RUSSIA- With only a week before the expiry of the Black Sea Grain Initiative, Russia has restated a demand for its state agricultural bank to be reconnected to the global SWIFT payments system to avert the collapse of the grain deal,
According to Russia, there has not been progress on any of its key demands, including the banking issue adding that it would not accept a reported compromise proposal.
In the interest of securing the grain deal for an extended period, the European Union was considering a proposal to allow Russia’s Rosselkhozbank to set up a subsidiary that could connect to SWIFT.
According to the proposal, a Russian bank under sanctions could carve out a subsidiary that would reconnect to the global financial network, which was closed to the largest Russian banks following the Ukraine invasion last year.
However, Russian Foreign Ministry spokeswoman Maria Zakharova dismissed the idea as “deliberately unworkable”, saying it would take many months to set up such a unit and another three months to connect to SWIFT.
She also rejected a U.N. attempt to create an alternative payment channel between Rosselkhozbank and U.S. bank JP Morgan (JPM.N).
“There is no real replacement for SWIFT, and cannot be,” Zakharova said in a statement.
Britain’s U.N. Ambassador Barbara Woodward recently remarked that she was not confident the grain deal would be renewed, owing to the hurdles Russia has faced in the implementation of its parallel deal with the UN.
“The U.N. is doing all it can, and we will do all we can. We’ve already worked very closely with the City of London to enable a very complex payment system for grain in order to make it work and continue to get food on people’s tables,” she said.
The UN describes the Black Sea grain deal and the efforts to facilitate Russian grain and fertilizer exports as “a lifeline for global food security”.
Any disruption or halt to such trade could aggravate a food crisis in the poorest countries, and push global prices much higher.
“The world has seen the value of the Black Sea Initiative … this isn’t something you chuck away,” the U.N.’s Martin Griffiths recently told reporters.
However, Russia’s foreign ministry said on Tuesday it was “obvious there are no grounds” to extend the deal beyond July 17, and that Russia was doing everything necessary for all ships covered by the deal to leave the Black Sea before that date.
Russia also holds that the deal had delivered Ukrainian grain to “well-fed” countries but failed to help those most in need, with the five poorest countries – Ethiopia, Yemen, Afghanistan, Sudan, and Somalia – receiving only 2.6% of the grain shipped.
The U.N. said it is continuing to work on ways to facilitate Russian fertilizer exports including a trade finance platform with the African Export-Import Bank (Afreximbank), facilities related to banking and insurance, and the resumption of major transshipment routes for fertilizer and ammonia.
Moreover, further talks among the related parties to the grain deal are going on to push towards its extension.
Negotiations between Russian President Vladimir Putin and Turkey’s President Tayyip Erdogan are set to take place, and the Hungarian farm minister will soon visit Turkey this week to discuss the same matter.