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EU sanctions derail Russian fertilizer supply to Africa
Wednesday, September 21, 2022
A wheat field: the new position of the EU makes it impossible to supply Russian fertilizers to third countries with EU economic operators, EU infrastructures and EU territory. PICTURES | SHUTTER
On August 29, the European Commission published updated clarifications on the application of sanctions against fertilizers produced or exported from Russia – potassium chloride, as well as complex fertilizers (NPK) containing nitrogen, phosphorus and potassium. The new position of the EU makes it almost impossible to supply Russian fertilizers on the world market with EU economic operators, EU infrastructure and EU territory. This decision directly contradicts previous EU statements on the non-application of restrictions on trade in agricultural products and fertilizers between Russia and third countries and puts people in developing countries on the brink of starvation.
It should be recalled that on April 8, 2022, the EU imposed sectoral sanctions on these types of fertilizers of Russian origin. The purchase, import or transfer of these products to the EU beyond the quotas set for the EU has been prohibited: the quotas amount to 837.5 thousand tons of potassium chloride and 1,577, 8 thousand tons of other types of fertilizers containing nitrogen, phosphorus and potash. It should be noted that initially the bans did not apply to the transit of Russian fertilizers to third countries using EU infrastructure.
UN Secretary General António Guterres told reporters on Wednesday, September 14, that “removing the obstacles that still exist in the export of Russian fertilizers is absolutely essential”. “There are (…) talks regarding the possibility of Russian exports of ammonia through the Black Sea,” said António Guterres, adding that there was a “dramatic situation” in the world fertilizer market.
“We risk having a tightening of the fertilizer market,” he said. “We have news from different parts of the world where cultivated areas are much smaller than in the previous cycle, which means that in 2022 we risk having a real lack of food.”
On August 10, the EU tightened sanctions against the transport of Russian fertilizers. The European Commission has extended the ban on the activities of European operators linked to the transit through EU territory of fertilizers intended for third countries. In addition, from now on the supply of fertilizers to third countries, even without the use of EU territory and infrastructure, will be considered a violation of sanctions. The provision of transport, transhipment and trading services by European companies, as well as all related services, such as insurance, financial and brokerage operations and technical assistance, are now prohibited.
Updated August 29 The clarification of the European Commission contains an important clarification, which can be considered as a violation of the immutable principles of international trade. According to the decision of the European Commission, operators from EU states are prohibited from making payments for Russian goods delivered to Europe even before the imposition of sanctions. Since payment is part of the performance of the contract, the EC has in fact forced European operators to unilaterally breach contractual obligations to Russian suppliers.
By imposing more and more restrictions, the European Commission cites that all these measures support the objective of the sanctions, which is to significantly weaken Russia’s economic base by depriving it of its most important markets for its products and by greatly limiting its ability to wage war.
When imposing sanctions in the spring of 2022 after Russia invaded Ukraine, the European Union said the targets of these sanctions were the Russian government, companies producing military products or services, officials making decisions in the military field and public figures loyal to the Kremlin. The EU said that the targets of the sanctions were in no way the Russian population, which had no direct or indirect connection with the conduct of military operations.
Despite these statements, subsequent decisions by European bodies have in fact made ordinary Russian citizens hostage to the sanctions. For example, European countries have significantly restricted or frozen the issuance of visas to Russians, which has put a barrier to mass tourism. Previously, Visa and MasterCard bank payment systems stopped handling cards issued in Russia, the consequences of which were felt by most Russian citizens. Fearing sanctions, many Western companies producing consumer products – household appliances, clothing, food, etc. – reduced their activities in Russia, which also affected the interests of large segments of the population.
At the same time, European officials are publicly continuing their rhetoric that anti-Russian sanctions do not target the population.
The EU sanctions race has also hit Europeans in the form of rising energy and food prices and unprecedented inflation. Social tension is rising, feelings of protest in many European cities are gathering residents for rallies, and people are increasingly openly expressing their displeasure at the adverse effect of the imposed anti-Russian sanctions.
Today, the European Union, represented by its supreme executive body, has gone even further, in effect extending the sanctions to the population of the developing world. The ban on serving Russian fertilizer transit operations to third countries has devastating consequences in the form of severe fertilizer shortages, the decline of agriculture and the spread of hunger among billions of people in developing countries in Asia, Africa and Latin America.
The new EU clarifications directly contradict both the numerous public statements made earlier by European politicians and the general principles enshrined in the preamble of the seventh sanctions package, which proclaims food and energy security in the world as the priority of the EU. In particular, the preamble states that none of the measures provided for in the Sanctions Regulation is intended to restrict trade in agricultural products, including wheat and fertilizers, between third countries and Russia.
Moreover, the EU grossly violates the “Memorandum of Understanding between the Russian Federation and the UN Secretariat to facilitate the promotion of Russian food and fertilizers in world markets”, signed on July 22 in Istanbul. The memorandum was supposed to solve the problem of unhindered supply of Russian food and fertilizers on the world market, as well as remove obstacles in the field of finance, insurance and other transit service operations.
However, this did not happen. In practice, EU sectoral sanctions on fertilizers have only cemented the impossibility of supplying these products to third countries involving economic operators, infrastructure or EU territory. The added cynicism of the whole situation is given by the fact that the EU has set quotas on fertilizers in its interest and removed them from sanctions.
Meanwhile, Russia is ready to give African countries hundreds of thousands of tons of fertilizer blocked in European ports because of sanctions. If they are unlocked. The situation in the port of Riga (Latvia) is paradoxical. A ship loaded with 55,000 tonnes of potassium chloride produced by Russian company Uralchem has been anchored there since early March (i.e. before sanctions were imposed). Latvian authorities could not make a decision on this cargo for more than six months, not allowing the ship to leave the port or to moor and unload the fertilizers.
Due to EU actions, another document signed on 22 July between the UN, Russia and Turkey – the Initiative on Safe Transportation of Grains and Foodstuffs from Ukrainian Ports – is not in fact not implemented. – The so-called “grain agreement”. The document prescribes an algorithm for the export of Ukrainian agricultural products from the Black Sea ports controlled by kyiv, the coordination task of which has been taken over by the UN. But out of 2 million tons of grain exported from Ukraine, only 3% went to the poorest countries, the rest went to European Union countries. And since restrictions on the export of Russian grains and fertilizers have never been lifted, Russia could refuse to participate in the grain agreement.
UN chief Antonio Guterres said he spoke with Russian President Vladimir Putin on Wednesday September 14 about Ukrainian grain exports from the Black Sea and that he hoped a UN-brokered deal would be maintained and expanded to include Russian ammonia .
Following the logic of events, unfortunately, a further extension of bans and sanctions by the European Union on world trade in other categories of goods cannot be ruled out. And that means the sanctions war could turn into a global humanitarian disaster in the future.
Jerry Jackson – Fertilizer Market Analyst, Africa Farming Council
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