While the Russia-Ukraine war continues at full speed, an agreement has been reached in Istanbul on the opening of a safe corridor that will enable grain shipments by sea.  The efforts of our country in this regard and  making the agreement in Istanbul  are of course good developments. However, it is too early to say that it was a complete diplomatic success. The full text of the agreement has not  been published yet. But the contract period which is determined as 120 days seems to be pregnant with many things. We will see this through experience. According to the contract, the task of the Joint Coordination Center established in Istanbul, departing from Odessa, Chernomorsk and Yuzhny ports of grain and similar food products to be exported from Ukraine it is understood as coordinating and following up the measures to ensure safe maritime transportation over the Black Sea and Turkish Straits.

 

It is known that the ports where the shipment will start have realized 65 percent of Ukraine's total grain exports in the last five years. The waiting 20 million tons of grain needs to be transferred by ships as soon as possible. It is mentioned that with the September harvest, it is necessary to make room in silos for 25 million tons of wheat and corn.

If all goes well, there might be need another 120 days for the next batch. I hope this will not be necessary and peace will be achieved.

But the strange thing is that some Western intelligence services are constantly making statements that prioritize war from open sources. Moreover, these statements are made by the heads of these institutions themselves. It looks like this war is not going to end. For example, the head of the British service said that Russia consumed almost zero in the Ukraine War, in case of a break; He comments that this will give the Ukrainians an opportunity to strike back and they can win the war.

Obviously, the fire is fueled. The attacks of the parties continue with all their violence. For example, the Russians hit military targets in the port of Odessa right after the agreement. Ukraine responded. The situation is not improving. If this continues, the grain aisle may not last long.

The Ukrainian side has already started talking about Plan B. Shipment of grain via Danube River ports is considered as an alternative. Especially British origin insurance companies seem to insist on this issue. In fact, this method was partially tested this year. However, the grain sent over the Danube River in this way could not reach the desired amount.  Another issue is that while the issue of shipment via Romania and Poland is persistently fueled by some, calculations are made that 100 dollars or more per ton can be added to the grain cost.

It seems very difficult to meet these costs by Ukrainian farmers. Now, besides the grain waiting in the silos, the products that are kept on the ground in the fields and in temporary storage bags are mentioned. This is a factor that can also affect the quality of the product. Another problem is that as the pace and intensity of the war increases, the shipment from the production areas to the ports becomes more difficult. However, the primary issue is to load the grain waiting in the silos at the ports onto the ships as soon as possible and deliver it safely to the desired destinations. A situation on the edge… Now, is there any point in fueling this war under these conditions? It is obvious that not only Ukraine but also Europe and the surrounding countries are harmed by everyone.

If we look at the graph of the grain exported by Ukraine in 2021-2022 monthly tons, wheat-corn-barley, taken from a foreign source, it cannot be said that the point reached is very pleasant.

Graphic-1: January 2021-April 2022 Ukraine Monthly Grain Export (Tons)

Reference: https://www.ifpri.org/blog/russia-ukraine-grain-agreement-what-stake

If you examine the graphic source, you can see the export tonnage of each product through the colors. It is reported that after April 2022, which is not included in the chart, the shipment reached approximately 1.5 million tons in May and 2 million tons in June. For now, the apparent supply part of the job is like this…

The West does not trust Russian commitments on this corridor. However, I think that Russia and Ukraine may need the safety of this corridor more than any other party, albeit for different reasons. Because there is also a demand side to this business. In case of a delay or a problem in the corridor; Can demand preferences cause change?

Graphic-2:  2016-2021 Average Global Grain Production Rates

Reference: https://www.fao.org/3/cb9013en/cb9013en.pdf

Because there are competitors who can partially meet the demand. In this context, competition comes to the fore. For example, Bulgaria and Romania and Canada and Argentina have started to show themselves as new competitors in the supply of grain, although their production volumes are lower. These countries began to be influential in the African and South American markets. Already, Egypt has terminated the purchase contracts of 240 thousand tons of wheat ordered from Ukraine in December 2021. Although the visit of the Russian Foreign Minister to Egypt is visible in the background, Bulgaria allegedly replaced Russia and Ukraine in the supply of grain to Egypt. In some open sources, it is stated that with Russia's imposition of export tax, the Ukraine war caused demands to be diverted in other directions.

Another issue is the insurance provisions that the shipping companies will face due to the high risk. It is predicted that in the face of insecurity and uncertainties, difficulties may arise in terms of finding both ships and personnel.  If problems arise in land and sea transportation routes, maybe, but for now, I think that this has been especially put forward by some Western sources. As a matter of fact, the Sierra Leone flagged ship named Razoni departed from Odessa on 01 August to transport 26,5 thousand tons of corn to the Lebanese port of Tripoli.

Some foreign open sources have confusing information on this subject. It may be wrong to rely on them and comment. Initially, there was information that only Ukrainian-flagged ships would pass. These may also be state ships. Our open sources, on the other hand, have different information. on the other hand, a few days ago, although their flags were not specified, they require confirmation; It was claimed that 6 bulk carriers were in Odessa, 13 in Chornomorsk and 3 in Yuzhny port. On July 30, sources were talking about the presence of 16 ships in Odessa. Of course, it is not possible for now to know the flags, numbers and how many of them are ready to watch. It is best to look at Razoni and the aftermath of the expedition and comment…

After all, will the corridor be the solution? Judging by the official statements, the corridor will be on the routes determined by Ukraine. It is said that if there is a need for demining, planning will be made with the agreement of the parties. In other words, it is understood that there will not be a mine hunting/scanning operation in the first place. If so, how will the safety of ships be ensured against mines? They can pass ships through routes to be determined in clear waters known to be outside the minefields. Technically, we call this "Rotation". Ships pass on these routes in the company of a guide warship. However, in any case, I think there may still be a need for a search operation beforehand. Because, although shipments started this week from Odessa, foreign sources state that shipments from three ports need two weeks at the earliest. 

If this information is correct, then perhaps a search operation can be carried out on the route legs to be determined within the preparation processes. Perhaps it was built before the first ship departed from Odessa. Of course, if  Ukraine has a dredge left… But supply capacity will depend on these efforts.

So what if something goes wrong? The answer to this question may vary depending on what the opposite is about. Because all attention is focused on the mine threat at sea. However, on the access lines to the ports, at the ports, at the crossings through the risky waters or at the positions determined as offshore checkpoints; in addition to the mine hazard, unexpected sabotage, attack or detection of a contraband material may be encountered. In that case, the parties involved should quickly resolve the problems that may arise at any stage.

I think these ships will come under our control as soon as they enter international waters or in any case our territorial waters. After reaching this stage safely, there will be no problem for the future.

As a result, the main struggle between some powers; In many places, we see that it continues within the scope of shaping the security and operation area. These shaping efforts cause  the balances  to change with the current flow of politics and economy. On the other hand, the explanations fueling the continuation of the war and the weapons sent to the war zone and the grain tried to be shipped to the world from this region constitute an interesting contrast. Grain waiting to be shipped outside while blood and gunpowder are blended inside; On the one hand, it stands as an economic gain and hope for countries such as Sudan, Nigeria, Tanzania and Kenya in Africa.

However, any effort to disrupt the security paradigms in the Black Sea; In the case of grain, it will also extend the time between the “decrease, bottom, recovery and peak phases” in the short cycle of the maritime market that controls supply and demand. In this sense, attrition of security and economy; It will affect all riparians in the Black Sea, and it will also castrate the Montreux Convention and pave the way for indefinite shapings. We have to be very careful with this.

In this context, the grain corridor is a good initiative. However, we must be prepared in every way for events that may develop beyond our control.

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