JPMorgan stops processing Russia’s grain payments
JPMorgan stops processing Russia's grain payments
Russia Demands Action, Not Promises, from the US to Facilitate Food and Fertilizer Exports
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In a recent development, Russia has called upon the United States to take concrete action to help facilitate Russian grain and fertilizer exports to global markets. The demand comes after the Moscow-Washington Black Sea grain deal, which allowed safe Ukrainian grain exports, was terminated on July 17. As a part of this deal, the United Nations agreed to assist in facilitating the export of Russian food and fertilizer. However, Moscow has insisted on certain conditions being met before it agrees to renew the deal.
One of the key requirements put forth by Russia is the reconnection of the Russian Agricultural Bank to the SWIFT international payments system. The bank was disconnected by the European Union in June last year after Russia’s invasion of Ukraine. To overcome this challenge, JPMorgan had been processing some Russian grain export payments, backed by reassurances from Washington. However, this cooperation abruptly ended this week, according to Russia’s Foreign Ministry.
The closure of the direct channel between the Russian Agricultural Bank and JPMorgan is seen as a setback, as it was considered an alternative to SWIFT. The move has prompted Russia to demand tangible action from the US, rather than mere promises. Kremlin spokesman Dmitry Peskov stated that once the Russian Agricultural Bank is reconnected to SWIFT, the Black Sea grain deal can be immediately renewed.
While Russian exports of food and fertilizer are not subject to Western sanctions, Russia has claimed that payments, logistics, and insurance restrictions have impeded the shipments. James O’Brien, a top US State Department sanctions official, urged Russia to be explicit about its demands and what constitutes success. He suggested that success should be measured by the amount of food and fertilizer that reaches global markets. O’Brien also emphasized that Russia is exporting record amounts of grain and that its complaints about the system are minor, as the system is working efficiently.
According to the Russian Grain Union, Russia is expected to export at least 55 million tonnes of grain in the 2023/24 marketing season, slightly lower than the estimated record-breaking 57 million tonnes in the previous season. Ukrainian exports for the 2022/23 season totaled almost 49 million tonnes, with nearly 33 million tonnes shipped under the Black Sea deal.
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The termination of the Black Sea grain deal by Russia has led Western countries to accuse Russia of using food as a weapon of war. Russia, however, argues that not enough Ukrainian grain is reaching the poorest nations. The United Nations counters this argument, stating that the deal benefitted everyone by reducing food prices by 23% from a record high following Russia’s invasion.
In conclusion, the demand for action from the US in facilitating Russian food and fertilizer exports showcases the importance of economic considerations in international relations. As Russia aims to overcome the challenges posed by Western restrictions, it seeks concrete solutions that will allow its products to reach global markets. The complexities surrounding international trade and diplomacy highlight the need for ongoing dialogue and negotiations between nations. Only through collaboration can mutually beneficial outcomes be achieved in the world of economics and geopolitics.
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