The global food crisis is getting so bad that the EU now wants to reconnect a sanctioned Russian bank to the global financial system to keep the grain supply moving
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- The EU wants to reconnect a sanctioned Russian bank to the global financial system.
- The bloc is trying to secure Putin's support to extend the Black Sea grain deal, which expires shortly.
- The deal allowed the export of Ukraine's food products from its ports amid a blockade by Russia.
The global food supply crisis has gotten so bad that the EU wants to reconnect a sanctioned Russian bank to the global financial system — a link severed when the country invaded Ukraine last year — the Financial Times reported on Monday, citing five knowledge of the discussions.
The concession wants to let the state-owned Russian Agricultural Bank handle payments related to grain exports.
Under the proposal — initiated by Moscow and brokered by the United Nations — a new subsidiary of the bank would also be allowed to use SWIFT, the global messaging system, which some Russian banks were banned from using following the country's invasion of Ukraine, per the FT.
The proposal to let the Russian bank access the global financial system is "the least worst option" to secure Russian President Vladimir Putin's support for an extension of the Black Sea grain deal that expires on July 18 this year, two sources told the FT.
The grain deal — which allowed the passage of food and fertilizer out of three key Ukrainian ports — was struck in July 2022 to allow Ukraine to continue exporting its food products to the global market amid a food crisis.
Previously, Ukrainian grain shipments were stuck at the country's ports as Russia blockaded certain key Black Sea shipping routes.
The proposed concession to let the Russian Agricultural Bank back into the SWIFT system underscores the difficulties the international community faces over the sanctions levied against Moscow.
The news of the potential concession came just as Gennady Gatilov, Russia's envoy to the United Nations, told the pro-Kremlin Izvestia newspaper there are no grounds to maintain the "status quo" of the Black Sea grain deal.
Gatilov said reconnecting the Russian Agricultural Bank back to Swift was one of the conditions for the extension of the agreement, according to the Monday report.
"Russia has repeatedly extended the deal in the hope of positive changes," Gatilov told Izvestia, according to a Reuters translation. "However, what we are seeing now does not give us grounds to agree to maintaining the status quo."
Russia is a major exporter of commodities, ranging from energy to farm produce. While the supply chain has been in a state of disruption since the COVID-19 pandemic started in 2020, the dislocations have been compounded by the war between Russia and Ukraine, both of which are major wheat exporters.
The UN Food and Agriculture Organization Food Price Index — which tracks a basket of commonly traded commodities — hit a record high of 159.7 in March 2022, although the index has fallen back down to 124.3 in May 2023.
The European Commission and the Russian Agricultural Bank did not immediately respond to requests for comment from Insider.
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