Areas: Hungarian Leaders Go To Turkey For Talks On The Black Sea Grain Deal Under The Backdrop Of Volatile Geopolitical Trends
Before diving into the Black Sea Grain Deal it’s important to know the latest updates on the important NATO Summit being held in Vilnius, Lithuania.
While ongoing talks over Sweden’s membership to NATO have concerned Turkey and other members since last year’s NATO Summit in Madrid, Spain, this year’s main focus is understandably on Ukraine’s future in the NATO alliance. According to reports and interviews by CNBC, Lithuanian’s president Gitanas Nauseda referred to Ukraine’s membership to NATO as an “achieveable goal.”
“I think it’s [an] achievable goal and this is a very important goal, too.”
Meanwhile, what’s going on simultaneously is, in my view, directly linked to the outcomes of this NATO Summit in Vilnius.
Although Euronews covers the Hungarian government’s position on Sweden’s accession to NATO extensively in their channels, I was surprised to find that there weren’t any reports or updates following the Hungarian farm minister’s visit to Turkey to discuss details about the Black Sea Grain Deal this week.
Reportedly, Hungarian leaders represented five of the Central and Eastern Europe (CEE) group of countries — Bulgaria, Hungary, Poland, Romania and Slovakia — by visiting Turkey to meet with government officials about the Black Sea Grain Deal.
Istvan Nagy, Farm Minisiter of Hungary, visited Ankara, Turkey, on 11 July 2023, to discuss the deal made jointly by Russia, Turkey and the United Nations (UN) to allow for exports of energy, food and fertilizer through Black Sea ports of Ukraine.
TRT World, a channel based in Istanbul, covers topics related to World Affairs and other developments in Turkish politics. They have highlighted all of the most recent and relevant details about the Black Sea Grain deal to date.
I am delighted that they did. Because the success or failure of this Black Sea Grain Deal is critical to emerging markets and global commodities. As a majority of grain and fertilizers transporting through Ukrainian territory is destined for developing countries through Africa and the Middle East.
The outcomes of this deal will also affect outcomes related to energy and food security, which will cause disruptions to the global economy, not only from the perspective of emerging markets.
For instance, Ukraine was forced to shift its grain exports to land-based infrastructure, due to the conflict with Russia which had reached a dangerous level of military conflict in the Black Sea. By moving exports on land, rather than by sea, it disrupted the supply chain networks on top of rising prices and volatile commodities markets.
It might seem that everyone would want to get on board for many of the developing world countries. But that’s just not the case. As the report by BNN-Foreign Affairs elegantly put it: “the corridor has not been functioning well, and Ukrainian grain has flooded the Central European market, creating difficulties for local farmers and producers.”
This Black Sea Grain Deal was initially extended for a second time on 18 May 2023 as the world waited with anticipation and fear during major escalations between Russia and Ukraine in their military conflict.
Turkey is the main broker of the deal between Russia and Ukraine, with the UN also playing a key role in the negotiations, along with an American commodities trader Trammo who is responsible for distributing the exports from Russia through Ukraine.
During that time in May, Russian Deputy Foreign Minister Sergei Vershinin warned the world that these crucial exports would “cease to exist” if a deal was not reached by the deadline.
The next deadline is July 18.
In Areas & Producers, we are always wanting to put the global commodities in perspective, and for what it means to the geopolitical trends in any given regional context around the world. That’s why I’m offering this previous update from the publication about the role of American Commodities Trader Trammo in the Black Sea Grain Deal, as well as content about Russia’s Fertilizer Diplomacy. It’s important to know the role of United States and Russia within the wider geopolitical trends of the European region.
Producers: American Commodities Trader Trammo Is Locked Into The Politics Of The Black Sea Grain Deal
- A column published by Reuters on 7 June 2023 provides explanations and clues about the ongoing Black Sea Grain Initiative, which is at the core of international diplomacy and global commodities during the Russia-Ukraine conflict.
- Also known as the “Black Sea Grain Deal” it has been offered as a token of international peace, since much of the grain and ammonia exports going through Ukraine are destined for countries in some of the most food-insecure areas of the world.
- However, my question has been: Does the newly proposed deal by the United Nations give hope for the success of the Black Sea Grain Deal or is it just another act of Fertilizer Diplomacy for Russia?
It was reported on 13 September 2022 that the United Nations (UN) is seeking to arrange a deal whereby Russia and Ukraine would allow ammonia exported from Russia through Ukraine to global markets. The ammonia is intended for international markets in a worldwide effort to combat the global food crisis amid a sharp rise in global fertilizer prices and tight supplies.
This proposal is being touted as a viable option for Russia to commit to the “landmark grain deal” orginally put together in cooperation between Turkey’s President Recep Tayyip Erdogan and Russia’s President Vladimir Putin, under the auspices of the UN with Ukraine’s President Volodymyr Zelensky, on 22 July 2022.
Heralded as a “beacon of hope” UN Secretary General António Guterres posted on Twitter: “It will help avoid a food shortage catastrophe for millions worldwide.”
This alternative form of Fertilizer Diplomacy, of course, would benefit Russia’s fertilizer producer Uralchem as the company would be responsible for sending the ammonia via pipeline to Urkaine. This means that Uralchem controls the amount of production and supply, irrespective of any arrangements made with Ukraine and other third-party actors. It’s ultimately another barganing chip for Russia to exploit and use to its advantage in the international system; hence the critical nature of Fertilizer Diplomacy.
The next part of the deal really blows my mind. At the Russia-Ukraine border, an American commodities trader, Trammo, would then be responsible for purchasing the ammonia and ensuring that it is exported through Ukrainian territory. Under the terms of this agreement, Trammo would own the ammonia, as it traverses Ukraine, and therefore pay all pumping and transit fees before the shipments make it to the final destination for shipping to global markets: the Black Sea.
As anyone following the Russia-Ukraine conflict knows, the Black Sea has been one of the highest-risk and volatile areas on the international marketplace ever since Russia invaded Ukraine on Februrary 24, 2022.
This proposed deal does try to shape the narrative that the Black Sea is getting back to business as usual, but the actual circumstances there could tell a completely different story if this deal is finalized. Russia has already proven time and time again that UN-sponsored deals do not decrease the likelihood of military action against Ukraine.
To know more about how these events unfolded after Februrary 24, 2022, read the full story in Areas & Producers: