Russia's drone attack on Ukraine's grain hub shakes global markets

On Wednesday, Russia launched drone attacks on Ukraine's main inland port, Izmail, on the Danube River across from Romania.

Russia's drone attack on Ukraine's grain hub shakes global markets
A view shows marine station building destroyed during a Russian drone strike, amid Russia's attack on Ukraine, in Izmail, Odesa region, Ukraine August 2, 2023. REUTERS/Nina Liashenko

The backstory: Ukraine is known for being one of the top grain exporters in the world. But after Russia invaded its territory last year, one consequence was disruptions in the global grain market. That's troubling for everyone, especially considering the ongoing global food crisis.

To tackle the issue, the UN and Turkey stepped in and negotiated a deal with Russia called the Black Sea Grain Initiative back in July 2022. The deal allowed Ukraine to continue exporting its grain, which was crucial in helping with the global food situation. At first, the deal was set for 120 days, and then it was extended automatically for another 120 days in November. So, Ukraine was able to safely export over 30 million metric tons of grain to reach the global market with this agreement.

More recently: In March,  it was time for another renewal of the grain deal. But Russia wanted some changes made to the agreement. So instead of the usual 120 days, the deal was renewed for just 60 days.

Then, in July, right before the Black Sea Grain Initiative's expiration, Russia said it would renew the deal only if certain demands were met, such as easing rules on its own food and fertilizer exports. Around the same time, Russia accused Ukraine of attacking a bridge connecting annexed Crimea to Russia. Hours later, Russia pulled out of the grain deal, although the country said the Crimean Bridge explosion didn’t have anything to do with its decision.

Last week, Russian President Vladimir Putin announced that Russia would not rejoin the deal at the Russia-Africa Summit in St. Petersburg and would instead work on ways to provide grain to certain African countries that need it.

The development: On Wednesday, Russia launched drone attacks on Ukraine's main inland port, Izmail, on the Danube River across from Romania. This is a big deal because the port is crucial for Ukraine's grain shipments, especially since Russia has been blocking ports in the Black Sea. The attacks had a huge impact, with buildings being destroyed and operations disrupted at the port. Also, around 40,000 tons of Ukrainian grain headed to Africa, China and Israel were destroyed, according to Ukrainian Deputy Prime Minister Oleksandr Kubrakov.

President Volodymyr Zelenskiy accused Moscow of trying to manipulate global food markets and disrupt grain supplies. But the Russian state news agency RIA said the targeted areas had been housing foreign mercenaries and military equipment. The situation has also affected international shipping, with ships that were headed for the port to load up with grain to get around Russia's blockade having to suspend operations and anchor near the mouth of the Danube River.

Key comments:

"Moscow is waging a battle for a global catastrophe," said Ukrainian President Volodymyr Zelenskiy in a video address. "In their madness, they need world food markets to collapse; they need a price crisis; they need disruptions in supplies."

"In the coming three or four months, we would be ready to provide to Burkina Faso, Zimbabwe, Mali, Somalia, the Central African Republic and Eritrea up to 50,000 tons of grain each. We will ensure free shipping of these cargo," said Russian President Vladimir Putin last week.

"Ukrainian grain is indispensable for the world and cannot be replaced by any other country in the coming years," wrote Ukrainian Deputy Prime Minister Oleksandr Kubrakov on Facebook. "The port of Izmail suffered the most damage, including the terminal and infrastructure of the Danube Shipping Company."