EU sanctions hamper Russian fertilizer supplies to Africa

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EU sanctions hamper Russian fertilizer supplies to Africa

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Wheat field: The new EU position makes it impossible to supply Russian fertilizers to third countries with EU economic operators, EU infrastructure and EU territory. picture | stock struggle

On August 29, the European Commission issued updated clarifications regarding the application of sanctions to fertilizers produced or exported from Russia – potassium chloride, as well as complex fertilizers (NPK) containing nitrogen, phosphorous and potassium. The new position of the European Union makes it almost impossible to supply Russian fertilizers to the world market with the economic operators of the European Union, the infrastructure of the European Union and the territory of the European Union. Obviously, this decision directly contradicts previous EU statements about the non-implementation 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 noted that on April 8, 2022, the European Union imposed sectoral sanctions on these types of fertilizers of Russian origin. The purchase, import or transfer of these products into the European Union in excess of the quotas established for the European Union was prohibited: the quota amounted to 837.5 thousand tons of potassium chloride and 1.577.8 thousand tons of other types of fertilizers containing nitrogen, phosphorous and potash. It should be noted that initially the ban did not apply to the transit of Russian fertilizers to third countries using the infrastructure of the European Union.

UN Secretary-General Antonio Guterres told reporters on Wednesday, September 14, that “removing the obstacles that still exist regarding the export of Russian fertilizer is absolutely necessary.” “There are … talks about the possibility of exporting Russian ammonia through the Black Sea,” Guterres said, adding that there was a “tragic situation” in the global fertilizer market.

“We are risking a fertilizer market crisis,” he said. “We have news from different parts of the world where acreage is much smaller than in the previous cycle, which means we risk having a real food shortage in 2022.”

On August 10, the European Union tightened sanctions on the transport of Russian fertilizers. The European Commission has expanded the ban on the activities of European operators related to transit through the territory of the European Union of fertilizers destined for third countries. Moreover, the supply of fertilizers to third countries even without the use of EU territory and infrastructure would be considered a violation of sanctions. The provision of transport, freight and trade services by European companies, as well as any related services, such as insurance, financial operations, brokerage and technical assistance, are now prohibited.

The European Commission’s updated clarification of August 29 contains an important clarification that could be considered a violation of established principles of international trade. According to the decision of the European Commission, operators from EU countries are prohibited from making payments for Russian goods delivered to Europe even before the imposition of sanctions. Since payment is part of contract fulfillment, the European Commission has unilaterally forced European operators to breach contractual obligations to Russian suppliers.

By imposing more and more restrictions, the European Commission notes that all of these measures support the goal of sanctions, which is to significantly weaken Russia’s economic base by depriving it of its most important markets for its products and drastically reducing its ability to wage war.

When imposing sanctions in the spring of 2022 after the Russian invasion of Ukraine, the EU stated that the targets of these sanctions are the Russian government, companies producing military products or services, officials who make decisions in the military sphere, and public figures loyal to the Russian government. The Kremlin. The European Union stated that the targets of the sanctions were in no way the Russian population, which has no direct or indirect relationship to the conduct of military operations.

Despite these statements, subsequent decisions of European bodies made ordinary Russian citizens hostage to sanctions. For example, European countries have significantly restricted or frozen the issuance of visas to Russians, which put a barrier to mass tourism. Earlier, the Visa and MasterCard bank payment systems stopped serving cards issued in Russia, the consequences of which were felt by most Russian citizens. Fearing sanctions, many Western companies producing mass market 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 publicly continue their rhetoric that sanctions against Russia are not aimed at the population.

The European Union sanctions race has also affected Europeans in the form of higher energy and food prices and unprecedented inflation. Social tension is rising, protest sentiment in many European cities is gathering residents in rallies, and people are increasingly expressing their dissatisfaction with the adverse effect of sanctions against Russia.

And now, the European Union, represented by its supreme executive, has gone even further, in effect extending the scope of sanctions to the population of the developing world. The ban on servicing Russian fertilizer transfers to third countries has serious consequences in the form of severe fertilizer shortages, deterioration 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 the many public statements made by European politicians previously and the general principles enshrined in the preamble of the seventh sanctions package, which declares food and energy security worldwide as a priority for the EU. In particular, the preamble states that none of the measures provided for in the Sanctions Regulations are intended to restrict trade in agricultural products, including wheat and fertilizers, between Third World countries and Russia.

Moreover, the EU is in flagrant violation of the “Memorandum of Understanding between the Russian Federation and the UN Secretariat on Facilitating the Promotion of Russian Food and Fertilizers on World Markets”, signed on July 22 in Istanbul. The memorandum was supposed to solve the problem of unhindered supplies of Russian food and fertilizers to the world market, as well as remove obstacles in the field of finance, insurance and other transport services operations.

However, this did not happen. In practice, the sectoral sanctions imposed by the European Union on fertilizers have entrenched the impossibility of supplying these products to third countries that include economic operators, infrastructure or the territory of the European Union. Further irony of the whole situation is the fact that the European Union set fertilizer quotas in its favour, removing it from sanctions.

Meanwhile, Russia is ready to donate to African countries hundreds of thousands of tons of fertilizer stuck in European ports due to sanctions. If it is unblocked. The situation in the port of Riga (Latvia) is contradictory. A ship loaded with 55 thousand tons of potassium chloride produced by the Russian company Uralchem ​​has been moored there since early March (that is, before the imposition of sanctions). The authorities in Latvia could not make a decision on this shipment for more than six months, not allowing the ship to leave the port or dock and unload fertilizers.

Due to the actions of the European Union, another document signed on July 22 between the United Nations, Russia and Turkey – the initiative for the safe transportation of grain and food from Ukrainian ports, was not implemented. – The so-called “grain deal”. The document provides an algorithm for exporting Ukrainian agricultural products from the Black Sea ports controlled by Kyiv, a coordination task that the United Nations has seized. But of the 2 million tons of grain exported from Ukraine, only 3 percent was sent to the poorest countries, and the rest went to the countries of the European Union. Since restrictions on the export of Russian grain and fertilizer have not actually been lifted, Russia may refuse to participate in the grain deal.

UN Secretary-General Antonio Guterres said he spoke with Russian President Vladimir Putin on Wednesday (September 14th) about Ukraine’s grain exports in the Black Sea and that he hopes to preserve and expand a UN-brokered deal to include Russian ammonia.

Following the logic of events, unfortunately, the further spread of embargoes and sanctions by the European Union on world trade in other categories of goods cannot be ruled out. This means that the sanctions war could turn into a global humanitarian catastrophe in the future.

Jerry Jackson – Fertilizer Market Analyst, African Agriculture Council

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