FT: EU considering concession to Russian bank on "grain corridor"

The European Union is considering a proposal to set up a subsidiary of the Russian Agricultural Bank to reconnect with the global financial network as a concession to Moscow, the Financial Times reported on Monday.

With the bank under sanctions, the move is aimed at protecting the Black Sea grain deal, which allows Ukraine to export food to world markets, the newspaper reported. The European Commission did not comment, and the Kremlin, when asked about the report, said it had nothing to say about the deal.

Last July, the United Nations and Turkey brokered a 120-day Black Sea Grain Initiative to help tackle a global food crisis exacerbated by Moscow’s incursion into Ukraine, one of the world’s top grain exporters. Since then, it has been extended three times, but it expires at the end of this month.

Under the agreement, Ukraine exported more than 32 million tons, mainly corn and wheat.

On Monday, Moscow reiterated that it is pessimistic about the prospects for an extension of the agreement, as no progress has been made on the implementation of the accompanying agreements relating to Russian exports.

On Monday, there was no particular reaction on the world grain markets, wheat prices remained practically unchanged. “There is general agreement in the market that the deal on Ukrainian supplies will not be extended unless Russia achieves significant concessions,” said one European grain trader. “Easing banking sanctions would be a quick way to give Russia something,” he said. , adding that many doubts remain as to whether the deal will be renewed.

Last week, Russia said it saw no reason to extend the grain deal because the West was “outrageous” about the deal, although it assured poor countries that Russian grain exports would continue.

Moscow’s plan, proposed in UN-brokered talks, would allow the banking division to make payments related to grain exports, the paper said, citing unnamed sources. The new division will be allowed to use the SWIFT global financial messaging system, which was closed to the largest Russian banks after Russia’s invasion of Ukraine, the newspaper adds.

The UN declined to comment on the FT report. “I don’t think it will help me talk in detail about what the UN is doing,” UN Deputy Spokesman Farhan Haq told reporters on Monday. He added that UN representatives are in contact with “a number of countries, including European ones, to find creative ways that will speed up the export of food and fertilizers from the Russian Federation.”

In response to a Financial Times report, Ukraine’s foreign minister told the state broadcaster that if EU takes any decision, Kyiv will react decisively. However, he added that nothing concrete has been decided at the moment. “We must not make any concessions to Russia in order to preserve the grain corridor,” Kuleba said, adding that it is Russia that must adhere to its obligations.

Ukrainian Foreign Ministry Ambassador-at-Large Olga Trofimtseva accused Moscow of blackmail, saying on the messaging app Telegram that “the blackmailer doesn’t stop if you follow his demands. He just makes new demands.”

Russia and Ukraine, as the world’s two leading agricultural producers, are major players in the grain and oilseeds markets, from wheat and barley to rapeseed and sunflower oil. Russia also dominates the fertilizer market.

In addition to restoring access to SWIFT, Russia is also pushing for the resumption of supplies of agricultural machinery and spare parts, as well as the removal of restrictions on insurance and reinsurance.

[Reuters].

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