The first grain ship leaves Odessa under a UN-brokered deal | The Economist

But how many more will follow?

by UKCHP_Admin

Laden with 26,000 tonnes of corn, the Razoni, a cargo ship registered in Sierra Leone, set sail from the Ukrainian port of Odessa on August 1st. The transit, Ukraine’s first maritime export since Russia invaded in February, was made possible by a deal the two countries reached in July. “I understand what war is,” the ship’s Syrian captain, Mohammad Abdoh, told Ukrainian officials a few days earlier, “and I am ready to go.” The Razoni is headed to Lebanon. At least ten other ships, among the dozens trapped in Ukrainian ports since the start of the war, are loaded and ready to follow.

But concerns remain. On July 23rd—only one day after António Guterres, the UN’s secretary-general, and Turkey’s president, Recep Tayyip Erdogan, had brokered the deal to allow the resumption of Ukrainian grain exports—Russia bombed the port in Odessa. Days later a Russian missile killed Oleksiy Vadaturskyi, the head of one of Ukraine’s biggest grain exporters, and his wife, in Mykolaiv, another port city. An adviser to Volodymyr Zelensky, the country’s president, said Vadaturskyi had been deliberately targeted.

Under the export scheme, cargo ships sailing to and from Ukraine will pass through a safe corridor in the Black Sea. The process will be administered by a “Joint Coordination Centre” (JCC) in Istanbul, staffed by representatives from Ukraine and Russia as well as Turkey and the UN. They will oversee the transit routes and inspect ships headed to Odessa to make sure they are not carrying any weapons.

When Russia’s invasion began, Ukraine’s army dropped mines in their own waters to impede an amphibious assault. But it has now already cleared enough of them to create a corridor for commercial ships. This was enabled by a breakthrough in late June, when Ukraine retook control of Snake Island from Russian occupiers. This made it easier for the Ukrainian navy to defend the country’s south-western coastline.

The ships stuck in Ukraine’s ports since the start of the war will be the first to leave. Whether grain traders have enough faith in the agreement to send new ships to Ukraine is unclear. Three vessels are scheduled to reach Ukraine by the middle of August, says Oleksandra Azarkhina, the country’s deputy minister of infrastructure. Many more may follow if the first shipments proceed without incident. “My phone has not stopped ringing,” says a UN official involved in the talks. “The shipping companies are equally excited and anxious.” Some intangible impediments are being removed. Ascot and Marsh, a pair of insurance companies based in London, recently announced the creation of a “marine cargo and war facility” that will insure ships using the grain corridor for up to $50m.

Many potential exporters remain on the fence, however. Buyers may be ready to pay the high premiums required to insure ships, costs that will inevitably be passed on to Ukrainian farmers in the form of lower prices for their grain. But they still worry about the potential for disruption. “Even if you find a ship and a seller, who guarantees the loading takes place, and who pays for it if it doesn’t?” asks a veteran grain-trader. “It will take time before people believe this is a feasible option.”

Any Russian aggression would sabotage the deal. “It’s not even Ukraine who will decide,” says Ms Azarkhina. “No company would want to send ships. It would be game over.” That would also spell disaster for Ukrainian farmers. Ukraine must swiftly export 20m tonnes of grain currently in storage to make space for up to 60m from the upcoming harvest. Unless exports resume on a big scale, much of the new crop may rot. That, in turn, would have further baleful effects. “If the shipments do not start, the sowing for next year’s harvest will not start,” says Anatoliy Haivoronsky, a grain producer from Dnipro. “It would mean bankruptcy for the industry.”

Ukraine has been able to export 2.5m tonnes of grain and oilseeds a month by alternative routes, via road, rail and barges on the Danube river, says Mykola Solskyi, the agriculture minister. But this is not nearly enough to compensate for the closure of its ports on the Black Sea. It recently took three weeks for Mr Haivoronsky to send 64 tonnes of corn to Greece by truck. “At that rate,” he says, “I would need two or three years to sell my stock.”

Russian security guarantees may not be worth the paper they are written on. But Ukrainians, and many of the 50m people around the world who the UN says are on the brink of famine, have no choice but to hope. “We can agree on everything, we can make all the arrangements” says Mr Solskyi, “but everything depends on the war.”



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