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UN proposes that Russia extend grain deal in exchange for access of subsidiary of Russia's agricultural bank to SWIFT Reuters

Thursday, 13 July 2023, 09:54

UN Secretary-General António Guterres has proposed that Russian President Putin extend the Black Sea Grain Initiative in exchange for reconnecting the subsidiary of Rosselkhozbank (Russia's Agricultural Bank) to the SWIFT international payment system.

Source: Reuters, citing its sources

Quote: "Russia has threatened to ditch the grain deal, which expires on Monday, because several demands to dispatch its own grain and fertilizer abroad have not been met. The last two ships traveling under the Black Sea agreement are currently loading cargoes at the Ukrainian port of Odesa ahead of the deadline.

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A key demand by Moscow is the reconnection of the Russian agricultural bank Rosselkhozbank to the SWIFT international payment network. It was cut off by the European Union in June 2022 over Russia's invasion of Ukraine. An EU spokesperson said in May the EU was not considering reinstating Russian banks," the agency stated.

Details: However, the EU is considering connecting Rosselkhozbank's subsidiary to SWIFT to allow transactions with grain and fertilisers, three sources familiar with the situation said.

Guterres suggested that Russia let the grain deal be extended by several months, giving the EU time to connect Rosselkhozbank's subsidiary to SWIFT, two sources familiar with the talks told Reuters.

Quote: "Guterres sent a letter to Putin on Tuesday proposing a way forward to further facilitate Russian food and fertilizer exports and ensure the continued Black Sea shipments of Ukrainian grain," the agency reports, citing a UN official.

"The objective is to remove hurdles affecting financial transactions through the Russian Agricultural Bank, a major concern expressed by the Russian Federation, and simultaneously allow for the continued flow of Ukrainian grain through the Black Sea," a UN spokesperson Stephane Dujarric told reporters.

Details: He did not provide any details on the proposal but added that Guterres is cooperating with all relevant parties on the issue and is ready to continue discussing his proposal with Russia.

A Kremlin spokesman did not immediately respond to a request for comment.

Reuters recalls that in July 2022, the UN and Türkiye brokered a Black Sea Grain Initiative with Russia and Ukraine to help mitigate the global food crisis, exacerbated by Moscow's invasion and blockade of Ukrainian ports.

To persuade Russia to agree to the Black Sea Agreement, a three-year memorandum of mutual understanding was signed at about the same time, under which UN officials agreed to help Russia bring its food and fertiliser exports to foreign markets.

Although Russian food and fertiliser exports are not subject to Western sanctions imposed after the invasion of Ukraine, Moscow says restrictions on payments, logistics and insurance have become a barrier for supplies.

Background: The European Union reportedly considered a proposal to create a subsidiary of the sanctioned Rosselkhozbank to reconnect it to the global financial network as a concession to Moscow to preserve the "grain deal".

Russian President Vladimir Putin has accused Western countries of failing to meet Russian demands under the Black Sea Grain Initiative and said that Moscow is considering a withdrawal.

The Ukrainian Foreign Ministry believes Russia will likely withdraw from the Black Sea Grain Initiative in July.

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