Black Sea: EU redirects Ukraine’s exports and thus slows down Russia’s plans

Ukraine now exports just 40% of its grain via the Black Sea, the rest via the EU. Threats from Russia are accelerating the development of new trade routes.

07/21/2023 | by Jan Dirk Herbermann, Mareike Müller and Carsten Volkery

Ukrainian grains in the port of Constanta © dpa

Western countries are expecting attacks on freighters after the Russian army bombed grain warehouses in the Ukrainian port city of Odessa in recent nights. “The route through the Black Sea is unsafe,” a senior EU official told Handelsblatt. Russia already showed last year that it does not hesitate to sink smaller transport ships.

A spokesman for the US National Security Council said Russia has placed additional sea mines in Ukrainian ports. The Kremlin wants to justify attacks on civilian ships and blame Ukraine. The British Ministry of Defense expects Russia’s Black Sea Fleet to play “a more active role” from now on.

Kiev’s government is now working with the EU to reduce the risk of Russian attacks by redirecting its exports. According to EU data, only 40% of Ukraine’s grain is exported through its own ports on the Black Sea. 60 percent is brought into the EU overland and shipped from there via ports on the Baltic Sea, Adriatic Sea and other ports on the Black Sea, such as Constanta in Romania.

Ukraine: EU wants to redirect exports

Foreign Minister Annalena Baerbock (Greens) told the meeting of foreign ministers in Brussels on Tuesday that it was right and important from the start “that we drive in parallel”. The EU will now work harder to get the grain out of Ukraine through the so-called “Solidarity Lanes”.

Inland navigation is playing an increasingly important role. Last year, 2.2 million tonnes of Ukrainian grain was shipped across the Danube every month, the EU official said. There are already more than three million tons. The target is four or five million tons. The operation is complex: in Romania, for example, pilots with local knowledge had to come out of retirement to get grain transport to its destination.

A Ukraine working group led by the EU Commission meets twice a month. The Ukrainian government is connected via video, while neighboring Poland, Hungary, Slovakia, Bulgaria and Romania participate on the European side. EU candidate Moldova is also there. The aim is to organize enough ships, trains and trucks and remove bureaucratic obstacles.

Transporting Ukrainian grain is increasingly seen as good business by European companies, the EU official said. While some farmers are struggling with cheap grain imports from Ukraine, other companies such as logistics see a growing market.

UN tries to save grain trade

Eventually, there will be enough capacity to export Ukraine’s entire grain harvest through the EU, the official said. Then the Russian blockade of the Black Sea would lose its importance.

DB Cargo freight cars parked in the port of Constanta © IMAGO/photothek

However, Ukraine still relies on exports passing through its ports. The United Nations is therefore trying to salvage the grain deal somehow. Together with Turkey, the UN brokered the deal with Russia in July 2022.

Everything will be done to ensure that world markets have access to Ukrainian and Russian food and fertilizers, a UN spokesman said. This is important for fighting hunger in the world.

However, the UN’s room for maneuver is very limited. It has no direct control or influence over banking regulation, the Swift international payment system, private transport or the insurance market. But Russia’s demands affect all these areas. Moscow has repeatedly demanded that the Russian agricultural bank be reconnected to Swift.

In a personal letter to Russian President Vladimir Putin, UN Secretary General Antonio Guterres made concrete proposals about Swift shortly before the end of the grain deal, including US bank JP Morgan. The Kremlin declined the offer. However, he reacted angrily to the secretary-general publishing long extracts of the letter.

Ukraine relies on Türkiye’s role as mediator

Guterres “violated all laws governing diplomatic correspondence”, criticized the Russian Foreign Ministry. The dispute over the charter is likely to put additional pressure on the search for a new deal. In any case, the Russian government accuses the UN Secretary General of unilaterally siding with Ukraine.

Destroyed barn in Odessa © via Portal

The Ukrainian ambassador to Turkey, Vasyl Bodnar, said that Russia is not only putting pressure on Ukraine, but also on other countries that depend on the grain. He has high hopes for the role of Türkiye mediator.

Ankara is expected to “conduct negotiations with the aggressor state so that we can return to agreements reached earlier,” he said. Perhaps other countries could also be included, especially those that have been the biggest recipients of Ukrainian grains, such as China, Spain and African countries.

On Wednesday, Mikhail Podoliak, a close adviser to Ukrainian President Volodymyr Zelensky, also suggested that the grain carriers be escorted by Bulgarian or Turkish warships, protected by a UN mandate, so that grain could be exported again.

Podoljak said talks were ongoing “at all levels”. However, NATO countries are skeptical about this option because a Russian attack on a member country’s ship would trigger NATO’s defense case.

First publication: 07/20/2023, 3:39 pm