Russia halted on Monday the U.N. negotiated deal which lets Ukraine export grain through the Black Sea. Russia ended the deal just hours after Ukraine struck Russia's bridge to Crimea.
Russia said two civilians were killed and their child wounded in what Moscow called a terrorist attack on the road bridge. The bridge carries supplies for Russian troops fighting in Ukraine.
Russia said there was no connection between the attack and its decision to suspend the grain deal. The Kremlin said there was a failure to meet its demands to put in place a separate agreement easing rules for its own food and fertilizer exports.
Russia's foreign ministry said it would consider rejoining the grain deal if it saw results on its demands.
Ukraine's President Volodymyr Zelenskyy said Ukraine wants to continue grain exports without Russia's safety guarantees.
"Even without the Russian Federation, everything must be done so that we can use this Black Sea corridor. We are not afraid," a spokesman for Zelenskyy said.
The explosion on the road bridge to Crimea could seriously affect Russia's ability to supply its troops in southern Ukraine.
Images showed part of the road bridge had collapsed and traffic was halted in both directions. A parallel railway bridge is still in use. Blasts were reported before sunrise on the 19-kilometer bridge, which Russian President Vladimir Putin ordered to be built after Russia seized Crimea from Ukraine in 2014.
Ukraine has long said that the bridge was built illegally, and its use by Russia for military supplies makes it a target. It was last hit by a large explosion and fire in October.
Any delays in exports resulting from Russia's suspension of the Black Sea grain deal could increase food prices across the world. That could affect poor countries the most. Ukraine and Russia are both major suppliers of grain to developing nations.
The grain deal was praised as preventing a global food emergency when it was negotiated by the United Nations and Turkey last year. The deal halted a blockade of Ukrainian ports by Russia.
The suspension of the deal on Monday led to an increase in wheat prices of about three percent in trading, to $6.81 a bushel, in Chicago. The price fell later in the day.
Experts do not expect more than a temporary increase in global food commodity prices. Finding suppliers outside Ukraine that are farther away could also raise costs.
The grain deal guaranteed that ships would not be attacked entering and leaving Ukrainian ports. A separate agreement permitted the movement of Russian food and fertilizer. Western sanctions do not apply to Russia’s agricultural shipments. But some companies might be unwilling to do business with Russia.
Now it is important to watch if Russia “weaponizes” its wheat exports, said Simon Evenett. He is professor of international trade and economic development at the University of St. Gallen in Switzerland.
Being the world’s largest wheat supplier, Russia could increase its export taxes. That “would raise world grain prices as well as allow Russia to finance more of its military campaign in Ukraine,” Evenett said. He noted that Moscow already raised taxes this month.
The grain deal has faced problems since it was first put in place. Russia pulled out briefly in November before rejoining and extending the deal.
In March and May, Russia would only renew the deal for 60 days, instead of 120. The amount of grain shipped per month fell from a high of 4.2 million metric tons in October to over 2 million metric tons in June. Inspections meant to ensure boats only carry grain and not weapons also have greatly slowed.
I’m Dan Novak.
