In an attempt to ensure a secure migration of Ukraine’s grain exports across the Black Sea, U.N. leader, Antonio Guterres, has reportedly proposed a trade-off to Russian President Vladimir Putin. This solution, as sources confirmed to Reuters, would involve linking a subsidiary of Russia’s agricultural bank to the SWIFT international payment system in exchange for an extension to the grain export deal, which is presently under threat.
Russia’s Threatened Grain Agreement
The specified agreement is set to lapse this Monday, and Russian authorities have previously threatened to call off the deal in light of various unfulfilled commands pertaining to the transport of their grain and fertilizer. Currently, the final vessels operating under this accord are loading up supplies at the Ukrainian port of Odesa, making the ticking clock impossible to ignore.
A crucial request from Russia includes reinstating their agricultural bank, Rosselkhozbank, within the SWIFT international payment network. This reconnection has been deemed necessary due to the European Union’s decision to sever ties in June 2022 as a reaction to Russia’s assault on Ukraine. Despite the EU’s May assertion that there would be no reinstatement of Russian banks, sources now indicate a shift towards allowing a Rosselkhozbank offshoot to join SWIFT and facilitate transactions for grain and fertilizer specifically.
Bridging the Grain Export – SWIFT Access Gap
Guterres has suggested that Russia should permit the continuation of the Black Sea grain deal for an extended period, which would provide the EU with an opportunity to connect the Rosselkhozbank subsidiary to SWIFT, sources with knowledge of the discourse disclosed to Reuters. Further, Guterres has extended his intentions via a letter to Putin, emphasizing that the ultimate goal is to dismantle the barriers that are currently interrupting financial transactions via Rosselkhozbank and to ensure ongoing grain flow from Ukraine via the Black Sea.
The Historical and Future Impact of the Black Sea Grain Initiative
Developed through a collaboration between the United Nations and Turkey, the Black Sea Grain Initiative was conceived in July 2022 within the context of global food crisis escalation due to Moscow’s invasion of Ukraine and successive port blockades. From the very beginning, the essence of the pact was to facilitate Moscow’s food and fertilizer exports to international markets while ensuring critical grain outflows from Ukraine.
Currently, mechanisms have been instituted to navigate around the SWIFT blockage, featuring the initiation of process payments for Russian grain export from U.S. banking giant JPMorgan Chase & Co, thanks to reassurances extended by the U.S. government. The United Nations is also collaborating with the African Export-Import Bank to establish a platform to ease payment processes for Russian grain and fertilizer exports to Africa.
