US quietly urges Russian fertilizer deals to unlock grain trade

The US government is quietly encouraging agricultural and shipping companies to buy and ship more Russian fertilizers, according to people familiar with the efforts, as fears of sanctions have led to a sharp drop in supplies, fueling soaring global food prices.

Russia Putin

Vladimir Poutine

This effort is part of complex and difficult ongoing negotiations involving the United Nations to increase shipments of fertilizers, grain and other agricultural products from Russia and Ukraine which have been interrupted by the invasion of its southern neighbor. by President Vladimir Putin.

US and European officials have accused the Kremlin of using the food as a weapon, preventing Ukraine from exporting. Russia denies this even as it has attacked key ports, blaming disruptions to shipping on sanctions imposed by the United States and its allies for the invasion.

The EU and US have built exemptions into their restrictions on trade relations with Russia to allow trade in fertilizers, of which Moscow is a key global supplier. But many shippers, banks and insurers have stayed away from the trade for fear of inadvertently breaking the rules. Russian fertilizer exports have fallen by 24% this year. US officials, surprised by the extent of the caution, are in the seemingly paradoxical position of looking for ways to strengthen them.

The US push underscores the challenge facing Washington and its allies as they seek to increase pressure on Putin over his invasion, but also to limit collateral damage to a global economy heavily dependent on raw material supplies from the US. Russia, ranging from natural gas and oil to fertilizers and grain. Prices for all of these have risen further since the war began in February, a point Putin regularly makes in his public efforts to undermine support for sanctions.

Washington sent a representative to the UN-led talks in Moscow earlier this month over supply issues, according to people familiar with the situation who spoke on condition of anonymity to discuss matters that are not public. Inadequate fertilizer deliveries this year could also affect next year’s crops.

The White House did not immediately respond to a request for comment.

The Kremlin has called on the United States to assure buyers and shippers of its fertilizers and grain that they are not subject to sanctions, suggesting that it is a condition of any measure to now unblock shipments of Ukrainian agricultural products.

“For Russia, it is really important that the US authorities send a clear signal that these agreements are allowed and in the interest of global food security and that they should not refuse to carry them out,” said Ivan Timofeev, Kremlin sanctions specialist. founded the Russian Council for International Affairs.

While Russia says sanctions fears are also dampening its grain exports, total shipments this season fell just 14% and wheat exports doubled in May, according to the country’s Grain Union.

By contrast, more than 25 million tonnes of grain, sunflower oil and other products are stuck in Ukraine due to security fears at Black Sea ports and the shipping lanes traditionally used to deliver them. to world markets. Officials warn that the situation will become more serious with the start of the new harvest.

Talks on releasing the shipments have moved slowly, with Putin seeking to blame Ukraine for not wanting to remove the mines from ports placed to defend them against possible attacks by Russian forces. Kyiv said it was not convinced by assurances from Moscow that it would not strike, noting that Russia had also insisted before the war that it would not invade.

Russia won Turkey’s backing in its appeals for sanctions relief last week, but Turkey’s efforts to find a solution to restart shipments have so far failed to yield results.

Shipping companies remain extremely wary of the Black Sea due to sanctions and security fears, and industry officials say a more concerted international push will be needed to reassure them. Efforts to ship Ukrainian products by rail to Europe have yielded limited results amid varying track gauges and other logistical problems.

“We’re working with our partners to get about half of what Ukraine exports each month,” but that will take time, James O’Brien, head of the Office of Sanctions Coordination at the State Department, said during the interview. of an online briefing. June 9. “So we are looking at a substantial shortfall.”

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Post expires at 6:53am on Friday June 24th, 2022