Two deals that the U.N. and Turkey brokered last month to unblock food supplies depend on each other: one protects ships exporting Ukrainian grain through the Black Sea and the other assures Russia that its food and fertilizer won"t face sanctions, safeguarding one of the pillars of its economy and helping ease concerns from insurers and banks.
The agreement allowed a Western shipper to move two vessels of grain out of Russia in a matter of weeks. It used to take months because Western banks refused to transfer payments to Russia. Although U.S. and European Union sanctions don"t directly target Russian agriculture, Western banks have been wary of running afoul, hindering buyers" and shippers" access to Russian grain.
What"s changed in recent weeks, Srivastava said, is "the appearance ... of this being sort of a truce between all parties."
The deal mattered to Russia because it"s the world"s biggest exporter of wheat, accounting for almost a fifth of global shipments, and the country is expected to have one of its best-ever crop seasons this year. Agriculture accounts for around 4% of Russia"s gross domestic product, according to the World Bank.
Srivastava, whose company operates from Los Angeles and Geneva, hopes to be able to ship out 10-15 million tons of Russian grain over the coming year
Russia"s demands for the deal included public statements from the U.S. and EU that sanctions don"t target Russian food and fertilizer. It also raised issues around financial transactions to the Russian Agricultural Bank, access for Russian-flagged vessels at ports and ammonia exports needed for fertilizer production.
Russia"s economy gets boost from wartime grain shipments
