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UKRAINE UPDATE: 21 JULY 2023

Kyiv says ships going to Russian ports are targets; Germany pushes plans for Ukrainian grain exports

Kyiv says ships going to Russian ports are targets; Germany pushes plans for Ukrainian grain exports
The TQ Samsun bulk carrier transits the Bosphorus Strait in the early hours of 18 July 2023 in Istanbul, Turkey. It was the last grain ship, carrying corn and rapeseed, to leave Ukraine under the Black Sea grain initiative before Russia notified the UN that it would not extend the grain deal signed on 22 July 2022. (Photo: Chris McGrath / Getty Images)

Kyiv has warned that any ships heading to ports in Russia or occupied areas of Ukraine may be considered military targets, a tit-for-tat response to a threat from Moscow that pushed wheat prices higher.

Germany said it is working with partners to get grain out of Ukraine by train via so-called solidarity lanes. Foreign Minister Annalena Baerbock told her European Union counterparts that the aim is to “make sure that the grain won’t rot in the silos in Ukraine” and that it reaches “people in the world who desperately need it”.

EU foreign policy chief Josep Borrell admonished Russia for halting the Black Sea grain deal and attacking Ukrainian grain facilities, dubbing it “barbarism”. The US has warned that Russia has laid mines at Ukrainian grain ports after Moscow ended the Black Sea grain deal that kept Ukrainian exports flowing.

Latest developments

 

 

 

Black Sea threats escalate as Ukraine warns on Russian ships

Ukraine said any ships heading to Russian ports may be military targets, a tit-for-tat response to a threat from Moscow that escalates the war’s risk to global food markets.

Since Moscow halted the Black Sea agreement that allowed Ukraine to export part of its grain harvests, Russia has attacked Ukrainian grain storage facilities and warned that all vessels heading to Ukrainian ports would be considered potential carriers of military supplies.

Wheat prices surged on Wednesday and initially jumped again when the Defence Ministry in Kyiv said any ships heading to ports in Russia and Ukrainian areas occupied by Kremlin troops were also legitimate targets. Prices then gave up those gains to trade little changed.

The escalating threat to vital Black Sea trade steps up the risk of turmoil on global markets for everything from oil and food staples to fertilisers. Russia’s attack on its neighbour has already severely disrupted exports from Ukraine, a major producer of grains and seed oils.

Ukraine has previously attacked Russian ships in the Black Sea, sinking the flagship Moskva cruiser with a Neptune anti-ship missile shortly after Russia’s invasion.

It also sank a landing ship and damaged another in the port of Berdyansk in March 2022, and Ukrainian rockets have reached Russia’s main supply line to Crimea, the Kerch Strait bridge.

“The fate of the cruiser Moskva proves that Ukraine’s defence forces have the means necessary to repel Russian aggression at sea,” Ukraine’s Defence Ministry said.

The Black Sea is home to a major Russian oil terminal, with more than half a million barrels a day of crude flowing through Novorossiysk, which is also a key port for fertiliser, grain and coal. Oil prices were little changed, suggesting the market took a sceptical view of the prospect of disruption.

Russian billionaire Tinkov removed from UK sanctions list

Russian-born billionaire Oleg Tinkov was removed from the UK sanctions list, the government said in a statement.

Tinkov, who gave up citizenship after criticising the invasion of Ukraine, was sanctioned by the UK authorities for his alleged ties to the Russian government, in particular through Tinkoff Bank, a large Russian financial institution founded by the tycoon.

While under sanction, his UK assets were frozen and he was forbidden from travelling to the UK. He has not been sanctioned by the US or the EU.

Tinkov formally renounced his Russian citizenship in October of last year, saying in an Instagram post that more prominent Russian businessmen should follow suit in an effort to weaken President Vladimir Putin’s regime.

Richard Branson recently called for the sanctions to be lifted on Tinkov, according to The Times of London.

“We have argued since February 2023 that our client had been wrongly, unfairly and irrationally targeted by those sanctions,” Tinkov’s lawyers said in a statement. “His designation has seriously undermined his health, his ability to conduct business and his international reputation.”

Russian flagship oil cargo transfers at sea grind to a halt

The transfer of Russia’s flagship Urals oil at sea — a key part of the nation’s petroleum supply chain since the war in Ukraine — has all but ground to a halt.

There has been just one so-called ship-to-ship transfer of the nation’s top export grade so far in July — a tiny switch of about 140,000 barrels — according to tanker-tracking data observed by Bloomberg. There were 14 last month.

Officials from two shipping firms, both of which have transported some Russian oil in the past year, said a mix of regulatory scrutiny, less-expensive freight, and the fact that Russia doesn’t need to keep ice-strengthened ships near its western ports during summer were likely contributors to the decrease.

There was a similar pause in September last year before the activity picked up again over winter. The practice came to a full stop at Ceuta, a Spanish exclave off the coast of Morocco, in April.

Back in May, the European Union banned ships from its ports if they were involved in illegal ship-to-ship transfers. Not all ship-to-ship transfers, including of Russian oil, break EU rules, especially if the cargo costs less than $60 a barrel — a level that Urals has recently exceeded.

Billionaire fighting sanctions says he last saw Putin at a 2007 funeral

Billionaire Eugene Shvidler said he last saw Russian President Vladimir Putin at a funeral in 2007 as he kicked off his challenge against the UK’s sanctions regime in a London court.

Shvidler, a close ally of Roman Abramovich, cannot influence Russian government policy and couldn’t possibly force the state to withdraw from Ukraine, his lawyers said in court filings on Thursday. He’d last seen Putin at the funeral of former Russian President Boris Yeltsin.

The sanctions on Shvidler are the first to be scrutinised by a British judge since Russia’s invasion of Ukraine. The billionaire was also one of the first people to be hit with an asset freeze in a rush of measures in the early days of the conflict last year. The UK says the sanctions must stand on account of his close friendship with Abramovich, arguing the ex-Chelsea Football Club owner benefited from or supported the Russian government.

The legal challenge comes as the UK, which has sanctioned more than 1,600 people, looks for ways to broaden the power and scope of existing tools to go as far as allowing the government to seize assets. Shvidler is one of the few tycoons hit by sanctions to claim to never have held a Russian passport.

Lawyers for the UK said Shvidler was described as Abramovich’s “best friend” and “right-hand man,” saying he commended the tycoon’s “brave efforts” concerning Ukraine. The UK maintains that Abramovich’s former control of London-registered steelmaker Evraz illustrates how he operates in a sector of “strategic importance” to the Russian government.

The parties clashed over the ongoing role of Abramovich, with the UK saying that sanctions measures on Shvidler “will incentivize him to put pressure” on his friend to distance himself from Putin. Shvidler counters that Abramovich is not close to the Russian president, but rather “has already used whatever influence he may in the past have had.”

Ryanair promises Ukraine post-war push during CEO visit

Ryanair CEO Michael O’Leary travelled to Ukraine and inspected Boryspil International Airport on the outskirts of Kyiv as he promised to invest more than $3-billion to rebuild the war-torn country’s aviation industry once the conflict ends.

Ryanair would resume flights within eight weeks of the Ukraine air space reopening and European regulators declaring the passage safe, the company said. The budget airline specialist said it wants to operate 600 weekly flights from Kyiv, Lviv and Odesa to cities in 20 European capitals, as well as a domestic service between the three Ukrainian cities.

The company plans to base as many as 30 new Boeing 737 Max aircraft at the airports. The Irish airline was Ukraine’s second-largest carrier before the air space shut down following Russia’s invasion early last year.

Russia restricts movement of UK diplomatic staff

Russia limited the movements of the United Kingdom’s diplomatic staff around the country in response to what it called the British government’s “hostile actions” against Russian missions.

Personnel of the British Embassy in Moscow and its Consulate General in the Urals city of Yekaterinburg will now have to give at least five working days’ notice of travel outside a 120km free movement zone, the Russian Foreign Ministry said on Thursday.

British diplomats will have to notify the ministry about the “timing, purpose, type of travel, planned business contacts, accompanying persons, mode of transportation, places of visit and accommodation, as well as the route of travel,” according to the statement.

The ambassador and some other senior diplomats are exempt from the restrictions.

 

 

 

US warns of explosives at Ukrainian sea ports

The US has warned that Russia has laid mines at Ukrainian grain ports.

The US alert, based on intelligence, came after Russia said on Wednesday that all ships sailing to the ports would be considered military vessels. The threats have dashed hopes that Ukraine will be able to keep exporting grains via the Black Sea — historically its most important shipping route — forcing supplies to world markets through narrower and more cumbersome avenues.

The latest moves signal Russia is ratcheting up efforts to weaponise food trade, with Ukraine still among the world’s major grain suppliers despite the war. Earlier this week Russia ended the Black Sea grain deal, which had helped to keep trade flowing for a time and marked a rare example of Russian cooperation during its war in Ukraine.

In the days since its withdrawal from the accord, which was initially agreed a year ago, Russia has repeatedly targeted Ukraine’s agriculture infrastructure — shelling ports and damaging crop terminals. Ukraine’s largest sunflower-oil producer, Kernel SA, said damage at one of its facilities could take at least a year to repair.

Targeting such infrastructure “marks a new phase in the conflict,” according to Paris-based adviser Agritel. On top of that, export capacity is being shut off as many of Ukraine’s crops are coming to harvest.

All ships using the Black Sea corridor had departed Ukraine before the grain deal came to a close. The last vessel — the TQ Samsun — cleared its outbound inspection on Monday in Istanbul. The Black Sea ports are a vital artery for Ukraine’s crop sales abroad, previously accounting for the bulk of its shipments.

The shutdown — and the new Russian shipping threats — will heighten the need for alternative routes to get Ukrainian crops to market. The nation has increased reliance on its Danube River ports and rail and road routes via the European Union throughout the war.

The grains rally sparked renewed fears of food inflation. Prices had, until recently, been moderating, due in part to the Black Sea accord. But the costs of many products made from wheat, such as flour and breakfast cereal, have continued to climb. Grain supply risks may again raise costs for food manufacturers.

“We are working with all partners internationally to make sure that the grain won’t rot in the silos in Ukraine in the coming weeks, but get to those people in the world who desperately need it,” German Foreign Minister Annalena Baerbock said to reporters before a European Union meeting of foreign ministers in Brussels. DM

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