New obstacle for Russia-Ukraine grain deal

The payment system saga is becoming an unresolved issue in the effort to resume the Black Sea Grain Initiative between Russia and Ukraine.

EU cân nhắc nhượng bộ ngân hàng Nga để bảo vệ thỏa thuận ngũ cốc (Nguồn: A News)

The resumption of the grain deal between Russia and Ukraine continues to face many new hurdles. (Source: A News)

On August 4, RIA (Russia) quoted the country's Foreign Ministry as saying that the direct trading channel between the Russian Agricultural Bank and JPMorgan, organized by the United Nations as a measure to maintain Moscow's participation in the Black Sea Grain Initiative, was closed on August 2. Last month, Russia refused to extend the Initiative and accused the West of not implementing the terms of the agreement, affecting Russia's food and fertilizer exports.

Previously, in April 2023, the US allowed JPMorgan to make payments to the Russian Agricultural Bank. However, this temporary solution does not replace connecting the Russian Agricultural Bank to the SWIFT global payment system.

Access to SWIFT is one of Russia's key demands in negotiations on the future of the Black Sea Grain Initiative. Russia has also reiterated that the deal's prospects depend on the West removing barriers to its grain and fertilizer exports.

Russia is the world's leading exporter of wheat. Along with Ukraine, Russia is one of the world's largest agricultural producers. The two countries account for large shares of the world's wheat, barley, corn, rapeseed, sunflower seeds, and sunflower oil markets. Russia also plays a significant role in the fertilizer market.

At present, Russian grain and fertilizer exports are not subject to Western sanctions following the country's military campaign in Ukraine from February 2022. However, Moscow says Western restrictions on payments, logistics and insurance are barriers to Russian exports.

On the same day, Polish media reported that Warsaw submitted to the European Union (EU) a request for infrastructure investment worth 1 billion euros to support the export of Ukrainian grain and other agricultural products across the Polish-Ukraine border.

500 million euros will be used to expand existing border crossings for trucks and railway infrastructure in the eastern city of Przemysl. The remaining half a billion euros will be used to modernize railway border crossings between Poland and Ukraine, build border crossing points for trucks and build customs checkpoints.

Polish Ambassador to the EU Andrzej Sados confirmed the information and added that Warsaw wants to increase the shipments of Ukrainian grain to third countries, especially Africa, in the next year and a half. However, he stressed that the country also needs investments to improve its infrastructure capacity.

According to the Polish news agency PAP , the amount of wheat and corn from Ukraine transiting through Poland reached a record level in May and June. On August 3, Polish Agriculture Minister Robert Telus warned that if the EC does not extend restrictions on Ukrainian grain imports after September 15, Warsaw, along with a number of other countries, will close its borders to agricultural products originating from its neighbor.

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