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- Blog post by Matyas Knol and Hussam Hussein
- Research article in Open Access available here
In the short-term, Russia’s recent withdrawal from the Black Sea grain deal is unlikely to significantly impact global agricultural markets. In our recent article in the International Spectator, we argued that the spike in food prices, witnessed between the outbreak of the Russo-Ukrainian war and the signing of the now-defunct grain deal, was a product of a confluence of supply chain crises. Poor harvests in the EU and America, geopolitical conflict throughout the developing world, and the consequences of COVID-19 all amplified the destabilizing impacts of Russia’s invasion of Ukraine. Since the spring of 2022, global food markets have adapted to the interlocking supply shocks, and prices have been on a downward climb, largely unaffected by the collapse of the grain deal.
In our article, we highlighted that the deal’s influence over global food markets has become a crucial instrument in Russia’s diplomatic toolkit. In withdrawing from the grain deal, the Kremlin seeks to apply pressure on the West, especially by raising the threat of food shortages as well as the one of socio-political dislocation and mass migration in Middle Eastern and African countries, which are heavily dependent on Ukrainian grain imports.
Despite the fall in grain prices that has occurred since the start of the war, Russia retains the capacity to destabilize the global food system, not only by cutting off Ukraine’s access to the world’s sea lanes, but – perhaps more importantly – by imposing trade controls and limiting its own exports to the developing world. Following Russia’s invasion of Ukraine in February 2022, some have pointed to the threat of Russia using famine as a weapon to weaken Western support for Ukraine. However, the past months have demonstrated Russia’s reluctance to pursue a full-scale campaign of targeted starvation.
Russia’s willingness to destabilize global food markets is checked by its geopolitical ambitions in the developing world. In effect, in recent years, the Kremlin has sought to build a presence across Africa and the Middle East: any efforts to undermine food security in these areas would run contrary to Russia’s wider foreign policy interests. Russia’s withdrawal from the grain deal should be primarily viewed as an attempt to force the West into relaxing its sanctions regime, rather than a first step of a systematic assault on the world’s food supply.
Despite all this, the continued threat posed by Russia to global food security means that any discussion of potential concessions to the Kremlin’s demands – centred mainly on allowing Russia to re-enter the global financial system – detract from the more fundamental question of building a food supply system that is more resilient to geopolitical dislocation.
On a regional level, this means contesting Russian naval supremacy in the Black Sea. European states should also relax trade restrictions and invest into infrastructure build-up along Ukraine’s Western border. This way, Ukraine could reduce its dependence on the Black Sea while allowing increased trade with the European Union.
Considering all of the above, the long-term solution should be focused not just on containing the Russian threat, but rather on developing a broader process of improving supply chain resilience and flexibility. This goal should not primarily entail efforts to boost domestic production in import-dependent states – which is a difficult, costly, and often-futile and unsustainable endeavour. Instead, its focus should be on enabling exporting countries to leverage their comparative advantage in agriculture and react more effectively to market dislocation and geographical diversification of imports. In conclusion, steps should also be undertaken to strengthen confidence-building mechanisms to discourage export controls and prevent market segmentation in times of crisis.
Post updated on October 4th, 2023 4.38 PM CEST
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