Russia says it is terminating
a yearlong deal
that allowed Ukraine to export its grain.
The Kremlin says it will no longer
guarantee safe passage in the Black Sea
where Ukraine had been moving
critical grain
supplies through Turkey's
Bosphorus straight
and into the open market.
The U.N.
has estimated
that blocking
Ukrainian grain
could create food insecurity
for as many as 47 million people.
The White House
just put out a statement
saying they, too, believe
that food insecurity will be heightened
based on this decision.
Our Scott McLain is with us now.
This is an agreement
that had been in place.
It was actually this strange
outcropping of this conflict
between Russia and Ukraine
for the last year.
Now, Russia says no more
Yeah, exactly.
And this wasn't entirely unexpected.
There have been plenty of signs over
the last few days and weeks
that this was not going
in a good direction.
In fact,
one Ukrainian diplomat
said last month
that she was 99% certain
that the Russians
were not going to renew this deal.
And obviously,
that has turned out to be true.
Still,
you mentioned the White House reaction.
There's plenty of
reaction to this from the Western world.
The E.U.
calling it
cynical, the Dutch foreign minister
calling it utterly immoral.
But from the Russian point of view, John,
they think that, look, the U.N.
was not living up
to its end of the bargain.
So in exchange
for allowing Ukrainian grain
to go through the Black Sea to market,
it was supposed to get help
from the United Nations
in getting its own
grain, its own fertilizer to market.
Of course,
there are no sanctions on Russian grain
or on fertilizer.
But of course,
there are plenty of sanctions
on Russian banks.
And so
that has complicated
the payment part of this.
And so one of the key demands
that the Russians
had was access
to those international payment
mechanisms where the U.N.
had offered
was access
for the Russian agricultural bank.
Obviously, that that's been rejected.
The U.N.
says that it will continue
to work to try to find a deal.
They also acknowledge, though,
according to one official,
that the Russian position is pretty final
The Russians say that they will, though,
go back to this deal
if their conditions are actually met.
And whether or not
this has anything to do
with the character bridge explosion.
John Dmitri
Peskov, the Kremlin spokesperson,
was asked about this earlier today,
and he said this and I quote,
These are absolutely unrelated events.
Even before this terrorist attack,
the position was declared
by President Putin.
And I repeat again,
as soon as the part of the Black Sea
agreements concerning
Russia is fulfilled.
Russia will immediately return
to the implements of the deal.
We may also see some efforts
by the Turkish
president, Recep Tayyip Erdogan,
to reach out to President Putin,
who suggested that he may call.
And, of course, given
that Ukraine
is responsible for perhaps
10% of the world's grain markets.
This is important
and it affects millions of people
around the world.
John, get tens of millions.
Scott McClellan,
thank you so much for that, Kate.
Joining us
now for more on this,
a CNN contributor, Jill Dougherty,
adjunct professor at George
Georgetown University and former CNN
Moscow bureau chief.
It's good to see you, Jill.
So Putin has been unhappy
with this green deal for some time.
What do you see in this in this new move?
What?
How is it how does it help Vladimir Putin
in a way, it
doesn't help him, obviously, because,
you know, you have a U.N.
report coming out showing that.
30% of the world population
doesn't have access to enough food.
So you would say that could hurt Russia.
However, at the same time,
you know,
Russia has really been romancing
diplomatically
a lot of the developing countries,
especially in Africa, and saying,
we are on your side.
It's a big, rich countries that are not.
So they're trying to insulate themselves.
But this is
this is a move that could backfire.
And we'll have to see where it goes.
But, you know,
this is all part of this war
where the Indian Ukraine,
which is not just the military fighting,
but all of these economic
and other issues,
it really affect the entire world.
I mean,
because the impact
of the decision,
it really does go way beyond Ukraine.
You were talking about
kind of the estimates from the U.N.
I mean, the ripple effects
of cutting off Ukraine's grain exports.
It really is huge.
It is because you have developing
countries, you know, primarily,
let's say, Africa and Middle East
who really need this food
and eventually maybe it will get out.
But it's very difficult
to ship it out, you know, by rail or
by land.
So they're going to suffer
And then you have this is the time
that the harvest is beginning,
you know, in Ukraine.
So that's another factor.
Then you have around the world
global warming and crops being hit.
This is really very bad then
for developing countries.
Wheat prices, grain prices can go up.
So it could potentially hit everybody.
It's CNN's Kate Sebastian
joins us from London.
Kate, great to have you on.
Look, Russia has been threatening
to pull out of this deal.
It basically expires in a few hours.
So take us through the latest here.
Whether there's an anticipation
of a last minute agreement
or whether
it is done
that Russia has officially pulled out
Yeah, Russia has been using this deal
for leverage
for really most of the year
that it's been in force.
It's been using it to its advantage
in several ways.
One, to try to get sanctions lifted.
It says
that it's still having trouble
getting its own food
and fertilizer
onto global markets
because of certain sanctions
impacting its banks.
There are no official sanctions
on Russian food
and fertilizer, it should be noted.
But they've been trying
to get some financial sanctions lifted.
The second thing is
to try to show loyalty
to certain developing,
especially African countries,
with which Russia has been quietly
cultivating alliances
throughout this war
by saying
that the deal has not directed
enough grain and food stuffs
to those countries that need it most.
That's also
part of
what's going on here as to
whether this is actually
a final decision.
The language
sounds pretty final right now.
Russia says
its basically canceled navigation
guarantees, safe navigation guarantees
through the Black Sea
for four ships
carrying Ukrainian agricultural products.
The U.N.
officials told CNN
that they believe right now
Russia's words are final,
but Russia has a lot to lose
if it walks away here.
It's got those, of course, alliances
with developing countries.
It's got its alliance,
its partnership with Turkey,
which helped broker this deal.
President Erdogan has said that
President Putin might even travel
to Istanbul next month
and it has that leverage over
a potential lifting
of sanctions, of sanctions.
It was just in the last week
or so that the UN and the E.U.
floated the idea
of reconnecting Russia's
agricultural bank
to the SWIFT
International Payments
Network under this deal.
So really,
this leverage is very important
to Moscow.
It remains to be seen
whether they'll come back in.
But Dmitry
Peskov did say that
if Russia feels
that the concessions
that it once have been granted
it could reinstate the deal.
So it's still possible.
That's a really good point.
I mean, what really struck me is
the reality
is that Russia,
of course, has a lot of friends
on a lot in a lot of emerging markets
that rely on this grain.
So it'll be interesting to see
how he plays that.
But look, I want to talk about
wheat prices. They are higher today.
We know they are off the highs
that we saw at the start of the war.
But how does this
grain
deal impact supply?
Yes, it's supply is is one thing.
In any Ukraine, a major provider,
about 10% of global wheat exports.
15% of corn.
So pretty much half the world's market
for sunflower oil.
Some of that was also being exported
to under this deal.
It's not just grain.
And we did see wheat prices.
Wheat prices, wheat futures
come up a little bit,
just about 3% today.
Still down about 50% from their all time
highs hit
last year when this conflict started.
Corn futures up a little bit as well.
So we're seeing a little bit of reaction
there as well.
But it is in terms of prices
that this deal has had a major impact.
The according to the U.N.
Food and Agriculture
Administration, its own food
price index that has come down some 21%
since between June 2022 and June 2023.
If you're talking cereals in general
are grains
that's 24% drop and then some 45% drop.
When you're talking about vegetable oils
that has had a big impact
on overall food prices.
We could see a gradual reversal
of that effect
depending on how many hints
we get from Moscow
about whether this deal
could be reinstated.
And then of course, don't forget
that the World
Food Program
gets half of its supplies
for the developing world from Ukraine.
There are countries in Africa,
like Eritrea and Somalia
that have previously
relied on Ukraine
for pretty much
all of their grain
so there is a lot riding on this deal.
That is why so much effort
was put behind it in the first place.
A lot at stake here.
Sebastian, thank you so much.
For bringing us up to speed on that.