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The Ukraine-Russia Grain Deal: A Success or Failure?

Ship at port next to large grain elevators

On October 29, Russia announced the 鈥済rain deal鈥 brokered by the UN and Turkey in July to allow Ukraine to export grain by the Black Sea. Moscow presented its move as a response to an alleged attack by Ukraine on the Russian fleet around Sevastopol city. Despite Russia鈥檚 warnings, a group of ships loaded with grain through the safe corridor, exporting grain that had been loaded in Ukrainian ports. Shortly thereafter, Russia made a U-turn and to the agreement after negotiations with Turkey. Moscow cited 鈥渨ritten guarantees鈥 from Ukraine that Kyiv would not use this corridor for military purposes or attacks against Russia.

This brief spat over the deal, which to that point had worked for all parties, left a mixed impression. On the one hand, Russia鈥檚 actions underscored that the agreement was vulnerable and weak, and made clear Moscow鈥檚 readiness to abandon it at any moment it saw fit. On the other hand, Turkey鈥檚 intervention, which secured the continuation of the deal and convinced the Kremlin to rejoin it, illustrated the significant influence Ankara , both as a key interlocutor between parties and as a counteracting player to Russia.

Russia鈥檚 move was inevitable. From the very beginning Moscow has seen the grain deal as affording it leverage over Ukraine and the West. Grain exports are one of the few sources of hard-currency income for the Ukrainian economy. What is more, being a security guarantor of the agreement allows Russia to raise the stakes with minimal effort every time it wants to pressure the West by destabilizing world food prices, which in turn has an impact on inflation worldwide. Indeed, Russia鈥檚 brief suspension of its participation in the grain deal in wheat prices across the globe.

Still, this diplomatic incident raises the question of whether the grain deal has been a success or a failure. The answer, in my opinion, depends on what one views as its initial primary goal.

Multiple Potential Goals of the Grain Deal

The most obvious goal is food security. Russia鈥檚 invasion of Ukraine caused a surge in global food prices, dealing a heavy blow to countries already at risk of food insecurity. Ukraine has been of grain, contributing 42 percent of the global share of sunflower oil, 16 percent of maize, and almost 10 percent of wheat. Not only are Ukraine鈥檚 exports essential for the stability of world markets, but Ukraine鈥檚 grain exports have greatly to the World Food Program鈥檚 humanitarian stocks, shipped regularly to such war-ridden countries as Yemen, Ethiopia, Somalia, and South Sudan.

In that context, the July agreement between Russia and Ukraine allowing grain and fertilizers to return to the market probably averted a humanitarian catastrophe and economic meltdown. Since the signing of the deal, have left Ukraine by sea. More than 100 ships have sailed from Ukraine, with 47 percent of the grain cargoes going to Turkey and Asian countries, 36 percent going to the EU, and 17 percent to Africa. Immediately after the agreement went into effect, food prices fell by . After hitting an all-time high immediately after Russia鈥檚 invasion in February, world wheat prices dropped by 14.5 percent and cereal prices dropped by 11.5 percent. Prices for those grains are still higher than they were in 2021, but the deal certainly eased pressure on the market. So, in terms of stabilizing markets, the deal has proved to be effective.

However, the agreement was not designed to save conflict-affected communities around the world, which for the most part continue to suffer critical food shortages. Particularly, Russia has constantly criticized the agreement, that the grain is not reaching countries that need it the most.

Indeed, contrary to popular perception, the majority of grain exports that were shipped out of Ukrainian Black Sea ports didn`t go to the poorest and most needed countries but rather to Europe and Turkey. Over the past five months, more than 12.3 tonnes of grain from Ukraine, with 44 percent of it being corn rather than wheat (29 percent). The main destinations of the cargoes were Spain (2.5 million tonnes), China (2 million), Turkey (1.9 million), Italy (1.3 million), and the Netherlands (898,000). Most of the grain that had been held up in Ukrainian silos after February 24 was corn (not wheat), contracted by international companies, not necessarily to feed people but, for example, to use as biofuel or animal food. Therefore the agreement wasn鈥檛 designed to immediately avert famine in countries like Yemen or Somalia but rather to stabilize the market and contain prices, which in turn hurt countries鈥 ability to purchase food.

From the Ukrainian perspective the agreement has positive implications. It allowed Ukraine , increasing its share from 1鈥1.5 million tonnes to almost 4 million tonnes. In addition, the deal for Ukraine to store the next harvest, which to 53 million tonnes, far exceeding domestic needs. The deal allows Ukrainian farmers to start planting crops for next year. The deal also ensures that Ukraine鈥檚 farming sector is not totally destroyed. Because of the war, Ukraine鈥檚 farming industry of its 2021 gross output, which serious liquidity problems for farmers. The grain had to be moved out of storage silos to avert a storage crisis, and if the whole goal of the deal was to move grain out of Ukraine, then the treaty made it possible.

Any hope that the grain deal might serve as a basis for the slow build-up of a potential compromise between Russia and Ukraine/the West, however, has been dashed. Ukraine and Russia don鈥檛 trust each other and are not ready to negotiate. Russia鈥檚 attempt to abandon the deal demonstrated that Moscow doesn鈥檛 see it as a trust-building measure but rather is trying to instrumentalize it as part of its war effort. Nor does Ukraine see the agreement as part of a potential peace process: President Zelensky insists that Russia should leave all Ukrainian territory occupied since 2014, including Crimea, no matter whether there is a grain agreement in place or not.

If the agreement is thought of as a means of stabilizing the Black Sea situation and localizing the war in Ukraine, then one could argue it has partially succeeded. Although Russia didn鈥檛 stop its indiscriminate attacks against energy, military, and civilian infrastructure in Ukraine鈥檚 South, it did show restraint toward foreign ships, which started shipping grain out of Ukraine through the Turkey-supervised safe corridor. In some way, the agreement has contributed to the creation of certain rules, however temporary, and 鈥渞ed lines鈥 in terms of safety and predictability for ships transiting the Black Sea.

Finally, if the agreement was about strengthening Turkey鈥檚 geopolitical leadership in the region, then it has definitely succeeded. Ankara boosted its diplomatic image by presenting the agreement as an achievement aiding food-dependent African and Asian countries. Moreover, Turkey cemented its role as a key mediator in the Russia-Ukraine war, capable of talking to both sides. President Erdo臒an in particular has been able to capitalize on the deal by placing Turkey at the heart of any potential follow-up agreements between Kyiv and Moscow.

The opinions expressed in this article are those solely of the author and do not reflect the views of the Kennan Institute.

Author

Kennan Institute

The Kennan Institute is the premier US center for advanced research on Eurasia and the oldest and largest regional program at the Woodrow Wilson International Center for Scholars. The Kennan Institute is committed to improving American understanding of Russia, Ukraine, Central Asia, the South Caucasus, and the surrounding region through research and exchange.   Read more

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