves the right to withdraw from the grain deal, Russian President Vladimir Putin said on November 2.
According to him, this will happen if the guarantees provided by the participating countries of the treaty are violated. On this day, the Head of state ordered to resume the full participation of the Russian Federation in the implementation of the Black Sea initiative. Turkey acted as a key mediator in the negotiations on the issue of food export from Ukraine. The experts interviewed by Izvestia doubt that the Kiev authorities will strictly follow their guarantees. The further fate of the contract remains unclear. Its term expires on November 19 of this year, and the possibility of an extension is still being discussed.
Warranty issue
The fact that Russia reserves the right to withdraw from the grain deal in the event that guarantees are violated, Vladimir Putin said during a speech at an operational meeting of the Security Council. The Head of State noted that he had already instructed the Defense Ministry to resume full participation of the Russian Federation in the agreement on safe international sea corridors for the export of Ukrainian grain.
Prior to that, the military department issued a statement with a written message from the Ukrainian side. In it, Kiev guarantees that "the maritime humanitarian corridor will be used only in accordance with the provisions of the Black Sea Initiative and the related SCC regulation."
Russia announced the suspension of its participation in the grain deal after the September 29 attack of seven Ukrainian naval and nine aerial drones with explosives on the port of Sevastopol. All of them were destroyed by the fire of ships and aircraft. At the same time, the sea minesweeper of the Black Sea Fleet "Ivan Golubets" received minor damage, as well as a boom in Yuzhnaya Bay.
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The attacked ships were used to ensure the security of the grain corridor as part of an international initiative to export agricultural products from Ukrainian ports.
"We have clear guarantees from Ukraine about the non—repetition of such attacks using, among other things, infrastructure and corridors related to the export of grain," Deputy Foreign Minister Andriy Rudenko confirmed on November 2.
— Ukraine can give any guarantees. But there is no certainty that they will not follow the path of bypassing them, to put it mildly," former UN Deputy Secretary General Sergei Ordzhonikidze told Izvestia. — I would not hope for their guarantees. The fact that they are not capable of negotiation was evident from the very beginning — as they promised, they took their word. In general, the benefits of this transaction are not obvious, neither political nor economic. If Ukraine exports 3% of the world's grain, what kind of problem is this? This does not affect the market in any way. Moreover, we are ready to supply 500 thousand tons for free. The security threat is not removed. It is necessary to carefully monitor each ship in detail in order to conduct an inspection. I would not trust Ukrainian politicians in any way.
Strengthening the Turkish Mediator
Russian and Turkish Foreign Ministers Sergey Lavrov and Mevlut Cavusoglu held two telephone conversations after the attack on the Black Sea Fleet, in which the Russian minister stated that Moscow demands guarantees from Kiev that Ukraine will not use the humanitarian corridor for military operations against Russia. This was also stated by Vladimir Putin on November 1 during a telephone conversation with Turkish President Recep Tayyip Erdogan.
Thanks to the efforts of Turkey and the UN, this was achieved, and already on November 2, the Russian leader confirmed in a telephone conversation with Indonesian President Joko Widodo that the Russian Federation was resuming the implementation of the grain deal.
Photo: Global Look Press/Keystone Press Agency/Onur Dogman
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Her resuscitation is a positive development of the situation, which once again proved Ankara's role as a leading mediator between Moscow and Kiev, deputy of the Grand National Assembly (Parliament) of Turkey Ozturk Yilmaz told Izvestia. According to him, immediately after Moscow announced its withdrawal from the deal on October 29, Turkey made great diplomatic efforts.
— I think that restoring the deal now is a win—win option for all parties. The expectations of the international community are that all the participants will come together to pave the way for an agreement that has already been signed. I think this is a positive and constructive development and we should all support the transit of this grain with the help of Russia," he added.
According to Yilmaz, Moscow's desire to get security guarantees is understandable. "Both sides are interested in the deal because it is profitable for them," the deputy said. Therefore, he added, the deal was restored.
Photo: RIA Novosti/Mikhail Mordasov
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— In the current situation, Russia should have drawn the attention of the world community to the inadmissibility of attacking ships that ensure the security of the grain corridor, but a complete exit from the grain deal would be strategically wrong, — Galina Sorokina, professor of the Department of World Economy and International Economic Relations at the State University of Management, told Izvestia.
According to her, the Russian Federation, claiming to be one of the most important centers of the world order, undertakes to help the poorest countries in reducing social problems. That is why it was important for Moscow to maintain its participation in the grain deal. Against this background, Russia's decision after receiving a letter of guarantee from the leadership of Ukraine will allow, on the one hand, to ensure control of the grain corridor, on the other — to reduce the reputational risks of blackmail by resuming the transaction without the Russian Federation, the expert concluded.
Extension in question
Despite the return of the Russian Federation to the deal, the agreement itself, according to the July agreements, expires on November 19. The parties negotiated its prolongation, but the main claim of the Russian Federation still remains unanswered: restrictions on the export of Russian agricultural products and the Rosselkhoznadzor, the main operator of transactions in the agricultural sphere, have not yet been lifted. Vladimir Putin also drew attention to this in an interview with his Turkish counterpart on November 1.
The UN press service did not respond to a request from Izvestia about whether the Secretary General of the organization, Antonio Guterres, would seek the lifting of restrictions on Russian food exports.
Russian Defense Minister Sergei Shoigu (left), UN Secretary General Antonio Guterres (third from right), Turkish President Recep Tayyip Erdogan (second from right) and Turkish Defense Minister Hulusi Akar (right) during the signing ceremony of the agreement on the creation of a corridor for the export of grain from Ukraine via the Black Sea
Image Source: Photo: TASS/Press Service of the Ministry of Defense of the Russian Federation
The signing of the grain deal took place on July 22 at the Dolmabahce Palace. The agreement, which provided for the creation of safe sea corridors for the export of Ukrainian grain from three ports (Odessa, Chernomorsk and Yuzhny), was concluded separately by Moscow and Kiev: each side signed a document with Turkey and the UN. The term of the agreement was 120 days, but the possibility of its extension was allowed. In addition, the Russian Federation and the UN signed a memorandum in Istanbul on promoting the promotion of Russian agricultural products and fertilizers to world markets. The validity period of these agreements is three years.
The Food and Agriculture Organization of the United Nations (FAO) estimates that the reduction in the prices of basic foodstuffs as a result of the deal directly or indirectly saved about 100 million people from extreme poverty. Vladimir Putin, speaking at the Valdai Forum on October 27, said that "the process of grain export from the territory of Ukraine was organized under the pretext of ensuring the interests of the poorest countries," but about 34% of grain goes to Turkey, 35% to the EU.
Market reaction
In the grain market, the news about Russia's return to the deal is unexpected, Andrei Sizov, director of Sovecon, told Izvestia. Even the day before, it was claimed that this would require fulfilling a number of conditions, which should have delayed the return process. So the growth continued on the stock exchange. But already on November 2, Andrei Sizov pointed out, wheat decreased in Chicago by 6% and the process may continue.
Photo: IZVESTIA/Alexander Polegenko
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At the same time, this decision will have little effect on the Russian market. Export prices have recently increased, but this will be largely offset by an increase in duties in the future.
A source of Izvestia in one of the exporters believes that Russia's return to the deal will not affect prices in any way: according to him, after the rejection of the deal, they have conditionally increased, now they will decrease in the same way. Real buyers of grain, unlike stock speculators, were willing to wait for the situation to end, so there were few real deals on it.
According to the source, Russian exports will continue to grow regardless of the presence or absence of a deal. Most exporting countries have problems with the harvest, and their grain prices are higher than the Russian supply. Thus, the Union of Grain Exporters indicated that Iran, which does not allow Russian grain, received offers from other exporters at least $84 more expensive per ton.
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