UN hails ‘beacon of hope’ as Russia, Ukraine sign grain corridor deal

22 Jul 2022 | Tim Worledge

The United Nations Secretary-General Antonio Guterres has hailed the signing of a landmark deal between Russia and Ukraine to re-open grain export routes in the Black Sea as a “beacon of hope” after five months of conflict.

The agreement, brokered by Turkey and signed in Istanbul, allows “significant volumes of commercial food exports” from the ports of Odesa, Chernomorsk and Pivdennyi and will also safeguard the export of Russian grains and fertilizers, according to the UN.

“Today, there is a beacon on the Black Sea... A beacon of hope – a beacon of possibility – a beacon of relief - in a world that needs it more than ever,” Guterres told delegates at the signing ceremony.

Mounting fears that the ongoing Russian invasion, which started on February 24, was leading to the blockade of Ukraine’s ports and preventing exports from one of the most significant producing regions in the world.

In the months that followed, attacks on key Ukrainian infrastructure and the interruption of trade flows stoked fears that the loss of corn, wheat and oilseed exports could spark famine across developing nations – leading the UN and Turkey to step up efforts to find a diplomatic solution.

The agreement will lead to the creation of a Joint Coordination Centre to monitor the agreement, while there is no explicit requirement for Ukraine to remove naval mines that have been placed in the approaches to the country’s Black Sea coast.

That was a key concern for Ukraine’s authorities who feared that any lowering of defences could allow Russian forces to mount an invasion further along the coast and target key export facilities around Odesa.

Where mine clearance is needed, it would be undertaken by a third nation with the approval of all parties – while observance of the deal will be undertaken remotely, as “no military ships, aircraft, unmanned aerial vehicles may approach the maritime humanitarian corridor” without agreement.

The contract also stipulates that all vessels will have to be inspected for ‘unauthorized cargoes and personnel’ – likely a reference to military hardware and trained soldiers, that Russia is concerned could be smuggled to support Ukrainian forces.

The deal explicitly includes a guarantee that merchant vessels will not be attacked and that Ukrainian territorial waters remain exclusively under the control of Ukrainian authorities, with the agreement in place for 120 days from its signing.

Prior to the outbreak of the war, Chornomorsk was the busiest port in Ukraine’s line-up, handling 12.8 million mt of grains in the marketing year up to February 24.

Yuzhny, or Pivdennyi as it is also known, was listed in third place with 9 million mt, with the two ports accounting for 48% of total seaborne exports from Ukraine, according to pre-war line up data.

In between the two Mykolaiv was fractionally behind Chornomorsk as the second busiest port – but the city is now on the front line and regularly subjected to Russian shelling and missile attacks.

Odesa, finally, sat in fourth place with 4.7 million mt handled – around 10% of all exports.

Analysts expect the re-opening of the ports could lift Ukraine’s export capacity towards five million mt per month – on par with its pre-war capacity, but trade sources stressed that insurance would remain a major challenge.

Trade sources also expected most of the volume to reflect coaster sizes of around 10,000 mt, rather than the handy and panamax-sized vessels of up to 70,000 mt that used to dominate Ukraine’s line up.