What does Russia’s withdrawal from the Ukraine grain deal mean?

A large drone attack Saturday on Russia’s Black Sea Fleet was cited by Russia the same day as its reason for withdrawing from a UN-brokered deal to export grain from Ukraine. Putin had spoken about the possibility of Russia backing out of the agreement at the start of September. However, the other parties to the deal intend to carry on without Russia.

The attack on Sevastopol

Drones attacked Russia’s Black Sea Fleet early Saturday morning. The Admiral Makarov, which became the flagship of the Black Sea Fleet earlier this year following the loss of the Moskva in a Ukrainian missile strike, was ostensibly one of the targets.

Russia’s Defense Ministry said that the attack involved seven airborne drones and nine underwater drones. It further claimed that preparations for the attack were conducted under the guidance of British specialists. The UK called this a “lie of epic proportions.”

The Defense Ministry described the damage from the attack as “insignificant,” saying that only the minesweeper Ivan Golubets sustained damage. There is no independent assessment of the effect of the strike on Russian ships, nor has there been any acknowledgement from Ukraine that it organized the attack. Anton Gerashchenko, advisor to Ukraine’s interior minister, said that the Admiral Makarov was the most likely target, while several Russian pro-war commentators suggested that one frigate sustained slight damage, the Ivan Golubets was seriously damaged and coastal infrastructure was also hit.

Regardless of the damage, this was a nasty shock for the Black Sea Fleet: cheap drones were able to break through defenses and get inside the fleet’s main base.

Later, Russia’s Defense Ministry said that the wreckage of the drones had been retrieved from the water and its navigational data decoded. “One of the devices could have been launched from the civilian vessels chartered by Kyiv or its Western patrons to export agricultural products from Ukraine’s sea ports,” the ministry suggested.

Leaving the deal?

A few hours later, Russia’s Foreign Ministry announced Russia would back out of the grain deal, suggesting the safety of civilian ships in the Black Sea could no longer be guaranteed.

However, it soon became clear that, apart from Russia, none of the other parties to the grain deal were planning to withdraw. Turkey, Ukraine and the UN responded by announcing they would continue to escort ships along the “grain corridor.” Turkey, the guarantor of the deal, was continuing because Russia had only withdrawn from escorting vessels — it has not withdrawn its signature from the agreement not to attack civilian vessels.

Putin said Monday that Russia had not withdrawn from the deal, but “suspended” its participation. And the Defense Ministry said Russia would not rejoin until it received guarantees ships in the “grain corridor” would not be used to attack Russian vessels.

Ukraine, Turkey and the UN agreed safe passage for 14 vessels through the corridor Monday – 12 leaving Ukraine and two in the opposite direction. At the time of writing, there were no reports of any incidents.

The wrangling over the deal immediately sent grain prices shooting upward, but March highs are still far off — the markets are apparently waiting to see if Russia will attempt to halt shipping in the Black Sea entirely.

What happens next?

For now, it appears that Russia is taking a time-out. Deputy Foriegn Minister Andrei Rudenko said that the next steps would be taken after analyzing the situation. He added that Russia is counting on its contacts in Ankara. More Russian missile strikes on Ukraine’s energy grid Monday were likely an indirect response to the Sevastopol attack (Russia launched 50 cruise missiles at Ukrainian cities — the biggest such attack since Oct. 10).

Experts interviewed by Kommersant believe that closing the corridor will influence grain prices. However, even if Ukraine’s exports ceased completely, the global market would lose just 5% (7-8 million tons) of grain for the remainder of the season. Russian producers would benefit from this: Russia enjoyed a record harvest and prices are high.

Why the world should care

If the flow of ships carrying Ukrainian grain continues in the current “gray zone” — i.e. without clear Russian guarantees of safe shipping — the “grain corridor” will become another potential flashpoint that could lead to military escalation. That is particularly true in the event of the sinking of a merchant vessel, whether accidental or deliberate.