In an effort to secure the continuation of the Black Sea grain deal, United Nations Secretary-General Antonio Guterres has proposed to Russian president Vladimir Putin that a subsidiary of Russia's agricultural bank be connected to the SWIFT international payment system.
The grain deal, set to expire on July 17, is at risk of being abandoned by Russia due to unmet demands concerning its own grain and fertilizer exports. The last two ships traveling under the Black Sea agreement are currently loading cargoes at the Ukrainian port of Odesa ahead of the deadline. The proposed connection to SWIFT would involve a subsidiary of Rosselkhozbank, the Russian agricultural bank that was cut off from the system by the European Union in June 2022 following Russia's invasion of Ukraine.
While the European Union has previously stated that it is not considering reinstating Russian banks to SWIFT, sources revealed that discussions are ongoing to potentially connect a subsidiary of Rosselkhozbank to SWIFT specifically for grain and fertilizer transactions. However, the European Commission has not provided an immediate comment on these reports.
Guterres' proposal to Putin suggests extending the Black Sea grain deal for several months, giving the EU time to establish the connection between SWIFT and the Rosselkhozbank subsidiary. A spokesperson for the UN confirmed that Guterres sent a letter to Putin outlining his proposal and expressing his desire to facilitate Russian food and fertilizer exports, as well as ensure the uninterrupted flow of Ukrainian grain shipments through the Black Sea.
The UN aims to address the financial transaction challenges faced by the Russian Agricultural Bank, a major concern raised by Russia, while simultaneously maintaining the flow of Ukrainian grain. Further details regarding the proposal have not been disclosed, but the UN spokesman, Stephane Dujarric, stated that Guterres is actively engaging with all relevant parties and is open to further discussions with Russia.
At the time of writing, the Kremlin had not responded to a request for comment on the matter.
The Black Sea Grain Initiative was brokered by the United Nations and Turkey in July 2022, with the participation of Russia and Ukraine. The initiative aimed to mitigate the global food crisis exacerbated by Russia's invasion of Ukraine and subsequent blockade of Ukrainian ports.
To incentivize Russia's agreement to the Black Sea deal, a three-year memorandum of understanding was established, wherein UN officials committed to assisting Russia in exporting its food and fertilizer to foreign markets.
Although Russian food and fertilizer exports are not subject to Western sanctions imposed after the invasion of Ukraine, Moscow has cited restrictions on payments, logistics, and insurance as obstacles to its shipments.
To work around the lack of access to SWIFT, UN officials have facilitated the processing of Russian grain export payments through JPMorgan Chase & Co, with reassurances from the U.S. government.
Additionally, the United Nations has been collaborating with the African Export-Import Bank (Afreximbank) to develop a platform that facilitates transactions for Russian grain and fertilizer exports to Africa, as reported by the top UN trade official last month.
The outcome of the proposal and the potential extension of the Black Sea grain deal remain uncertain as discussions continue between the involved parties.
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