EU now has no clear financial options to help export Ukrainian grain- Reuters

The European commission currently has no funds available to finance the extra transport costs Ukrainian grain exports will face after Russia’s pulling out of the Black Sea grain deal, Reuters reported, citing sources.

Ukraine, one of the world's largest grain exporters, will now have to rely almost entirely on expensive routes through the EU and the cheapest alternative artery, the Danube River, may not be able to expand its volume as much as hoped after Russian bombings.

In a letter dated July 21 and seen by Reuters, Ukraine’s agriculture ministry Mykola Solskyi asked EU trade chief Valdis Dombrovskis for the European commission to provide financial aid for the extra transport cost of using alternate EU routes known as ‘solidarity lanes’. Ukraine estimates the extra cost to be $30-40 a tonne.

The letter also asked for the ‘solidarity lanes’ to be expanded by 1-1.5 million tonnes a month through ‘green corridors’ including to the Adriatic Sea, the Baltic States, to Germany and the Netherlands.

However, EU commission sources told Reuters there is neither additional funding nor a plan to support Ukrainian exports.

“We have not found a solution yet to support the grain transport. People have been scratching their heads since last year,” said a source with knowledge of the European commission discussions.

One diplomatic source said “money was very short and substantial funds could only come after the mid-term budget review that could take several more months to hash out, even with the autumn corn harvest around the corner”, per Reuters.

Another issue is the temporary ban on imports of Ukrainian grains into five neighbouring EU countries as some states do not see the value in paying for the extra transport cost because of this ban.

On July 17, 2023, Russia announced its withdrawal from the Black Sea Grain Initiative, adding that it would not give guarantees of non-attack on civilian vessels after that date. On the same day, Ukrainian president Volodymyr Zelenskyy offered the UN and Turkey to continue the work of the corridor without Russia.

After that, Russia attacked Odesa for several nights in a row, causing serious damage to the ports in Odesa and Chornomorsk, which worked within the corridor.