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Russia rejects bank compromise as Black Sea grain expiry looms

July 4, 2023 at 7:01 pm

The spokesperson for the Foreign Ministry of the Russian Federation Maria Zakharova makes a speech during a press briefing held by Russian Foreign Minister Sergey Lavrov (not seen) at the United Nations Headquarters in New York, United Nations on April 25, 2023 [Selçuk Acar – Anadolu Agency]

Russia, on Tuesday, restated a demand for its state agricultural bank to be reconnected to the global SWIFT payments system and said it would not accept a reported compromise proposal, Reuters reports.

With 13 days remaining until expiry of the deal that has allowed Ukraine to export grain from its Black Sea ports despite Russia’s invasion, Moscow said there had been no progress on any of its key demands, including the banking issue.

The Financial Times reported on Monday that the European Union was considering a proposal to allow Russia’s Rosselkhozbank to set up a subsidiary that could connect to SWIFT.

But Russian Foreign Ministry spokeswoman, Maria Zakharova, dismissed the idea as “deliberately unworkable”, saying it would take many months to set up such a unit and another three months to connect to SWIFT.

She also rejected a UN attempt to create an alternative payment channel between Rosselkhozbank and US bank, JP Morgan.

READ: Russia says ‘no grounds’ for extension of Black Sea grain deal

“There is no real replacement for SWIFT, and cannot be,” Zakharova said in a statement.

Russia says the severing of the bank’s access to SWIFT is one of the obstacles facing its own exports of food and fertiliser, and that it cannot keep renewing the Black Sea deal unless those issues are addressed.

The stakes are high. The United Nations says the deal has, so far, allowed the export of more than 32 million metric tons of food from three Ukrainian Black Sea ports to 45 countries on three continents.

Any disruption or halt to such trade could aggravate food crisis in the poorest countries and push global prices higher.

Russia has made previous threats to quit the deal, only to agree to extensions, most recently in mid-May. But its rhetoric has hardened since then.

Its Foreign Ministry said the Black Sea initiative had delivered Ukrainian grain to “well-fed” countries but failed to help those that needed it most in Africa, Asia and Latin America.

The five poorest countries – Ethiopia, Yemen, Afghanistan, Sudan and Somalia – received only 2.6 per cent of the grain shipped, it said, adding that the situation regarding Russian grain and fertiliser exports had “continued to worsen”.

A statement from the Ministry said it was “obvious there are no grounds” to extend the deal beyond 17 July  and that Russia was doing everything necessary for all ships covered by the deal to leave the Black Sea before the expiry date.

READ: Black Sea grain corridor transported over 30.5m tons of grain