(C) U.S. State Dept
This story was originally published by U.S. State Dept and is unaltered.
 . . . . . . . . . .



The UN-brokered Black Sea Deal and Impacts on Global Food Security [1]

["Ambassador Jim O'Brien", 'Office Of Sanctions Coordination']

Date: 2022-09 

THE WASHINGTON FOREIGN PRESS CENTER, WASHINGTON, D.C.

MODERATOR: Hello and welcome to the Foreign Press Center’s briefing on the UN-Brokered Black Sea Deal And The Impact On Global Food Security. Joining us today is Ambassador Jim O’Brien, the State Department’s head of the Office of Sanctions Coordination. My name is Wes Robertson and I’m the moderator for today’s briefing.

And now for the ground rules. This briefing is on the record. We’ll post a transcript and video of this briefing later today on our website, which is fpc.state.gov. Please make sure that your Zoom profile has your full name and the media outlet you represent.

Ambassador O’Brien will now give opening remarks and then we’ll open it up for questions. Over to you, Ambassador.

AMBASSADOR O’BRIEN: Thanks, Wes. Thanks, everyone, for giving me time on a Friday. We’ve spoken in this forum a couple of times about our efforts to ensure that global food supplies continue and that we build resilience around the world. We know that the food insecurity has grown, and it’s because of many long-term trends, including climate change and changing weather patterns, migration patterns. But it’s also been made more acute by the war this year. Obviously, when one of the world’s largest exporters of food chooses to invade another of the world’s largest exporters of food, there will be disruptions. But with a lot of work, we feel that the trends are moving in the right direction.

I think it’s especially important that the UN get credit for the success it has had by brokering the movement of grain through the Black Sea. And there’ve been some criticisms of that recently, and so I just – I want to lay out a few of the facts around this and just say the criticisms are wrong. They’re loud wrong. And I think it’s very important to see the facts. And I’ll apologize because part of this will be incredibly boring because all the facts I’m going to give you are publicly available on the UN website or on the Food and Agriculture Organization website or other places, so they’re very easy to find and work through.

So let me talk through what I think are some good trends, even though we know the situation is acute in many parts of the world. The first is that there are more supplies of grain on the global market now, and I want to again give credit to the UN and Turkey and the Joint Coordinating Center that has opened the Black Sea ports for Ukrainian grain exports. From beginning of August until earlier this week, 2.3 million tons of Ukrainian grain has been exported to global markets. This is food for millions of people or for animals, who will in turn feed millions of people.

That – those supplies are part of the positive trend, because over the last several months, really since May, Ukraine has also exported 10 million tons of grain directly into the EU. And this grain goes to animals or goes onward to other places, but it – or allows the EU to let other grain go to the global markets.

The basic estimates that the Food and Agriculture Organization provide indicate this is food that could work for tens of millions of people. Now, all of that – that’s 13 million tons of grain. All of that is on the market because of exceptional efforts by the UN, by the Ukrainian people, by Turkey, and by the EU, along with other partners like us. And they deserve credit for getting this out, and it allows us to see a real effect on global food prices.

So just in August, once it became clear that the UN had opened the Black Sea ports, wheat prices fell 5 percent, and year on year you can track this. They’re coming down steadily – different grain prices. Wheat future prices now are back to prewar levels, which means though that’s way too high and much higher than 2019, we are seeing that the supplies are expected to be normal as we go forward.

Now, one of the criticisms that has been broached is that the food is not going to the Global South, to the neediest countries, and I think this is a problem. These are global markets, so regardless of where specifically the food goes, any particular basket of wheat goes, it is adding to the global supply and making it possible for other people to buy other wheat. So this is in some sense a misleading discussion, but again, I just want to go through some of the facts here.

So the UN mechanism through the Black Sea, through earlier this week, had allowed 102 ships to go out. Now, why do I know that? Because it’s published on a UN website. So just google Black Sea Initiative and it will pop up, and you can look and see a listing of all the ships and where they go.

Now, of those ships, here are a couple reasons that I say this is helping not just the global market but the neediest. So if we look at the ships, the destination of ships says that 47 of the 102 are going to the Global South, really 22 are going to all over the Global South, 25 go first to Turkey. Now, we don’t know where all of the grain that stops in Turkey and gets repackaged goes, but Turkey is historically a major trading point for food that is going to the Global South, so much of that probably is.

If we look at the volumes – because these ships are all different sizes, so if we look at how – the larger shipments of food out of Ukraine, approximately two-thirds of the volume is going to the neediest countries. Again, a large – about 20 percent of that amount is going to Turkey. So that tells you roughly half of the grain that’s leaving Ukraine is going to the Global South if you actually count it by the food and not just by the number of ships. How do I know that? It’s all on the UN website so it’s easy to fact-check the assertions that are being made about where food is going.

Now, why do I think this trend will continue? Because historically for the last years, seven or eight years, Ukraine has sold half of its export crop of wheat particularly to the World Food Program. The World Food Program has begun issuing tenders to Ukraine and others and is buying food again. So as we look going forward, we’d expect to see over time that same pattern to be repeated that half of Ukrainian wheat will go to the neediest countries, the recipients of WFP food. And I would note that the U.S. Agency for International Development gave the WFP additional money just so it could buy a large shipload of grain to get out immediately to – I think that’s going to the Horn of Africa.

So we are – that was an important point to get the WFP and the Ukrainian farmers in conversation again. Now that market is starting to work, and over time it will be about half of all Ukraine’s exports are going to the Global South.

Now, at the beginning – and just a footnote – the first few ships that went out, one of them lost its customer, another went to Ireland – I know. That was because in order for grain to move out of Ukraine, the first thing that had to happen was that a bunch of ships that were stuck in the port had to leave. Those ships were being held hostage because Russia had stopped all shipping in that part of the Black Sea. So those ships had to leave. They just wanted to go home. They were loaded with late market grain and that often doesn’t go to feed people in the developing world. So they were sent away or they left and went wherever they went, but now we’re starting to see Ukrainian wheat from the latest harvest go to market, and that increasingly – again, it goes to the Global South.

So the trends here are all positive in terms of where the grain goes and the effect it is having on the global market. There is still too much food insecurity; we have enormous work to do, but these are the facts around the UN’s system.

Another point that’s been raised is the issue that Russia needs to be allowed to export, so a few basic facts here. One, the U.S. has no sanctions on Russian food and fertilizer. There are complaints that’s sometimes it’s difficult for individuals, companies, or countries to be able to make payments through traditional mechanisms, but we have – we are working intensively to see that those problems do not stop people from buying grain. If they choose to buy it from Russia, they will be able to do so.

Since I spoke with you last a few weeks ago, we have had contacts. We’ve asked all of our embassies to contact their host governments, and we have reached out anytime we have heard of a complaint. We have had direct conversations in Dakar and we are going to have additional conversations in Addis, in Johannesburg, and other places around Sub-Saharan Africa as well as outreach to other continents. We have a dedicated help desk at the State Department. It’s FoodSecurityHelpdesk@state.gov, and anyone with a problem is able to write and begin to see the problem addressed. Frankly, we’ve had very few examples of outreach. We did see at one point about a dozen to 14. Most of them were very short and small. We’ve had to issue one comfort letter over the period of the last several months just making clear that a transaction to buy Russian food would be allowed. Otherwise, Russian food is continuing to move.

The latest information that’s available to us is that Russia’s exports of wheat and fertilizer appear to be completely in line or maybe even going up from its pattern since 2012. So we’re seeing no disruption in Russia’s ability to send food to market. It is true that there are specific companies that have had individual transactions disrupted. The UN is brokering a process whereby we look at those and we try to work our way through them, but this is a little like looking at your house and saying one window is closed when it used to be open when the other windows are all open.

The fertilizer is still reaching markets at the same rate that it always has, and we will do everything we can to be sure that there is no disruption. So the complaints I think are just an example of misinformation, and I am sure that the UN and others would join us in correcting what we are hearing as we go through all this.

So I’m going to pause there and maybe – I see there are a lot of hands raised, but I’m happy to take questions. To the extent I can offer answers here I will, or if not we can take some offline. But Wes, why don’t I go back to you and maybe we’ll take a few questions and I’ll try to answer as I can.

MODERATOR: All right, thank you for your opening statement, sir. This is now the Q&A portion of our briefing. If you have a question, please go the participant field and virtually raise your hand. We’ll call on you and you can unmute yourself and ask your question. If you’ve not already done so, please take the time now to rename your Zoom profile with your full name and the name of your media outlet.

We did have one question that was submitted in advance. This is from Evan Ingram from Asahi Shimbun in Japan. He asks: “Could you comment on how much grain shipped to Turkey you expect to be reprocessed and sent to non-European countries?”

AMBASSADOR O’BRIEN: Yeah, the short answer is I don’t have a clear number on that. Traditionally, Turkey is a very prominent exporter to North Africa, the Horn of Africa, Iran, and other markets, and so I would expect those trends to continue. I don’t know whether the early numbers might be a little different because some – as I said, some of the first ships out of Odesa were very small and were carrying kind of out-of-season crops, but over time I’d expect Turkey to reship just as much as it traditionally does to the markets in North Africa and the Horn of Africa. But I really – I think you should ask the Turkish authorities about that.

MODERATOR: We’ll now go ahead and take a live question. We’ll go first to Dmitry Anopchenko from Inter TV Ukraine, if you’d like to unmute yourself and ask your question.

QUESTION: Oh yeah, good afternoon. Thank you for doing this. Ambassador, I just want to ask you the same question I asked last time when we got the first briefing, but anyway I hope maybe you’ve got some update or some different answer.

I understand that this like grain agreement is important for the American Government. (inaudible) told us yesterday during the gaggle that America will try to save this agreement. But at the same time we’ve got Russia who can broke this agreement you know in one second just starting shooting, so what is your plan just to prevent this? Is it any message you want to send to Russia, to Kremlin? Will it be any consequences? Will it be any sanctions in case if Russia will brutally destroy this agreement in one moment? Thank you.

AMBASSADOR O’BRIEN: Wes, do you want to gather a few questions and I can offer answers?

MODERATOR: Yeah, sure. The next question is from Alex Raufoglu from Turan News, if you’d like to unmute yourself.

QUESTION: Yes, thank you so much, Wes. And Ambassador O’Brien, great to see you this afternoon. This is Alex Raufoglu from independent news agency of Turan based in Azerbaijan. A couple of questions here, and let me start with the criticism that you were referring to in your opening statement. Any concern on your end that Turkey’s recent position could be jeopardizing Western unity on this topic? President Erdoğan blasts grain deal, as you know. He also blamed sanctions for energy crisis, something I raised at the State Department at the press briefing a couple of days ago.

There’s a conventional wisdom that are said and also have been subscribed to Israel is that Turkey often plays this double game, making moves that keep Turkey in the West’s good graces, if you want, while maintaining strong ties to Russia, but any concern on your end that this support for Putin’s position might actually be harmful at this point?

Secondly, President Putin is suggesting that he might have to crack down on this grain export. I was wondering if international condemnation this time at pushback doesn’t work, do you have any Plan B at this point such as – there is some talks at least among foreign policy circles that the Western allies could formulate a naval escort operation to get some of these ships and to see them out of Black Sea.

And lastly, if I may, on sanctions. Have you seen the team of jailed opposition – Russian opposition politician Alexei Navalny’s list, that published list of some 200 Russian officials, journalists, and celebrities that they say that should be sanctioned immediately for pushing the Kremlin’s narrative in this ongoing, unprovoked war against Ukraine. Are you aware of the list, and if so just wondering whether it is under you consideration/ Thank you so much.

MODERATOR: So that was a lot of questions there, Ambassador. Would you like to work on some of those first?

AMBASSDOR O’BRIEN: Yeah, so I’ll take them in reverse order.

So we have multiple lists and obviously Mr. Navalny, whose imprisonment is completely unjust, is very knowledgeable about the Russian system, so we receive – we look at all the information. And my message as always is for Russians tomorrow will be worse. Those who have chosen to endorse the Kremlin’s line are increasingly likely to suffer some consequence. The specifics of how and when we do it are something still to come, but I – yeah, I think understanding the evolving power structure in Moscow is something always of interest to us, and we’ll continue to work on sanctions.

Maybe – I’m going to do a little bit of merging of the other questions here, and I want to emphasize a couple points. The interests of the most vulnerable people in the world are that grain markets work. That’s why we don’t sanction food and fertilizer in Russia. It’s why the opening of Odessa led to a 5 percent drop in prices. Any talk of disrupting that agreement is a statement that people should pay more for food.

So the criticism of the agreement is the threat to raise prices and restrict supply, and that’s dangerous. It is also not in the interests of any of the parties to this agreement. As I noted, Ukraine has exported 2.3 million tons through Odesa. The Russian Government or the Russian companies continue to export as they did prewar. They complain that some of the large ports on the Black Sea are not seeing the return of large ships. The reason for that is that the shipping companies and the commercial insurance companies have not yet regained trust that they can send valuable assets into Russian ports. The way they will rebuild trust is to see the Black Sea agreement implemented. And so the path forward is to work through this agreement and we will start to see improvements. The effort to use a threat of force to compel private actors to do something is foolish and that’s against everyone’s interest.

Now, we’re actually very grateful to Turkey for the role it played in helping to open Odesa, and I think President Erdoğan’s comments were an effort to keep a conversation going. I’d note, as I did in the statistics – and again, these are the UN website – Turkey plays a large commercial role in the trade out of both Ukraine and Russia. It is receiving 20 percent of the grain that comes out of Ukraine, and that’s important for Turkish businesses which resell those amounts around the world. I don’t think Turkey will want to see that stop. But Turkey also has an interest in seeing the Russian Black Sea ports begin to open to large volumes of grain, and so I think that the path forward is to build – continue to implement the agreement and build confidence so that more grain flows through the Black Sea, including to Turkey, and I then I think everyone will see a way forward.

Now, are there alternatives? Well, we do have an alternative that is working right now. And as I mentioned, there have been approximately 10 million tons of Ukrainian grain sent to the West through the European Union. In August, it was about 2.6 million tons, and about two-thirds of that I believe came out through the Danube and then onto the Black Sea and on through Turkey to the globe. Traditionally, again, 50 percent of that would go to the World Food Program, probably 40-odd percent of it would go into North Africa and the Horn of Africa. Those are Ukraine’s traditional trading patterns. If Russia had not invaded, that is who Ukraine would be selling to.

So we do have these paths that are available for about – and they’re handling about half of what Ukraine used to export in the prewar period, so there are some options available if there are disruptions. But again, it’s in everyone’s interest just to make this work. And as it works – it’s only a month in. As it works, we will start to see the return of large ships and lower costs, but it will come only if people are confident that Russia will live up to the terms of the agreement.

MODERATOR: All right, we have a lot of hands raised still and we’ll get to as many people as we can. The next question will go to Yaroslav Dovgopol from Ukraine, if you’d like to unmute yourself and ask your question.

QUESTION: (Inaudible.)

MODERATOR: We’re having trouble hearing you.

QUESTION: And now do you hear me? Okay, so I have just one question, but it’s important for Ukraine and I would be thankful for your answer. A couple of days ago, President Biden said he would not designate Russia as a state sponsor of terrorism, and the White House then declared it could create some additional risk, including in the global food security domain, and also jeopardize the Black Sea port deal which we are talking about today. However, Ukraine and President Zelenskyy personally insist it is necessary to designate Russia as an SST. In this context, does the United States administration have finally – has finally abandoned the idea of this designation, or does the issue of SST status for Russia remain on the table? Thank you.

AMBASSADOR O’BRIEN: I think I have the same answer I did last time, which is that we’re always in conversation with Congress and with our Ukrainian partners to see what’s an appropriate step going forward. I think all of the labels that are talked about I think get in the way of the substance, which is Russia will emerge from this war having suffered a strategic defeat, and that’s what we are working to do with our sanctions. Particular labels, I don’t want to talk about one label rather than another because I think it obscures more than it illuminates.

Did I forget another question? Sorry.

MODERATOR: I think that’s good, sir. We’ll go ahead and move on to the next one. The next question is for Michelle Nichols from Reuters, if you’d like to unmute yourself and ask your question.

QUESTION: Hi, Jim, thanks so for much for the briefing. I just wanted to follow up on some of the Russian remarks the other day. As you said, there’s no U.S. sanctions on food and fertilizer. But Prime Minister Lavrov was saying – appeared to be pushing for the lifting of what he called “logistic sanctions.” And they’re also saying – the Russian UN ambassador said the other day that no grain or fertilizer has shipped under the UN deal. I don’t know what that means to you, given you’ve just said that all their food and fertilizer is reaching global markets. And how concerned are you that these remarks are just part of a negotiating tactic ahead of the renewal of the Ukraine export deal? Thank you.

AMBASSADOR O’BRIEN: Wes, do you want to take a couple more?

MODERATOR: Sure, let’s go ahead and go to Margaret Besheer from Voice of America. Margaret, if you’d like to unmute yourself.

QUESTION: Hi there. Michelle sort of covered it a little bit, but I just want to understand the price and supply of fertilizer does still seem to be affected. So what do you attribute this to since you say the Russian supplies are going out at normal rates? And the grain deal has a 120-day renewable expiration date, and with Putin making noise that sounds like they may not want to renew it. What would be the U.S. response if that should happen? I mean, would you stop helping facilitate and removing these bottlenecks for the Russians getting their items to market? Thank you.

MODERATOR: And then one more question from Hiba Nasr from Asharq News. If you’d like to unmute yourself.

QUESTION: Hi. Thanks for taking my question. Hi, Ambassador. I want to understand – we have a lot of information. The Russians are talking about this deal every day. It was criticized by your ally, Erdoğan. So I want to understand, regarding the grain deal process, in terms of where the grains goes, is the priority to countries which – with most need or it is to countries that have already paid for it? Can we explain the process and where your role ends here? Thank you.

MODERATOR: Okay, Ambassador. I think that’s enough questions at the moment. They had quite a few built up for you again. Is there any of those you’d be able to address?

AMBASSADOR O’BRIEN: Yeah. I – so the mechanism of that agreement – I think that question is better addressed to the UN and the Joint Coordinating Centre, so I think that – you may want to ask them.

From our standpoint, this is about reopening the global markets. So what happened in February with the invasion – first off, approximately 20 million tons of Ukrainian grain was stuck and unable to get out. The World Food Program and Food and Agriculture Organization indicated that was enough food for hundreds of millions of people; they disagreed on how many hundred, but it was hundreds of millions of people. And that was just stuck, and now much of that grain is starting to reach market. Historically half of that would go to the World Food Program or the wheat part anyway and a large part of it would go to stabilize global markets.

So what happened at the beginning of the agreement was that some of the end of harvest grain had to just get out. It normally would have gone out in February, March, and then the new Ukrainian crop that came in in the summer would have flowed to the Global South at about half of the rates that it normally does. That pattern got disrupted.

And I think what you’re hearing from the Russians is the effort to pick – again, as I said, they’re picking one element of something that was disrupted and harping on that, but not looking at the full picture. So again, it’s like saying that one window in your house got stuck for a time. All the other windows are open, so there’s as much air in the house as there ever was, but they’re complaining about the one window. Okay, I get it, but it’s misleading.

And it’s also – I think the statistics and the times are misleading when you hear those comments. Because in March and April, Russia had export quotas on its own food and fertilizer and then it stopped publishing its own data. So getting access to the data requires that we look at declarations of imports by other countries and shipping company information and other things, which we have a high degree of confidence in, but it means that Russia’s constantly quoting back to a period when it was restricting its own exports and when there was a maximum amount of uncertainty around the globe about who could buy and whether they could use the Black Sea at all, because of Russia’s actions.

So if we keep looking back at that time period, you get a lot of noise. If you look over the course of 2022, what we see is also Russian fertilizer exports are going at about the same rate that they were before the war. I think they’ll end up being a bit higher. But they’re probably going slightly through different routes than they were before. But again, there’s that momentary disruption that provides lots of anecdotes for people to talk about. On the whole though, the amount of air in the house, the amount of fertilizer in the market from Russia is continuing the same.

Fertilizer is an area of great concern to us, because really it’s natural gas prices. So we’ve seen a lot of the capacity in Europe to produce nitrogen-based fertilizers has gone offline because of the price of natural gas. That’s also an issue Russia could help with – it’s not, but okay – but so fertilizer prices are much too high, and we do need to undertake a range of efforts to be sure that it’s well used and that supplies can reach where they should go. But Russian-made supplies are reaching market in the way that they did before the war.

Now, two points, though. I want to emphasize we are working in good faith to avoid any of the disruptions that Russia calls to. So one thing that’s happened over the last week, the UN’s brokered a way for us to speak with some of the Russian companies around specific concerns. And we’re working on that, and over the next weeks I expect we’ll start to be able to resolve those. But again, very often the specific complaints date to this short period when Russia’s export quotas and the uncertainty in the market were particularly high. But we will do what’s needed to make clear to every commercial player that they are allowed to buy Russian food and fertilizer. So we’ll work our way through that, and that’s something that’s just coming now.

Which leads us to the broader questions: Are we nervous about this agreement going forward? I’d just say we’re still in relatively early days. It is beginning to show real results. The Russians met with the primary UN person last week – well, actually September 7th – to discuss some specific areas where they would like to see the UN help to broker their access to markets. And that process has just started, so that’s maybe typical, that they couple that constructive engagement with a bunch of loud noises. But I think if we work our way through the process in front of us, by the time we get to needing to renew the deal, everybody will be seeing some clear benefits.

At the same time, Russia doesn’t really need this deal. It’s got access to the markets through other means. And I want to emphasize one key point here, which is the World Food Program. So back to priority – is it important that the food reach the neediest? Absolutely. Again, Ukraine was – it was not only did Ukraine export half of its crop through – to the World Food Program, but up till this year, Ukraine was half of what the World Food Program bought, and that was all stopped by Russia’s invasion. So to get at the World Food Program to begin to buy grain from Ukraine again is an incredibly important signal, both for this year and for next year. And that was enabled by an additional contribution from the U.S. Government.

I’d note the U.S. – the World Food Program also had a tender, and it encouraged Russia to apply for that tender. And Russia’s price was too high, so the World Food Program was forbidden from undertaking it. Russia has lots of cash. It’s sitting on an enormous cash reserve right now. It could make a donation to the World Food Program to cover the gap in the ability of it to export, and then more Russian grain would go directly to the world’s neediest. It’s chosen not to do that. That’s frustrating, because it could both export through a UN agency and to the neediest in the world, but it’s not. And that, I think, is a significant statement about Russia’s approach to this.

But we will do everything we can to address specific complaints. We are just hearing those. Russia and the UN are just now engaged on some specific requests that it has under the UN agreement. And I think we’ll see progress in that over the next few weeks. So the noise shouldn’t distract us from the real work that’s getting done.

MODERATOR: Thank you, Ambassador. I don’t think we have time for any more questions. We’ve already gone over our allotted time. Did you have anything that you wanted to add before we close?

AMBASSADOR O’BRIEN: No. No, thank you very much for the time and attention. And look forward to the stories.

MODERATOR: Absolutely. So this concludes our briefing. I want to give special thanks to Ambassador O’Brian for sharing his time with us today and to those of you who participated. Thank you and good day.

[END]
---
[1] Url: https://www.state.gov/briefings-foreign-press-centers/black-sea-deal-and-impacts-on-global-food-security

Published and (C) by U.S. State Dept
Content appears here under this condition or license: Public Domain.

via Magical.Fish Gopher News Feeds:
gopher://magical.fish/1/feeds/news/usstate/