A Call For Diplomacy
Most of us have heard that Russia has exited the Black Sea grain deal, which involved an agreement between Russia, Ukraine and Turkiye to facilitate safe passage of grain from Russia and Ukraine to the rest of the world.
Most of us have heard that Russia has exited the Black Sea grain deal, which involved an agreement between Russia, Ukraine and Turkiye to facilitate safe passage of grain from Russia and Ukraine to the rest of the world.
Many sources report with the presentation that this only involves wheat but there is far more involved. This also involves corn, sunflower, soybean, rapeseed and fertilizer. Russia is the largest single source globally for fertilizer and wheat. While Ukraine exports a large amount of wheat, their importance has been overstated, being the fifth largest wheat exporter globally.
Why did Russia exit this deal? If you listen to some sources, Russia is weaponizing the global food supply. In a sense, this has a modicum of truth. However, there is far more to this which those same sources do not mention.
This grain deal was implemented in July 2022. This agreement had multiple parts, which included supply of 40% of Russian grain and millions of tons of fertilizer to be supplied, free of charge, to poor countries across the globe, especially countries in Africa. It also included sections which banned the import of weapons through the Black Sea corridor and also weapons production and storage in close proximity to grain storage. It also included a method of payment to Russia for the remaining 60% of grain and fertilizer, as sanctions had blocked Russian access to the SWIFT system and many countries have refused to pay using Russian rubles.
Since this agreement was implemented, only slightly over 3% and apparently no fertilizer has been delivered to the intended poor countries. Russian diplomats have brought up this issue many times over the past year at the UN, primarily involving UN chairman Antonio Guterres. Each time the subject was broached, promises were made to rectify these issues. To date, not one part of the agreement has been honored by the west. The majority of grain has gone solely to more affluent western countries.
The grain deal originally had a time frame of three months. It has been renewed three more times in three month increments. Each time it was renewed, it was with the promise that these issues would be rectified. On the most recent renewal, Russian president Vladimir Putin began making himself clear that Russia would not renew their participation in the grain deal if all agreements were not adhered to. Only in the past few weeks did the west begin discussing implementing only the part of the deal which involved the payment system, yet no new payment system was fully constructed.
One should make clear that Russia did not cancel or violate the grain deal. The grain deal was due for renewal on July 17, 2023 and they simply did not renew participation in the deal.
The west, considered as the US, EU, NATO and G7 countries, have stated that there has been no ban on Russian grain exports, yet they did place a ban on insurance for ships carrying Russian exports. This meant that shipping companies refused to transport Russian exports, with few exceptions. Russia has been able to contract small “shadow fleets” of ships willing to take the risk, though this has been at exorbitant cost, driving up the cost to both Russia and destination countries.
The result has been an increase in the cost of global food supplies and increased starvation in poor countries. While the US has experienced a reported peak inflation rate which reached 9.1% in June 2022 and currently less than 3%, EU countries have experienced much higher inflation rates. Note that the stated inflation rates exclude the cost of food and energy, the highest drivers of inflation in real world terms. European consumers have reported buying less food, while in the US, food banks have seen usage which equal or even exceed 2020 levels, with millions of users of food banks reporting to have never used a food bank previously. Oxfam reports that in 2022, one East African dies of starvation every 36 seconds. While people in poor countries starve to death by the millions, grain which was diverted from the agreement to more affluent countries has been used to feed livestock in Spain and to make biodiesel in other countries.
In the three days since the grain deal expired, Russia has extensively bombed two of three Ukrainian ports, most notably the port of Odessa, the largest Ukrainian port. This has damaged port facilities to a degree which will require years to repair. They have also blocked all naval access through the Black Sea. Part of this bombing campaign included surrounding facilities near the ports which they claim housed weapons storage and drone production, which violated the terms of the agreement. Even if true, as long as the agreement were in place, Russia could not attack, whether by explicit terms of the agreement or because of negative political impact. Only time will reveal whether there is any truth to these allegations. If untrue, we will see no variance in Ukrainian combat patterns. If true, we will see a decrease in Ukrainian drone usage and other weapons. If the claims are factual, they will continue to be denied by Ukraine and the west. If false, then we can consider it war propaganda by Russia. Either way, we may never know the truth.
I had fully expected Ukraine to approach NATO countries to request military escorts for ingoing and outgoing ships through the Back Sea on expiration of the agreement. Ukraine did, in fact, approach Turkiye, who refused due to risk and expense, which would not have been compensated. It is unlikely that any NATO country would have agreed, as this would have brought NATO into direct involvement in the conflict. With the destruction of the ports, this becomes a moot point.
The fact that Russia has intentionally left one of three ports untouched does tend to indicate the potential for the agreement being renewed at some point, though this will only occur with a full renegotiation. That renegotiation will mandate full implementation of the western side of the agreement, enabling Russian export to poor countries and construction of a viable payment system before a single Ukrainian grain ship is allowed to leave port. I do not expect this to happen with the current US administration. Instead, we will continue to hear ranting about Russia weaponizing the food supply, which is hypocritical considering what I have already covered.
Ukraine does have the ability to export grain by land, though this increases cost of transport considerably. The cargo of one grain ship will fill hundreds of train cars and possibly thousands of trucks. Meanwhile, Europe is already experiencing a diesel shortage, while Ukraine must use nearly all fuel supplies for military and energy purposes.
It should also be noted that five eastern European countries have banned the import of duty-free Ukrainian grain, as this negatively impacts the incomes of their own farmers. Some European countries have claimed that Ukrainian grain contains chemicals which are banned in those countries in the food supply.
In the past months, Russia has increased diplomatic interaction with African countries, who have refused to implement western sanctions against Russia. While we are told that the entire world is honoring these sanctions, the truth is that roughly 85% of countries are not implementing sanctions. The actual countries implementing sanctions include only members of NATO, the EU, Japan, Australia and Canada, each with varying compliance. Even the US is still importing oil from Russia. Many countries have increased trade with Russia. We can surmise that part of Russia’s diplomatic interaction with African nations include some form of promise to increase grain and fertilizer exports to Africa.
The timing of Russia’s exit from this agreement is especially important. It is too late in the year for American, Canadian, European and possibly Australian farmers to expand planting of new crops. In addition, the decrease in the fertilizer supply will increase the cost of fertilizer, which drives up food prices even further. Chances are that less fertilizer will be available for use, reducing crop yields next year. So, unless this gets resolved quickly, the impact on the global west will be significant. This is coupled with the fact that India had a decreased wheat crop this year and so exported no wheat at all.
We can expect rhetoric of how this will negatively impact Russian GDP, which may be true. However, Russia’s inflation rate is currently 3.4% year over year, 0.35% month over month and their debt to GDP ratio is less than 14%. The US debt to GDP is greater than 120%.
We should consider the fact that, under any current circumstances, Russian citizens do have food and energy, as they are net exporters of both of these. Major Russian imports consist mainly of vehicles, packaged medications, minerals, broadcasting and computer equipment, each of which they also produce in some quantity. It has been past sanctions against the USSR and then the Russian Federation that have driven Russian increases in production of grain, oil and other commodities. It was a US food embargo in the 1980’s which drove Russia to become the world leading export of grain. That same food embargo, by the way, was a major driver of farm failures in the US in the 80’s, according to a declassified CIA report.
Russia exiting this agreement has grossly intensified the conflict with Ukraine. This exit was also completely avoidable. As I have previously stated, this agreement can be renegotiated, though it will require new terms which must be adhered to. The current circumstances, if allowed to endure, will unquestionably lead to inflation and food shortages which will last not for months but for a minimum of two years, possibly longer, depending on subsequent political events. If no agreement is reached, these circumstances will lead to many millions of deaths by starvation in poorer nations and significantly increased poverty among lower and even lower middle income residents of wealthier nations. This will lead to greater unemployment and social unrest on a scale which we have not seen in decades and which most younger generations have never experienced.
A diplomatic solution has been necessary for this conflict since long before it began. At this stage it is absolutely critical for diplomacy to take the lead role in some form of resolution. Are we going to see diplomatic efforts? Or are we simply going to see more jingoistic posturing, which turns a blind eye to the negative consequences? Every sanction has failed. There is no way to force Russia to reengage in the grain deal. Any attempt to seize Russian grain by military force will result in World War 3. As usual, it is the most vulnerable globally that are used as talking points but who are offered up as sacrifices to a political agenda. It is the poor who will suffer and die if no realistic diplomatic solution is reached. Every one of us will feel the effects of these circumstances in short order and will escalate quickly if something is not done. It is time to stop beating bloated chests and war drums. It is time to have meaningful talks which yield real world results.
Russell Meyers
Independent for US President 2024