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Getting the grain out of Ukraine is China’s chance to step in

Posted By on August 21, 2023 @ 12:00

Thousands of tonnes of grain stored in the Ukrainian port of Odessa were destined for some of the world’s hungriest people. But on 17 July, Russian President Vladimir Putin nixed Russia’s participation in the Black Sea Grain Initiative (BSGI), a UN- and Turkey-brokered agreement that promised safe passage of the grain through the Black Sea to global markets.

Russia may have a war interest in blocking Ukraine’s grain but its partner, China, is likely to push for a new grain deal. Russia’s actions clash with China’s longstanding practice of courting countries in the global south, and Beijing will hesitate to side with Russia in devastating their food security. How China brokers such a deal will reveal the limits of the Russia–China relationship.

Despite the war, Ukraine remains one of the world’s largest wheat suppliers. As of July, it provided 80% of the World Food Programme’s wheat, and the UN estimates that 64% of the grain Ukraine exported under the BSGI went to low- and middle-income countries. The International Monetary Fund forecasts a 10% to 15% increase in global grain prices from the deal’s cancellation, while wheat and corn futures have risen by 9% and 8%, respectively. Without a deal, the world’s poorest people will go hungry, increasing the risk of conflict, economic privation and disaster-driven migration.

There’s a clear incentive for China to involve itself in repairing the BSGI. Standing by Russia’s actions could destroy its decades-long diplomatic strategy of strengthening bilateral relations with developing countries. It has increased its engagement and leadership of the global south through forums such as BRICS (Brazil, Russia, India, China and South Africa) and the African Union, and promised infrastructure, aid and security through the Belt and Road Initiative (BRI), the Asian Infrastructure and Investment Bank and the Shanghai Cooperation Organisation. Beijing has presented itself as a benevolent supporter of the global south’s rights to development, prosperity, peace and food security.

These efforts have been embedded in Chinese messaging for years. Every BRICS declaration for the last five years has referenced them as China has touted the grouping as an alternative to the Western-led multilateral system. Food security was further enshrined as a pillar of BRICS through the 2022 BRICS strategy on food security cooperation and the BRICS Forum on Agriculture and Rural Development.

China will also look for any opportunity to increase its influence and voice within the UN, a broker of the BSGI. Chinese state media has focused on China’s work in ‘establishing peace’ in Ukraine through the UN, through bilateral diplomacy and by reporting neutrally on the UN statement condemning the breakup of the deal. Qu Dongyu, a Chinese national, is director-general of the UN’s Food and Agriculture Organization and on 22 July, Geng Shuang, China’s deputy permanent representative to the UN, told a Security Council briefing that China wanted a resolution to the halting of the BSGI, noting that it was of great significance to ensuring global food supply. This suggests that China sees promoting food security as important to its international interests.

In China, Russia has a begrudging partner that seesaws between tacit support of the invasion and diplomatic messaging pitching itself as a peacemaker while noting how horrified it is at ‘NATO’s eastward expansion’. Its suspected direct support for Russia’s war is further enflaming tensions with the US but, more importantly for China, harming its reputation and economy. Several European countries that were previously strong BRI supporters have said they won’t attend China’s BRI forum later this year because Russian President Vladimir Putin will be there. China wants and needs friends, and Russia is making that tougher than it needs to be.

In addition, China knows that both the Western coalition and Russia’s proposed solutions to the impasse won’t adequately secure food supplies to the global south.

At its poorly attended Russia–Africa summit in late July , Moscow pledged free grain to a group of six African nations. This misses the point that the ability of poor countries to buy grain at reasonable prices is determined by supply, not the identity of the buyers and sellers. It also ignores that short-term deals with no promises of renewal are unlikely to calm markets. With only six nations offered the deal, Putin politicised a food security decision in a way that was unlikely to win him friends among economies that missed out.

NATO and Ukraine, on the other hand, favour a diplomatic solution to the problem and have proposed logistical workarounds to export Ukrainian grain west over land or south via the Danube delta. Although this would address grain supply, insurance premiums and the costs of transporting goods overland from zones under Russian shelling would limit its impact on prices—especially since the European Commission said in late July it has no budget to subsidise shipments.

Given all this, analysts should watch for increased Chinese messaging efforts bilaterally, multilaterally and through state media burnishing China’s credentials as a benevolent leader of the global south. China’s foreign minister, Wang Yi, announced at a BRICS ministerial meeting on national security on 25 July ‘four propositions’ for strengthening cooperation among the nations of the global south that could be a basis for this. There will likely be an uptick in bilateral meetings with affected countries in Africa and the Middle East as well as with Turkey to gain intelligence on, and perhaps shape, that country’s position on the BGSI. Crucially, analysts should watch for possible Chinese diplomatic efforts to convince Russia to sign back onto the deal or negotiate alternatives.

Ukraine’s grain harvest occurs in August and September, and a deal is needed urgently for this year’s grain to be exported. The BRICS summit in South Africa that begins on Tuesday would be an ideal opportunity for China to pressure Russia, and perhaps even to announce a deal. Its details will reveal the extent of China’s strength in its relationship with Russia and the health of its foreign affairs apparatus. Whatever happens, we should hope for the sake of the world’s poor that a deal is struck to let the grain flow.

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[1] nixed: https://www.abc.net.au/news/2023-07-17/russia-withdraws-black-sea-initiative-ukraine-grain-deal-un/102602042

[2] remains : https://www.spglobal.com/marketintelligence/en/mi/research-analysis/trends-in-grains-market-during-russianukrainian-war.html

[3] provided: https://news.un.org/en/story/2023/07/1138532

[4] UN: https://documents-dds-ny.un.org/doc/UNDOC/GEN/N23/214/63/PDF/N2321463.pdf?OpenElement

[5] forecasts: https://www.imf.org/en/News/Articles/2023/07/25/tr072523-transcript-of-world-economic-outlook-update

[6] risen: https://press.un.org/en/2023/sc15362.doc.htm

[7] embedded : http://www.brics.utoronto.ca/summits/index.html

[8] BRICS strategy on food security cooperation : http://brics2022.mfa.gov.cn/eng/hywj/ODMM/202207/P020220707546231285340.pdf

[9] BRICS Forum on Agriculture and Rural Development: http://brics2022.mfa.gov.cn/eng/dtxw/202206/P020220707550577308151.pdf

[10] reporting: http://en.people.cn/n3/2023/0718/c90000-20045481.html

[11] director-general: https://www.fao.org/director-general/biography/en/

[12] noting: http://un.china-mission.gov.cn/eng/hyyfy/202307/t20230722_11116661.htm

[13] suspected: https://www.reuters.com/world/us-intelligence-report-says-china-likely-supplying-tech-russian-military-2023-07-27/

[14] said: https://www.wsj.com/amp/articles/europe-avoids-chinas-belt-and-road-forum-keeping-a-distance-from-xi-and-putin-14f6253b

[15] pledged: https://www.theguardian.com/world/2023/jul/27/putin-promises-free-grain-to-six-african-nations-after-collapse-of-black-sea-deal

[16] said: https://www.reuters.com/markets/commodities/inside-eu-no-clear-financial-options-reduce-ukraine-grain-transport-cost-2023-07-27/

[17] ‘four propositions’: https://www.thepaper.cn/newsDetail_forward_23990944

[18] occurs: https://www.fas.usda.gov/sites/default/files/2022-04/Ukraine-Factsheet-April2022.pdf