The European Union is reportedly considering reconnecting a subsidiary of the sanctioned Russian bank, Rosselkhozbank, to the SWIFT global financial network in order to salvage the Black Sea grain deal. The deal, which involves the export of Ukrainian and Russian grain, is currently set to expire on July 18. However, Moscow has warned that it will withdraw from the agreement if Rosselkhozbank is not reconnected to SWIFT.
According to sources familiar with the discussions, the EU is considering this move as a way to facilitate grain and fertilizer transactions. The plan was allegedly proposed by Moscow through UN-brokered negotiations. Rosselkhozbank was disconnected from SWIFT as a result of Ukraine-related Western sanctions against Russia. Moscow has made the reconnection of the bank to SWIFT one of its conditions for extending the grain deal.
Last week, Moscow stated that it saw no reason to prolong the agreement as it had not achieved its intended goal of directing grain towards poorer nations, and it claimed that Russia’s demands had not been met. In an effort to find a solution, UN Secretary-General Antonio Guterres proposed to Russian President Vladimir Putin that Moscow agree to extend the grain deal in exchange for partial access to SWIFT. Guterres reportedly suggested that the agreement be extended for several months, giving Brussels time to reconnect the Rosselkhozbank subsidiary to the payment system.
The Black Sea Grain Initiative, formally signed in July 2022 and mediated by the UN and Turkey, has faced numerous challenges throughout its duration. One of the main issues has been the ongoing Ukraine conflict, which has resulted in Western sanctions against Russia. These sanctions, including the disconnection of Rosselkhozbank from SWIFT, have hindered the smooth operation of the grain deal.
The proposal to reconnect Rosselkhozbank to SWIFT is seen as a potential resolution to the current impasse. By allowing the subsidiary to regain access to the global financial network, it would enable the smooth facilitation of grain and fertilizer transactions. This move could potentially salvage the Black Sea grain deal and prevent its collapse.
However, the decision to reconnect the sanctioned Russian bank to SWIFT is not without controversy. Critics argue that it would effectively bypass the current Western sanctions against Russia, undermining their intended impact. Proponents, on the other hand, argue that reconnecting Rosselkhozbank is necessary to ensure the continuation of the grain deal and to prevent further strain on international trade relations.
The EU’s consideration of this proposal demonstrates the importance of the Black Sea grain deal for both parties involved. It also highlights the complex nature of international trade and the delicate balance between economic cooperation and political tensions. As negotiations continue, it remains to be seen whether the reconnection of Rosselkhozbank to SWIFT will be agreed upon and whether it will be enough to save the Black Sea grain deal. Ultimately, the outcome of these discussions will have significant implications for the future of trade relations between the EU and Russia.