#118 The G|O Briefing, November 17, 2022

This is an onsite, slightly edited republication of the complete G|O Briefing newsletter

Today in the Geneva Observer: Welcomed early this morning by Antonio Guterres, the extension of the Black Sea Grain export agreement comes as a huge relief around the world. Had the negotiations over its extension failed, the war-driven global food crisis would have worsened even further, endangering the lives of millions of people in the poorest countries of the world, in Africa and elsewhere.

Guterres’ succinct announcement, breaking the much-hoped-for news, was as crafted a diplomatic statement as they come. All parties and their contributions are acknowledged, as are Russia’s lingering complaints. “The United Nations is fully committed to supporting the Joint Coordination Centre so that this vital supply line continues to function smoothly,” the UN Secretary-General stated. “The United Nations is also fully committed to removing the remaining obstacles to exporting food and fertilizers from the Russian Federation. Both agreements signed in Istanbul three months ago are essential to bring down the prices of food and fertilizer and avoid a global food crisis.”

Restating Moscow’s repeated demands, the Russian Mission in Geneva said in a statement that “we note that after our repeated reminders, efforts began to be made to unblock about 300 thousand tons of Russian fertilizers detained in EU ports (blocked by sanctions), which Russia transfers free of charge to developing countries in need. Further delay in the implementation of these urgently needed supplies is unacceptable.” “The renewal of the Black Sea grain initiative is good news for global food security and for the developing world,” tweeted Rebeca Grynspan, Secretary-General of the UN Conference on Trade and Development and a party to the negotiation, calling the extension a “beacon of hope,” adding that “solving the fertilizer crunch must come next.” Grain prices fell sharply after the announcement.

In another positive development, Mykola Gorbachov, president of the Ukrainian Grain Association, tells John Zarocostas in an exclusive interview that Ukraine is now ready to add a fourth port to the initiative to increase the country’s export capacity. Gorbachov, however, also describes how the war has impacted grain production, including leaving farmland inaccessible in many places, littered with mines, and unexploded ordnance. Could this give further impetus to the proposal to open a Kyiv antenna of the Geneva International Centre for Humanitarian Demining (GICHD), we wonder, recalling our reporting from two weeks ago?

Negotiations intensified over the last few days to salvage the grain agreement, including on the sidelines of the G20 Summit in Bali. The agreements reached there on trade and stabilizing financial markets have been welcomed here in Geneva, according to The G|O’s Jamil Chade.

Arduous as the negotiations were, can confidence between parties be rebuilt? “The Black Sea Grain Initiative continues to demonstrate the importance of discreet diplomacy in the context of finding multilateral solutions,” concludes the UN Secretary-General in his short statement. On this topic, The G|O’s frequent contributor Daniel Warner explains and expands on the concept of ‘peace through pieces’—which, boiled down to its basics, says dialogue begets further and broader dialogue. The war has its own catastrophic dynamic, but so has the search for peace. The clamor to end this war is clearly getting louder by the day.

On another note, we are happy to announce that The G|O is branching out. Local TV station Léman Bleu is piloting four discussions in English about International Geneva. The G|O will present its show tomorrow, 19 November, at 8:30 pm. Join noted Swiss broadcaster Muriel Siki, The G|O’s Jamil Chade, former Reuters Geneva Bureau Chief Stephanie Nebehay, and yours truly as we discuss the significance of International Geneva in global affairs and how the rivalry between great powers is playing out here. En guise d'amuse-bouche, the trailer can be watched here. See you tomorrow.

And finally, save the date: Next Tuesday, 22 November, at 5:30 pm at Payot Rive Gauche, I will have the honor and pleasure of interviewing French Ambassador to the UN in Geneva, Jerôme Bonnafont, on the occasion of the launch of his book, Diplomate, pour quoi faire?

A seasoned diplomat with a stellar career, Ambassador Bonnafont is one of the most astute observers of Geneva’s multilateral scene. The event is free. As usual, thank you for reading—and watching—us! All the best from The Geneva Observer.

-PHM

PRESIDENT OF UKRAINIAN GRAIN ASSOCIATION CONFIDENT OF INCREASED GRAIN EXPORTS

By John Zaracostas

The Black Sea Grain Initiative (BSGI) agreement was predictably one of the main topics of debate at this year’s Fastmarkets Global Grain Geneva meeting (November 15–17), held at the Intercontinental Hotel. The gathering included hundreds of leaders from the global grain trading, shipping, freight, and logistics community, together with diplomats from missions and multilateral agencies based in Geneva. On the sidelines of the event, the influential President of the Ukrainian Grain Association, Mykola Gorbachov, granted The G|O an exclusive interview on a range of topics just a few hours before the UN announced the agreement would be extended. Below are edited extracts.

Renewal of the agreement on the same terms was secured following technical-level talks among the UN, Russia, Ukraine, and Türkiye, co-chaired by the UN and Türkiye and held in Istanbul on November 16 and this morning (November 17). The terms of the agreement can be modified through negotiations at any time during the 120-day period.

The G|O: The deadline for the renewal or rollover of the Black Sea Grain Initiative brokered in Istanbul on July 22 expires on Saturday (November 19). How optimistic are you about its extension?

Mykola Gorbachov: I believe that they will find a solution, and the grain corridor will be extended. I hope we will even add an additional port. At the moment, we are only able to export from the three Panamax ports—Odesa, Chernomorsk, and Yuzhny. I hope we will add Mykolaiv, which is quite a big port with 11 grain terminals; from there, we can export up to 2.5 million tonnes per month. 90 percent of Ukraine’s total grain exports are produced by our members. Last year, we produced more than 107 million tonnes of grain and oilseed. Our domestic consumption is a little over 20 million tonnes, which means our potential export could reach 70 million tonnes per year of wheat, corn, barley, soybeans, rapeseed, and other products.

How has the war impacted grain export flows? (According to the Initiative’s Joint Coordination Centre (JCC), as of mid-afternoon November 17, 11,186 million tonnes had been exported via the corridor in 941 voyages, of which 51 percent went to high-income countries, 28 percent to upper middle-income, 17 percent to lower-middle income, and 4 percent to low-income countries.)

The biggest impact of the war has been on farmers, who have not been able to produce enough grain. Production fell from 107 million tonnes of grain and oilseed before the war to 68 million tonnes this year. That decrease in production of 40 million tonnes is because part of the territory is occupied, and much of the land which is not occupied contains unexploded mines and bombs and, therefore, cannot currently be used for agriculture. The biggest problem at the moment is that farmers do not believe that they will be able to sell the grain at a normal price, with some profit, in the near future. Therefore, they will decrease grain production, and this is another reason why, next season, we will see less production of grain. For the winter crop, the planting area for wheat has already decreased from 6.5 million hectares on average to 3.7 million hectares. For corn, last season, we had 5 million hectares; now, we’re discussing an optimistic scenario of about 3 million hectares and a pessimistic scenario of 1.7 million hectares.

Do Ukrainian grain farmers need some form of financial assistance to continue, break even, and make some profit?

Ukrainian farmers are, I think, the only farmers around the world who have no subsidies at all. That is why, for them to produce the grain, they have to sell it at a profit. It’s a business. If they produce grain at $200 per tonne and only sell it for $100, you can’t expect them to produce it for long! For the moment, they continue to sell the grain only because they have it in stock, and they have no choice. They have to sell it, and they have to go to the field and continue to harvest everything. How much damage has the war done to transportation infrastructure and logistics for the grain business? Have facilities, railways, and storage silos been destroyed, and how much has that taken off the grain export capacity of Ukraine? Currently, about 20 percent of our territory is under occupation. Before the war, we had 1,200 inland grain silos, with a total storage capacity of about 67 million tonnes. If we say roughly 20 percent is under occupation, then 13 million tonnes of grain storage are under occupation. If we can export grain from Mykolaiv, Odesa, Chernomorsk, and Yuzhny, I am sure we can easily increase our monthly exports to close to 6 million tonnes through this corridor. Additionally, we can export through alternative ways, about 600–700,000 tonnes by railway, about 400–500,000 tonnes by truck, and about 1–1.5 million tonnes by barges through the Danube River. We can load the barges and sell to Constanta in Romania, and at the same time, we can load and sell directly to Türkiye or other destinations.

How important has international diplomacy and the United Nations been in securing the Black Sea Grain Initiative agreement?

I would like to thank Mr. Guterres and the Western countries for this agreement which benefits the whole world.

Beyond the war, how concerned are you about the impact of climate change on future grain output?

I am sure people will find solutions to this. Ukraine will continue to grow grain. We are located in a good area, and I’m sure new technology will provide new opportunities and will increase yields around the world. We will produce more grain, and we will find a solution on how to feed the world. Ukraine is very eager to join the European Union. Since Ukraine is a big agricultural country and agricultural policy is a politically sensitive issue in the EU, could this be a sticking point in fast-tracking Ukraine’s accession bid? I’m not sure that we will be in the EU in the next ten years. I would like us to be, but I’m not sure. However, there is good potential for Ukraine to find a special agreement with the EU before we join it as a full member.

-JZ

RELIEF IN GENEVA AFTER A BUSY G20

By Jamil Chade

Bali may be 12,000km from Geneva, but with the G20 Summit taking place there this week, it has never seemed so close, and the results are seen here as positive. From the official meetings to the sidelines, and a final communiqué stating that “most members strongly condemn the war in Ukraine,” and that “the use of nuclear weapons is inadmissible,” the G20 managed, to the relief of the UN and the wider multilateral system, to go beyond its primary vocation of coordinating the world’s economic situation.

In these fraught geopolitical times, the fact that such a communiqué would be accepted by all members—including China and the US—is, in itself, of significance. Diplomats and UN representatives present in Bali told The G|O that this was in large part the result of Monday morning’s ‘G2’ great powers summit between Joe Biden and Xi Jinping.

When it came to its core remit of acting as an economic coordination platform, US Treasury Secretary Janet Yellen’s two-hour meeting with Chinese central bank Governor Yi Gang was interpreted as a positive sign that the two superpowers were ready to try stabilizing the markets. The meeting marked Secretary Yellen’s first in-person discussion with a senior Chinese economic official.

A few hours later, the final communiqué declared that the G20 countries had agreed to calibrate monetary tightening and expressed their commitment to avoid excessive exchange-rate volatility—issues at the heart of the agenda of the Geneva-based UN Conference on Trade and Development (UNCTAD). On debt, the group also concluded that the “deteriorating” situation of some middle-income countries is worrisome.

Present in Bali, WTO Director-General Ngozi Okonjo-Iweala stressed that major economies face a real risk of sliding into recession, as the war in Ukraine, plus rising food and fuel costs, continue to affect their capacity to overcome the impact the pandemic years had on their economies. At the WTO, a global recession—a situation in which governments tend not to cede ground—coupled with a lack of dialogue is seen as the major threat to the organization’s reform, which will require major concessions and compromises by all. G20 watchers also credit the intense diplomatic work done in Bali for the extension of the Black Sea Grain deal. “We support the international efforts to keep food supply chains functioning under challenging circumstances. […] We are committed to addressing food insecurity by ensuring accessibility, affordability, and sustainability of food and food products for those in need, particularly in developing countries and least developed countries,” reads the final communiqué from the summit.

-JC

PEACE THROUGH PIECES AND THE GRAIN DEAL: CAN FUNCTIONALISM HELP THE WAR IN UKRAINE

By Daniel Warner

There has been new-found optimism in Geneva, although fleeting, about the war in Ukraine; and not because of the results of the US midterm elections. “The resumption of the talks on a memorandum between Russia and the UN on the export of grain and fertilizer is another positive development for International Geneva,” wrote Philippe Mottaz in last week's G|O Briefing.

While the resumption of talks was declared a “modest” step forward in returning Russian and Ukrainian grain and fertilizer to the world, according to Mottaz, it may have been a harbinger of larger and more needed talks about stopping the war in Ukraine. The underlying premise of Mottaz’s optimism was that by providing a space for dialogue, the grain talks could lead to future peace talks and settlement.

“Peace through pieces” was an important contribution to understanding mediating differences, conceived by the political theorist David Mittrany in the mid-20th century. Mittrany argued for an issue-specific strategy for solving larger problems. “The historical task of our time is not to keep the nations peacefully apart but to bring them actively together,” Mittrany wrote, “through the continuous development of common activities and interests across them.”

Closer interaction because of global interdependence, Mittrany postulated, would lead to closer cooperation and peaceful co-existence, a concept known in international relations as Functionalism. Many of Mittrany’s proposals were used in the establishment of the specialized agencies of the United Nations.

A recent example of his theory that peace would come from common rules and technical cooperation would be the admission of Russia to the World Trade Organization in 2011. By including Russia in a rules-based institution, it was assumed, larger cooperation, based on the institution’s rules, would follow; a sort of socialization of the Russian Federation, at least in trade. Mottaz’s optimism—“Geneva remains the city where the possibility of achieving ‘peace by pieces’ can be imagined”—should be seen in the context that no formal peace talks have taken place between Russia and Ukraine, and the fact that President Putin did not attend the G20 summit. (The director of the C.I.A., William Burns, recently met with his Russian counterpart. The New York Times reported that: “U.S. officials insisted that the sit-down was not for negotiations or to discuss any peace talks or truce.”)

Mittrany would have argued that the grain and fertilizer talks between Russia and the UN were a very small step in the right direction toward peace. How small were the steps? The grain talks can be seen as only discussions about freeing Ukrainian and Russian cereals to a world suffering from the lack of their usual sources of food. Instead of the highest-level Biden/Putin summit in Geneva on June 16, 2021, the November 11 Geneva meeting between the Russian Deputy Minister of Foreign Affairs Serguei Vershinin, the UN humanitarian chief Martin Griffiths, and the UN trade and development agency head Rebeca Grynspan merely focused on “steps taken to facilitate payments, shipping insurance, and access to EU ports for grains and fertilizer.”

Very small steps, it could be argued, in terms of the death and destruction of the war. David Mittrany’s Functionalism has had a significant impact on the importance of rules-based institutions. Geneva is the home to numerous issue-specific UN agencies like the World Health Organization and the International Labour Organization. They are all confronted with the problem of what to do with a Russia that continues to violate basic international law. Should Russia be expelled or suspended from these organizations because of its violations of fundamental norms in its aggression? It has been suspended from the UN Human Rights Council and there have been suggestions of expelling or suspending it from the Security Council. (A crucial issue in the grain negotiations is whether feeding the world, especially impoverished countries, is worth helping Russia’s economy.)

Mittrany’s theory would say that continuing issue-specific cooperation will lead to settlements on larger issues such as war and peace. The talks are a reminder of the power of Mittrany’s ideas and the potential for specialized agencies to have an impact when larger institutions, like the Security Council, cannot guarantee peace and security. The success of the grain talks are a barometer of Mittrany’s Functionalism. Their success or failure warrants close attention.

-DW

Today's Briefing: Philippe Mottaz - Jamil Chade - John Zarocostas - Daniel Warner

Edited by: Dan Wheeler