The blockade of Ukraine’s Black Sea ports causes no less damage to the Ukrainian economy than the regular Russian missile attacks on the country’s infrastructure. The "grain corridor" alleviates this problem only partially. Therefore, Ukraine should be more active in raising the issue of free and safe navigation in the Black Sea for all types of ships and cargoes before the international community. If this does not happen, Ukraine should call for a ban on ship traffic from Russia’s Black Sea ports.
No difference between Nazis and “rashists”
Yale University professor Timothy Snyder wrote in an article in The New York Times in May that Russia's war against Ukraine "is not only a return to the traditional fascist battleground, but also a return to traditional fascist language and practice." Indeed, the practices of the German Nazis and their Russian descendants in the conduct of war are very similar: the use of terror against the civilian population, the bombing of civilian facilities, the artillery shelling of residential areas, the rocket attacks on energy infrastructure, and the blocking of transport infrastructure.
In an attempt to bring to its knees Great Britain, which was resisting the Nazi war machine alone in 1940, Adolf Hitler ordered Admirals Erich Raeder and Karl Dönitz to strangle the enemy with a naval blockade. By the end of the year, Britain had lost a fifth of its merchant tonnage, the Nazis had mined the waters off British ports and the country itself had come under a series of powerful air strikes. However, despite serious economic difficulties, which even forced it to introduce food rationing, Britain’s armed resistance became more and more effective over time.
Vladimir Putin is diligently copying this method employed by Adolf Hitler: the blockade of Ukraine’s seaports, to which the aggressor resorted from the very beginning of the war, was aimed at destroying the Ukrainian economy. Indeed, the blow turned out to be powerful since a large proportion of Ukraine’s foreign trade, specifically almost 80% of its exports, passed through seaports before the war. The blockade resulted in Ukraine’s GDP falling by over 30% last year, which is the worst indicator since Ukraine attained independence.
Time to upgrade the grain deal
Under pressure from the “international community,” the Russian Federation was forced to lift the naval blockade partially, allowing metered export of agricultural products through the ports of Odesa, Chornomorsk, and Pivdennyi. However, Kyiv should not be satisfied with this concession because even agricultural goods are exported in volumes that are far less than the desired volumes and all other products can still not be exported by sea.
It was possible to export 16.3 million tons of agricultural products in 2022, thanks to the "grain corridor." This quantity is de facto half of all the grain exports from Ukraine during martial law (that is, excluding the volumes that were exported before 24 February). More than USD 3.5 billion in foreign-currency earnings was generated in the first three months of the operation of the "grain corridor" alone. The figure reached USD 7 billion in the period from August 2022 to the beginning of February 2023.
However, it is not enough this year. Allowing shipment of all the other categories of cargo from the ports of Greater Odesa and Mykolaiv promises to at least double the foreign-exchange earnings. In fact, the cumulative effect will be even greater because normalization of logistics will enable Ukrainian enterprises to produce more goods and sell them at prices that are more competitive.
Ukraine recorded an increase in the number of cases of Russian inspectors artificially delaying the passage of ships through the Bosporus strait under the "Grain from Ukraine" program in January. Only 2–3 vessels are inspected per day instead of the planned 10. Approximately 120 ships have been waiting for 3–5 weeks to pass through the Bosporus. Therefore, the world received 25% less Ukrainian grain in January than it received in December. According to estimates by Ukraine’s Minister of Infrastructure Oleksandr Kubrakov and Minister of Foreign Affairs Dmytro Kuleba, there has been a shortfall of 10 million tons in the export of Ukrainian grain in the past three months.
"For several months, the Russian Federation’s representatives in the inspection teams at the Joint Coordination Center in Istanbul have been systematically delaying the inspections of vessels passing through the Bosporus Strait to/from Ukrainian ports. Russian inspectors are deliberately slowing down inspections, regularly demanding documentation that is not stipulated in the regulations, refusing to work during working hours, and looking for other unjustified reasons to stop the inspections," Kubrakov and Kuleba said in a joint statement.
More arguments in favor of expanding the grain deal
The facts stated above can serve as a good impetus for revising the Black Sea Grain Initiative on a more global scale, especially considering that the initiative will expire in mid-March and, according to Ukraine’s Deputy Minister of Infrastructure Yurii Vaskov, negotiations on its extension will begin at the end of February.
On the one hand, Turkey, which is currently focused completely on alleviating the aftermath of a major earthquake, can be expected to be less actively involved in these negotiations. On the other hand, Ukraine has accumulated enough arguments to appeal to the international community to expand the initiative without necessarily appealing to the goodwill of the Russian Federation. Kyiv can also seek a mirror ban on the sailing of ships to and from Russia’s Black Sea ports.
The naval blockade of war-torn Yugoslavia in the early 1990s can be considered a precedent to a certain degree. At the time, several dozen vessels and aircraft were involved in the operation. Technically, everything is simpler with the Black Sea (given its geographical location). It is essentially an internal water body connected to an outer ocean by the Bosporus and Dardanelles straits, which are controlled by a NATO member country.
We should note that Russia enjoys unhindered commercial shipping from its Black Sea ports. "The volume of cargo transportation through the Russian Federation’s seaports in the Sea of Azov-Black Sea basin totaled over 250 million tons in 2022, which is more than the volume in 2021. These vessels do not undergo inspection in the Bosporus, which makes it possible for Russia to receive military cargoes in commercial vessels to continue the war against Ukraine," Kubrakov and Kuleba said in the joint statement.
The issue can thus be stated thus: either the volume of transit of Russian cargo through these straits is reduced to zero or the Black Sea returns to the status quo of 2021, i.e., a return to free and safe movement of all ships from any point of departure and under any flag.
Economic losses
Why is this so important to Ukraine? Because the faster it returns to its usual export volumes, the sooner it can more effectively create an economic base for rebuilding the country and strengthen its ability to resist the aggressor. It will also help to resolve humanitarian issues and prevent the unemployment rate in the country from rising further, especially in the industrial regions.
Let us take the indicators of 2021 as a base. That year, Ukraine’s export volumes reached USD 68 billion. Three major sectors accounted for more than half of this export volume: ferrous metals and ore accounted for USD 21 billion, grain USD 12.34 billion, and vegetable and animal fats (mainly sunflower oil) USD 7 billion. According to the latest estimates from the Ukrainian Ministry of Economy, Ukraine exported goods worth USD 44 billion last year, i.e., 35% less. Of the three sectors listed above, the ferrous metals and ore sector suffered a fatal drop in export volumes. According to state customs statistics, the volume of export of iron ore fell from USD 6.9 billion to USD 2.9 billion and the volume of export of ferrous metals fell from USD 13.9 billion to USD 4.5 billion.
The dynamics in other key export segments were also not very encouraging, but not as depressing. For example, exports of sunflower oil decreased by only 14%. However, farmers had to export a significant amount of sunflower simply in the form of seeds because they were unable to process them. As a result, Ukraine’s export revenue from this item increased by as much as 33 times, compared with 2021. However, representatives of the Ukrainian agro-industrial complex do not see this as a great positive because they had to sell their products with a lower added value. Regarding other grains, it was possible to maintain the export revenue from corn at the previous level of almost USD 6 billion but the export revenue from wheat fell by over 40% to USD 2.6 billion.
The expected effect of reopening ports on industry
Several port operators in Greater Odesa wrote to President of Ukraine Volodymyr Zelenskyi in autumn 2022, asking him to intensify the efforts to unblock the operations of these seaports. Ukraine’s First Deputy Prime Minister Yulia Svyrydenko raised this issue at the World Economic Forum in Davos in January. "What we need to do from a strategic viewpoint is to open seaports. This applies not only to agricultural products, but also to steel," Bloomberg News quoted her as saying. According to Svyrydenko, unblocking additional seaports and expanding the grain initiative is a prerequisite for Ukraine's GDP to grow by 3% in 2023 after falling by almost a third in 2022 because of Russian aggression.
Ukraine’s Deputy Economy Minister Taras Kachka also said that he raised this issue during talks with Ukraine’s international partners. However, the issue emerges in public only sporadically rather than in the form of a systematic request from Ukraine to the “civilized world.” We certainly need more weapons on the battlefield and continued foreign funding to keep the country afloat, but a resumption of full-fledged maritime exports could be an important step to bringing victory closer.
Serhii Kudriavtsev, executive director of the Ukrainian Association of Ferroalloy Manufacturers (UkrFA), said that production in the industry fell by at least 30% last year. According to him, unblocking Ukraine’s seaports would reduce logistics costs for ferroalloy producers, address the difficulties involving the export of finished products, and make supplies of imported raw materials possible. The Velta mining company’s CEO Andrii Brodskyi described the impact of the blocking of Ukraine’s seaports on the company's operation as "catastrophic." "Our primary client is in the United States, and shipments traditionally went through the Pivdennyi seaport. The company continues to operate, but at a completely different level of profitability – one might say negative," he said.
According to Volodymyr Schelkunov, president of the Ukrainian National Committee of the International Chamber of Commerce (ICC Ukraine), unblocking Ukraine’s seaports and broadening the list of goods that can be exported through them would allow the country to increase its foreign-exchange earnings to USD 20 billion per year. He also noted that the “international community” has limited the export of Russian products to its markets through sanctions and that Ukrainian manufacturers have a chance to take their place. However, for this to happen, it is extremely necessary to reopen seaports because railway corridors cannot ensure the full flow of goods. The issue of unblocking Ukraine’s seaports can be raised to the highest level of discussion jointly with Ukraine’s partner countries, the United Nations, and business organizations.
Therefore, one can fully agree with former infrastructure minister Volodymyr Omelian’s position. "We need to extend the grain corridor to all types of cargo, including bulk and container cargoes, and it can be done. We have seen that Russia is weak and unable to control the Black Sea. Ukraine, its allies, and Turkey can break its position through a joint approach," the former minister said.
