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Failure of talks between Erdogan and Putin regarding the grain agreement!
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Failure of talks between Erdogan and Putin regarding the grain agreement!

created Lukasz Klufczynski5 Września 2023

Turkish President Recep Erdogan met with Russian President Vladimir Putin yesterday to discuss renewing a deal allowing Ukraine to safely export grain. Moscow withdrew from the agreement in July, citing unfulfilled demands to facilitate the export of Russian agricultural products. However, Putin has made it clear that the initiative will not be restored now.

What was the outcome of the talks?

Putin poured cold water on hopes for a revival of the grain initiative, saying the West must first meet his demands for facilitating Russian agricultural exports. The West has previously rejected these complaints and said that there is nothing to prevent these exports.

Why did Russia leave the grain deal?

The Kremlin has refused to renew a grain deal that expires in July, saying a parallel deal promising to remove obstacles to Russian food and fertilizer exports has not been kept.

Moscow complained that restrictions on transport and insurance hinder trade in agricultural products, despite having shipped record numbers since last year wheat. Some companies are wary of doing business with Russia because of the sanctions, although Western countries have assured that Russian food and fertilizer exports are exempt from sanctions.

The original deal - negotiated by the United Nations and Turkey in July 2022 - allowed nearly 33 million metric tons (36 million tonnes) of grain and other goods to safely leave three Ukrainian ports despite the war raging through Russia.

Why is Türkiye a middleman?

Putin and Erdogan, both authoritarian leaders in power for more than two decades, are said to have developed a close relationship after Erdogan's failed coup in 2016, when Putin was the first major leader to offer his support.

The Turkish president maintained this close relationship during the 18-month war. Türkiye did not join Western sanctions against Russia after its invasion, becoming main partner and logistic center for foreign trade of Russia. At the same time, Turkey, a NATO member, also supported Ukraine by sending arms, meeting Ukrainian President Volodymyr Zelensky, and supporting Kiev's bid to join the Western alliance.

Since Putin withdrew from this initiative Erdogan has repeatedly promised to renew the arrangementsthat helped avoid food crises in parts of Africa, the Middle East and Asia. Ukraine and Russia are the main suppliers of wheat, barley, sunflower oil and other commodities that developing countries rely on.

Russia-Türkiye relations have not always been rosy

Traditional rivals Turkey and Russia have been on opposite sides in the conflicts in Syria, Libya and Nagorno-Karabakh. Nevertheless, relations between countries flourished in segments such as energy, defense, diplomacy, tourism and trade.

However, since Erdogan's re-election in May, Putin has faced internal challenges that could make him appear a less credible partner, most notably after a short-lived armed revolt in June by the late mercenary chief Yevgeny Prigozhin. Erdogan angered Moscow in July when he allowed five Ukrainian commanders to return home. The soldiers were captured by Russia and handed over to Turkey on the condition that they remain there for the duration of the war.

Can a breakthrough still come?

Erdogan said Turkey and the United Nations had prepared a new package of proposals.

"We believe that in a short time we will be able to find a solution that will meet your expectationsErdogan said after yesterday's talks in the Russian resort of Sochi.

Putin also expressed hope that the deal would be renewed if his demands were met. However, earlier German Foreign Minister Annalena Baerbock reacted sharply, stating that "Putin's game with the grain deal is cynical".

UN Secretary General Antonio Guterres recently sent Russian Foreign Minister Sergei Lavrov "concrete proposals" aimed at directing Russian exports to world markets and enabling the resumption of the Black Sea initiative. However, Lavrov said that Moscow was not satisfied with the letter.

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About the Author
Lukasz Klufczynski
Chief Analyst of InstaForex Polska, with the Forex market and CFD contracts since 2012. He gained his knowledge in many financial institutions, such as banks and brokerage houses. He conducts webinars in the field of technical and fundamental analysis, investment psychology and MT4/MT5 platform support. He is also the author of many expert articles and market commentaries. In his trading, he puts emphasis on fundamental elements, relying on technical analysis.