Islamabad: Foreign Minister Bilawal Bhutto-Zardari spoke on the phone with his Russian partner Sergei Lavrov on Wednesday. It is about bilateral ties and the Black Sea Grain Initiative (BSGI). The Foreign Office said in a statement that the two men talked about BSGI.
The statement said that FM Bilawal acknowledged the importance of this initiative. As well as its potential impact on global food supply chains. Which could lead to food inflation and other problems with food security. He also stressed the need for coordinated efforts to find solutions that would help developing countries that are already struggling economically.
Food and fertiliser can be sent out of Odesa, Chornomorsk, and Yuzhny/Pivdennyi, which are three Ukrainian Black Sea towns.
FM Bilawal said he hoped that everyone interested in the initiative would talk to each other in a positive way to bring it back to life. In this case, the minister said again that Pakistan was behind international attempts to fix the deal by listening to everyone’s concerns.
Bilawal also told Lavrov about the BSGI talks he had with his peers from Ukraine and Turkey, as well as with the US Secretary of State and the High Representative for Foreign Affairs of the European Union.
While thats going on, the Russian minister explained how his government saw the situation. After that, the two foreign ministers agreed to keep in close touch about the problem.
Both Bilawal and Lavrov had a useful conversation about mutual issues and how the two governments are working together in more and more areas. Bilawal also invited Lavrov to visit Pakistan again.
Deal stoppage could raise grain prices 10-15%
The International Monetary Fund thinks that if Russia pulls out of the deal, food prices around the world could go up by 10-15%, but it says it will continue to look at the situation.
Pierre-Olivier Gourinchas, the head economist at the IMF, told reporters that the Black Sea grain deal had “very important” in making sure that Ukraine could ship a lot of grains, which helped keep food prices down. He said that its possible that prices would go up if its stopped.
He said, “We’re still trying to figure out where we’re going to end up, but you might think that a 10–15% increase in the price of grains is a good guess.”
On Tuesday, the IMF said that global average inflation would drop from 8.7% in 2022 to 6.8% in 2023 and 5.2% in 2024. Core inflation would drop more slowly, from 6.0% in 2023 to 4.7% in 2024.
Gourinchas told Reuters that inflation might not get back to where central bankers want it to be until the end of 2024 or the beginning of 2025. At that point, the current cycle of tightening money would end.
What is the Black Sea Grain Initiative?
The UN and Turkey came up with the Black Sea deal in July of last year to help stop a global food disaster thats made worse by Russia’s invasion of Ukraine in February of 2022. Ukraine and Russia are two of the biggest producers of grain in the world.
Russia has said that not enough grain is going to poor countries because of the deal. But the UN said that the agreement was good for those countries because it helped lower food prices around the world by more than 20%.
Under the deal, Ukraine has sent out nearly 33 million metric tonnes of maize, wheat, and other grains. Under the deal, the last ship left Ukraine on Sunday.
To get Russia to agree to the Black Sea deal, UN officials decided in July 2022 to help Russia get its food and fertiliser exports to foreign markets. This was part of a three-year memorandum of understanding.
Even though food and fertiliser exports are not affected by the sanctions the West put in place after Russia invaded, Moscow has said that limits on payments, logistics, and insurance have made it hard to ship goods.
Russia’s main requests were that it be allowed to send ammonia through a pipeline to the Ukrainian port of Odessa and that its state farm bank, Rosselkhozbank, be reconnected to the SWIFT international payments system. The European Union cut it off in June of last year, after the attack.
During the time that the UN-backed grain deal was in place, about 60% of Ukraine’s exports went through the solidarity lanes and 40% went through the Black Sea.
