Metis Insights: Black Sea Grain Initiative Analysis

On 22nd July 2022, Ukraine and Russia signed agreements with Turkiye to facilitate the export of grain, foodstuffs, and fertilisers from Ukraine.

The Ukraine-Russia War has contributed to skyrocketing global food prices that are assessed to have pushed 47 million people into acute hunger. Developing and emerging economies in Africa, Asia, and Latin America have been the most severely impacted, due to their reliance on fuel and grain imports. Food price hikes have contributed to political unrest and violence. The Black Sea Grain Initiative promises to increase the global supply of grain and bring down food prices.

The deal was brought into question on 23^rd July when Russia launched four Kalibr missiles at the port of Odesa, one of the three ports listed under the deal. None of the missiles struck the grain port, but the attack appeared to demonstrate a Russian disregard for the parameters of the agreement. Nonetheless, on 24^th July Kyiv and Moscow signalled they were willing to continue with the initiative. The first shipments may depart from Chernomorsk on Wednesday 27^th July.

In our latest Metis Insights, Dryad Global analyst Cameron Watson explores the potential outcomes of the newly signed Black Sea Grain Initiative.

THE BLACK SEA GRAIN INITIATIVE

Overview

On 22nd July 2022, Ukraine and Russia signed agreements with Turkiye to facilitate the export of grain, foodstuffs, and fertilisers from Ukraine.

The Ukraine-Russia War has contributed to skyrocketing global food prices that are assessed to have pushed 47 million people into acute hunger. Developing and emerging economies in Africa, Asia, and Latin America have been the most severely impacted, due to their reliance on fuel and grain imports. Food price hikes have contributed to political unrest and violence. The Black Sea Grain Initiative promises to increase the global supply of grain and bring down food prices.

The deal was brought into question on 23rd July when Russia launched four Kalibr missiles at the port of Odesa, one of the three ports listed under the deal. None of the missiles struck the grain port, but the attack appeared to demonstrate a Russian disregard for the parameters of the agreement. Nonetheless, on 24th July Kyiv and Moscow signalled they were willing to continue with the initiative. The first shipments may depart from Chernomorsk on Wednesday 27th July.

The Initiative

UN-backed negotiations for a ‘grain corridor’ in the Black Sea began in May 2022. These negotiations concluded on the 22nd of July, when Ukraine and Russia signed separate agreements with to facilitate the export of grain from Ukraine. The deal covers the export of grain and related products, including foodstuffs, and fertilizers inclusive of ammonia. As part of the Initiative, Russia signed a separate Memorandum of Understanding with the UN to facilitate the export of Russian fertilizer, worth $7.6bn annually.

 All parties to the agreement have undertaken an agreement to not attack or endanger any vessel or civilian vessels engaged in the activities contained within the deal.  The deal specifies that Ukraine and Russia will create a safe environment around the ports of Odesa, Chernomosk and Yuzhnhnyi. The deal will remain in place for 120 days from the date of signing and will be extended automatically for the same period, unless otherwise stated by any party to the agreement. 

As part of the provisions of the deal, a Joint Coordination Centre (JCC) will be established in Istanbul and will be composed representatives from all signatories. This will include representatives from Ukraine, Turkey, the Russian Federation, and the UN. It is understood that the Ukrainian delegation arrived in Istanbul on Monday 25th July with the Russian delegation expected soon after, headed by Rear Admiral Eduard Luik, Chief Navigator of the Russian Navy.

Merchant vessels are to be prior registered with the JCC, verifying their details and confirming their loading port, having liaised closely with port authorities. The JCC will remotely monitor vessels through the duration of their passage through the maritime humanitarian corridor. As all vessels will be monitored remotely, no military vessels or aircraft or drones may approach the humanitarian corridor closer than a distance agreed by the JCC without authorization by the JCC and consultation with all parties. The JCC will develop and disseminate a detailed operational and communications plan including safe harbors and medical relief options. 

Vessels will be subject to inspections in ports designated by Turkey. Vessels will be inspected upon entry and exit of the Turkish Straits. Inspection teams will consist of representatives from each of the signatory states. Vessels will transit inbound the Ukrainian ports in line with the JCC approved schedule upon inspection. The stated primary responsibility of the inspection teams is to check for the absence of unauthorized cargoes and personnel onboard vessels inbound and outbound the designated Ukrainian ports. It is intended that the technical documentation regulating the work of the centre would be endorsed by Tuesday the 26th with operations commencing soon after.
 
All activities within Ukrainian territorial waters will be under the authority and responsibility of Ukraine.  Should demining be required, a minesweeper of another country, agreed by all parties will conduct a sweep of the approaches to the designated Ukrainian ports as necessary. Should any suspicious activities or noncompliance with the rules of this operation or emergencies occur on a vessel in transit, depending upon location and upon request to a party of the contained within the JCC, required assistance will be provided to the crew.  

Risks surrounding the Initiative

Whilst the terms of Initiative provide for the protection of merchant shipping, there are pertinent and persistent risks around the Initiative that are likely to remain for the entirety of its duration.

In the balance of negotiating power, Russia has the upper hand in this Initiative, although it still stands to benefit from the successful implementation of the deal. The export of grain is worth much more to Ukraine, as a proportion of GDP, than the export of fertiliser is to Russia. After these first tranche of voyages, Ukraine hopes it will be possible to reconsider the safety and military risks of the north-western Black Sea, which would have significant economic benefits for Ukraine. These benefits may be seen by Russia as a way to weaken Ukraine further, providing an incentive for reneging on the Initiative in its earliest hours. However, Russia has made promises to allies in Asia and Africa to reduce the burden of the war on their food prices by facilitating this Initiative, so sabotaging the deal without justification would further erode Russia’s international credibility.

Turkiye, the common partner to both parties, is strongly incentivised to ensure the Initiative is a success. Turkiye has suffered some of the highest food price inflation and its shipping industry has suffered due to the externalities of the war. A success would also validate both Turkiye’s status as a viable mediator in the conflict and President Recep Erdoğan’s position domestically and internationally.

The 23rd July Kalibr strike on Odesa demonstrated Russia’s ongoing capacity to strike shipping at anchor at any of the three designated ports. Russia claimed the 23rd July attack sank a Ukrainian naval vessel, indicating Russia is willing to twist narratives surrounding direct and indirect attacks on port facilities to justify its means. Odesa is home to the Western Naval Base of the Ukrainian Navy, so continued activity in and around Odesa is an area of acute sensitivity and continued activity beyond the parameters of the agreement, potentially presenting a vector for Russian aggression, or withdrawal from the agreement cannot be discounted. The 23rd July strike demonstrates the fragility of the Initiative and the need for the mutual guarantees of safety and security to enable the Initiative to proceed.

There is also an established history of Russian attacks on unaffiliated shipping in the Black Sea. In previous negotiated ceasefires and surrenders, Russia has demonstrated a willingness to “give with one hand while taking with the other”, which could manifest in this deal as an intensification of attacks on ports and areas out with the structure of the deal, or unprotected Ukrainian ports, like Ochakiv. There is evidence of weakening command and control in Russia forces, so an attack as a result of ill-discipline miscalculation remains a realistic possibility. The treaty is meant to protect the escort vessels, so an attack on escort vessels is unlikely but a strike by Russian missiles cannot be ruled out in the event that Russia loses faith in the Initiative. It is crucial that Turkiye and the United Nations devise mechanisms to continually reassert Russian commitment to the Initiative and its guarantees of safety, rather than assuming Russian compliance through participation.

The terms of the treaty further attempt to mitigate the threat of sea mines to merchant shipping. Escort vessels will be on hand and provided by a third party if necessary and will support mine clearance operations if required. There is a demonstrated risk in this conflict of drifting sea mines posing a hazard to commercial vessels transiting the Black Sea not withstanding those that will transit through a narrow navigation corridor.

Initially, only ships owned by nationalised Ukrainian companies will be transiting the humanitarian relief corridor. Commercial ships will follow in subsequent days, after regulation and advisories from the JCC in Istanbul have been published.

Overall, despite assurances within the terms of the treaties, vessels participating in the Black Sea Grain Initiative will be exposed to significant ongoing threats during transit through Ukrainian territorial and international waters and whilst at anchor in the ports of Odesa, Chernomosk and Yuzhnhnyi. The persistent threat of sea mines remains the most prominent threat, although such a threat can in part be mitigated via both effective mine avoidance and mine clearance where required. The additional threats of Russian aggression and continued commitment to the terms of the agreement are harder to account for, and as such present a potentially greater threat to the continuation of the agreement over the longer term.

The first week of operation will be highly significant for the Initiative, as these types of agreement are most vulnerable to being broken in their early days. Its success or failure may also determine further de-escalations of the conflict are possible. Whilst there are strong reasons for Russia to act strictly within the bounds of their agreement with Turkiye and prevent any attacks on grain terminals and ships, this conflict has repeatedly demonstrated the importance of never assuming Russia will behave within the bounds of reason.