Ukraine is accusing Russia of deliberately obstructing the inspection of ships at Black Sea ports, reducing grain deliveries by half or more in recent months and impairing the ability of some poor countries to receive adequate food supplies.
At any one time, more than 100 grain ships are lined up near the Bosporus Strait, which connects the Black Sea to Istanbul, waiting as long as a month for inspections. Ukraine’s Ministry of Infrastructure last month blamed the crush of ship traffic on the “deliberate sabotage by the Russian side of vessel inspections in the Bosporus.”
In recent weeks, shipments from Ukraine’s three operating Black Sea ports, among them Odesa, have fallen to a four-month low. The shipments are monitored and recorded by the United Nations under the Black Sea Grain Initiative program. On Feb. 1, five ships set sail from the ports and only two ships on Feb. 2. Seven ships set sail on Friday, but the number appears to have been an outlier from the trend.
Russia has given no official explanation for the ship-inspection slowdown, though Ukraine has no doubt that the Kremlin is doing it on purpose to deprive Kyiv of foreign exchange earnings required to finance the war and to show that it can, in effect, control most ship movements in the Black Sea.
“The Russians would like to limit Ukraine’s ability to run its economy and to get income, and they also like to show their importance in the Black Sea,” said Andrii Ryzhenko, a retired Ukraine navy captain and former assistant minister of defence who monitors the grain initiative for the Centre for Defence Strategies (CDS), a Ukrainian think tank. “The grain deal gives Russia leverage for talks with Ukraine and the West.”
In a recent note, the CDS said that fully unblocking Ukraine’s sea ports to all types of products “will give Ukraine more than US$20-billion in [annual] revenue and help preserve it from losing its position in the world market.”
The grain initiative was struck in July among Ukraine, Russia, Turkey and the UN and got off to a good start. The full resumption of ships laden with wheat, barley, corn, soya beans and sunflower oil helped to propel the downward prices of global food commodities, which had peaked in March, the month after Russia invaded Ukraine.
On Friday, the UN’s Food and Agricultural Organization (FAO), said that overall global food prices have fallen almost 18 per cent since their March peak. But it noted that prices for cereals (grain-based foods such as wheat and rice) rose marginally in January and are up 4.8 per cent over a year. FAO in part blamed “tighter availabilities,” offset somewhat by greater wheat supplies from Russia and Australia, though not Ukraine.
While most of the grain shipments from Ukraine go to upper and middle-income countries in Europe and Asia, a significant amount goes to what the UN calls “lower-middle income” countries such as Kenya, Egypt, Tunisia, Bangladesh and Sri Lanka, where food inflation is high and any disruption to supplies can put upward pressure on already elevated prices. In Egypt, which has a bread-based diet, soaring prices for bread are causing misery among the tens of millions of lower-middle-class Egyptians who are not eligible for state food subsidies.
High and steady wheat exports from Russia and Ukraine are required to prevent food inflation from damaging economies. The two countries together exported a quarter of the world’s wheat before the start of the war. When Russia threatened to leave the Black Sea grain deal in October, global food prices spiked by five to six per cent, then came down after the country agreed to stay put.
The recent inspections bottleneck reduced the shipments of grain and other agricultural products by 19 per cent in January over the previous month, according to maritime data compiled by Lloyd’s List Intelligence.
The technical existence of the Black Sea grain deal does not appear to be under threat. The signatories renewed the program in November for four months, and it is expected to be renewed again in March. What has been at threat is the adequate pace of the ship inspections.
The ships’ cargo manifesto and other documents, and sometimes the cargo in the holds, are inspected by joint teams composed of Ukrainian, Russian, Turkish and UN employees once the ships travel through the Bosporus to Istanbul. If any one party to the team fails to show up, or makes itself available infrequently, the inspections either cannot be done or slow down considerably.
A journey through the Bosporus to Odesa and back, including inspections, should take about 10 days. Now it can take a month or longer. The delays are putting financial pressure on Ukrainian wheat farmers, who face problems delivering their output to global markets.
Mr. Ryzhenko said he thinks pressure from Turkey, which is a member of NATO but has maintained a friendly relationship with Moscow, could break the inspections logjam and there are early indications that the inspections rate could ease a bit fairly soon. “Turkey and Russia have mutual economic interests and Turkey has some leverage over Moscow,” he said. “Moscow could fix the inspections problem quickly if it wanted to, or was encouraged to.”