With grain deal in focus, Putin to meet Erdogan in Russia

MOSCOW (Reuters) -Turkish President Tayyip Erdogan will try to convince Kremlin chief Vladimir Putin to return to a Ukraine grain export deal that helped ease a global food crisis, when the two leaders meet in Russia’s Black Sea (NYSE:) resort of Sochi on Monday.

Russia quit the deal in July – a year after it was brokered by the United Nations and Turkey – complaining that its own food and fertiliser exports faced obstacles and that not enough Ukrainian grain was going to countries in need.

Kremlin spokesman Dmitry Peskov said that the talks with Erdogan, who previously played a significant role in convincing Putin to stick with the deal, would take place in the middle of the day, Moscow time.

“We play a leading role here,” Erdogan’s chief foreign policy and security advisor Akif Cagatay Kilic said in an interview on A Haber television channel.

“The current status (of the grain deal) will be discussed at the summit on Monday. We are cautious, but we hope to achieve success,” Kilic said.

The deal was aimed at getting grain from Ukraine to world markets through the Black Sea and easing a global food crisis that the United Nations said had been worsened by Russia’s full-scale invasion of Ukraine in February last year.

Russia and Ukraine are two of the world’s key agricultural producers, and major players in the wheat, barley, maize, rapeseed, rapeseed oil, sunflower seed and sunflower oil markets.

Putin has said Russia could return to the grain deal if the West fulfils a separate memorandum agreed with the United Nations at the same time to facilitate Russian food and fertiliser exports.

While Russian exports of food and fertilizer are not subject to Western sanctions imposed after Russia’s invasion of Ukraine, Moscow has said restrictions on payments, logistics and insurance have hindered shipments.

Ahead of the Erdogan talks, Ukrainian officials said Russia launched an overnight air attack on one of Ukraine’s major grain exporting ports.

A 3 1/2-hour drone assault on the Danube River port of Izmail, in Ukraine’s Odesa region, hit warehouses and production buildings, and drone debris set several civilian infrastructure buildings on fire, the governor of the Odesa region said.

UN PROPOSAL

U.N. Secretary-General António Guterres said on Thursday that he had sent Russian Foreign Minister Sergei Lavrov “a set of concrete proposals” aimed at reviving the deal.

One of Moscow’s main demands is for the Russian Agricultural Bank to be reconnected to the SWIFT international payments system. The EU cut it off in June 2022 as part of sweeping sanctions imposed in response to the invasion.

Russian foreign ministry spokeswoman, Maria Zakharova, said on Saturday that things that were implied by the agreement had not been implemented last time. In its report on the Erdogan meeting, Russian state television said promises made to Russia must be implemented.

Russia has also been discussing a Putin initiative to supply up to 1 million tonnes of Russian grain to Turkey at reduced prices for subsequent processing at Turkish plants and shipping to countries most in need.

For Russia, Erdogan is a key broker – and one respected personally by Putin. It is their first in-person meeting since October.

Ahead of Monday’s meeting, U.S. wheat prices closed lower on Friday as markets weighed tight global stocks against the prospect of hefty Russian wheat production and efforts to renew the deal.