Putin’s phantasmagorical state… | Grain Brokers Australia

Posted by | June 21, 2022 | Weekly Commentary | No Comments

The standoff between Russia and the West over the invasion of Ukraine continued in style last week, with President Vladimir Putin using an address to the St Petersburg International Forum to launch a tirade against the West. He blamed the United States, rather than Russian military activities in Ukraine, for fostering crises in global food security, inflation, international relations and trade.

Western sanctions also figured heavily in the Russian leader’s speech, which was delayed by more than an hour after a cyberattack disrupted the forum’s security systems. Putin labelled the sanctions as stupid and doomed from the outset, adding that the country remains open for business ‘with those who want it.” He said the Western sanctions had failed to destroy the Russian economy. However, his own economic development minister expects the economy to shrink by 7.8 per cent this year. Oops, missed that memo!

Further demonstrating the Russian leader’s divorce from reality, Putin accused the West of colonial arrogance. He suggested the conflict in Ukraine, which has led to thousands of unnecessary deaths, was due to the West’s refusal to respect its obligations. He claimed the main aim of the unprovoked invasion was to defend the primarily Russian-speaking Donbas region in eastern Ukraine, a justification that both Ukraine and the West continue to dismiss as an unsubstantiated pretext for his neo-imperialist ambitions.

All this Putin hoo-ha comes as the United Nations continues the convoluted negotiations around a solution for the resumption of Ukrainian agricultural exports via the Black Sea that will help alleviate food shortages in many countries throughout North Africa and the Middle East, which rely on grain imports from the region.

Turkey has been a lead negotiator in the discussions, having taken a neutral stance by supporting Kyiv on the one hand but not imposing sanctions upon Russia on the other when the war began in February. The irony of the situation is that Turkey is one of several countries believed to have received and discharged at least one shipment of grain stolen from Ukraine and shipped out of Crimea in recent months.

Turkish efforts to ease the situation by negotiating safe passage for grain stuck in Ukraine’s Black Sea ports have met resistance on both sides. Kyiv said Russia was imposing unreasonable conditions and the Kremlin said free shipment depended on an end to Western sanctions.

Of major concern is the danger the export corridor discussions are only a front for a deal between Russia and Turkey. Russia wants transit for additional warships through the narrow Bosporus strait, which Turkey controls and is the only corridor into and out of the Black Sea. In return, Turkey wants Russian support for action against the Kurds in southeast Turkey and northern Syria. Maybe that is why Ukraine’s invitation to the discussions went astray?

One of the biggest hurdles to the safe passage of grain export ships are the sea mines that litter the Black Sea, particularly outside Ukraine’s key ports. The mines are a real barrier to grain exports from Ukraine. However, they are an even more important barrier to a Russian amphibious attack, given that one of Putin’s key objectives is to gain control of Ukraine’s Black Sea ports, namely Odesa and Mykolaiv, and those along the Sea of Azov coastline, such as Mariupol which his forces now control.

During a recent meeting in Turkey, Russia’s Foreign Minister Sergey Lavrov suggested that grain exports could resume if Ukraine de-mined its ports. He also said that Russia would guarantee the safety of ships carrying Ukrainian grain and would not use the situation to its advantage. However, Russia insists it be allowed to check incoming vessels for weapons before proceeding to load port.

Ukraine has understandably been cynical about such assurances, with Foreign Minister Dmytro Kuleba saying that any guarantees from President Vladimir Putin were hollow. Kyiv is also sceptical about Turkey’s ability to provide naval escorts in the Black Sea, and Kyiv is insistent that a neutral entity should provide such support.

But Moscow is now using the mines to its advantage. It is undoubtedly an excuse for the Russians that the mines are there as they can selectively de-mine pathways out of the ports they control, such as Mariupol, try to redirect Ukrainian grain via those ports, and maintain a de facto blockade over Odesa whilst claiming that this is all on Kyiv.

Ukraine urgently needs a resumption of exports to not only earn some much-needed foreign reserves but to also clear storages. An estimated 22 million metric tonne of grain from the 2021/22 harvest still sits in Ukraine ports and upcountry silos ready for export. But some of those facilities have been bombed, such as the Nika-Tera grain export terminal in Mykolaiv. So too have rail facilities housing wagons used to transport grain to port.

With the 2022/23 season winter harvest commencing last week, farmers who would typically deliver their grain to the port or state-owned silo complexes for export worldwide face a new crop storage dilemma. Many are resorting to silo bags, but very few farmers have experience with the technology, they are difficult to buy and so too is the equipment required to fill and empty the bags. Quality will be questionable if and when this grain is exported.

Of course, there is still the burning question of who will own the exported grain should the mines be cleared, and an export route negotiated? Why would Russia allow safe passage for Ukrainian-owned exports of grain and other commodities, so it can earn US dollars to buy arms to fight their own forces in the east of Ukraine?

Furthermore, humanitarian considerations appear to have had little influence on any aspect of the conflict so far. If these considerations extend beyond the regional to have global impact, it seems fairly safe to assume that this would not be a deterrent for the current Russian regime.

Over recent weeks there has been a general move towards consensus in the West that the aggressors in the Ukraine conflict may be prepared to weaponize global famine to expedite their territorial ambitions.

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