Why is Ukrainian grain no longer welcome among kyiv’s main allies?

The invasion of Russia Ukraine, which began in February 2022, brought with it a global crisis of raw materials. From the outset, both Russian oil and gas exports and grain exports from both rivals were affected, leading to international fuel and grain prices soaring.

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Now, on the contrary, the release of such products – especially grains – seems to have fulfilled the effect of a broken dam, endangering the local production of neighboring nations, many of them Ukraine’s main allies.

THE INITIAL CRISIS

It is not a minor fact to remember that during the 2020-2021 season, Russia and Ukraine ranked third and fourth on the list of the largest grain exporters in the world, respectively. To get a clearer idea of ​​their production power, it is enough to confirm that the two countries combined accounted for 22% of global exports in that period.

With the invasion ordered by the Kremlin, Russian ships took it upon themselves to blockade Ukrainian ports, annulling not only 98% of the country’s export capacity, but also stranding some 100 foreign ships.

The situation left some 20 million tons of Ukrainian wheat and corn in limbo, while the UN estimated that food prices would increase by 20.7% year-on-year as a result of the war.

In this context, the European Union began to lead the efforts to solve the crisis. In June of last year, a decision came into force that eliminated tariffs and agricultural export taxes on Ukrainian products, with the intention of keeping Kiev’s battered economy afloat.

The plan seemed to work, allowing the Ukrainian government to receive some 26 billion dollars – only 1 billion less than in 2021 – in said item since then.

During the 2020-2021 season, Russia and Ukraine ranked third and fourth largest grain exporters in the world, respectively. (SERGEI SUPINSKY / AFP /)

SOLUTION OR NEW PROBLEM?

Less than a year later, however, the president of the European Commission (EC), Ursula von der Leyen, had to acknowledge in a letter that the decision adopted by the bloc to rescue Ukraine has had “unintended consequences” and has caused a “unexpected increase” of imports.

Von der Leyen’s pronouncement comes after the EC held an emergency meeting with the governments of Poland, Hungary, Slovakia, Bulgaria and Romania.

Since last weekend, some of these Eastern European countries had taken different veto measures to try to curb Ukrainian exports.

The government of Poland, one of Ukraine’s main allies during the Russian invasion, announced on Saturday the 15th that imports of Ukrainian cereals into its territory were prohibited.

That same day the Hungarian government, headed by the ultra-nationalist Viktor Orban, issued a similar ban to safeguard the work of local farmers.

On Monday the 17th, Slovakia joined the decision of its neighbors by vetoing cereals, sugar, seeds, dry fodder, hops, flax, hemp, fruit and vegetables, processed fruit and vegetable products, wine, ethyl alcohol of agricultural origin, honey and bee products.

On Wednesday the 19th, the Orban Executive published a decree in which it also prohibited the sale of flour, honey, wine, bread, meat and vegetables from Ukraine until June 30.

Almost in parallel, the Bulgarian government issued a similar ban on Ukrainian cereals despite an offer from Brussels of aid of 16 million euros.

For the moment, Romania is the only one of this group of countries that has not enacted a ban against Ukrainian products, but local farmers are already putting pressure on the government to adopt a similar decision.

An ultimatum has been issued in the country for the publication of a veto that goes from June 15, 2023 to March 15, 2024, threatening to start protests from June 7 if there is no progress in that regard.

But why do they consider Ukrainian products to be a threat to local jobs? The short answer is that there is an excess demand for these products, supported by tax relaxations.

Thus, the EU countries neighboring Ukraine experienced a sharp increase in arrivals of corn, wheat or sunflower, which caused silos to become saturated due to logistical problems and local prices to plummet.

Ukraine received some 26 billion dollars from cereal exports during 2022 thanks to the lifting of tariffs. (SERGEI SUPINSKY / AFP /)

LOOKING FOR A SOLUTION

The European Commission branded on Sunday the 16th of “unacceptable” the decisions adopted by the Eastern European countries, which led to a crossover of statements mainly between Warsaw and Brussels.

Polish Deputy Foreign Minister Pawel Jablonski responded earlier in the week stating that “we would very much like the EU to have reacted just as quickly when Poland, Romania, Hungary, Slovakia and Bulgaria sent a letter to the EC President (Ursula von der Leyen) about three weeks ago asking for urgent intervention”, reported the EFE agency.

From Bulgaria, meanwhile, local farmers rejected the offer of a 16 million euro aid package offered by Brussels, when they estimate the direct losses caused by this crisis at 400 million euros.

A similar situation was experienced in Romania, where the Federation for Agriculture and Cooperation described the offer of 7 million euros by the European Commission as “miserable”.

Despite these crosses, however, certain wills have been seen to normalize the situation.

Hungary, for example, will allow Ukrainian grain to transit through its territory, but warned that very strict procedures will be put in place at border posts to ensure its electronic tracking.

A meeting held on Tuesday the 18th between the Polish head of government Mateusz Morawiecki and the Ukrainian deputy prime minister Julia Swiridenko led Warsaw to lift the veto for the transit of cereals.

During the meeting between Von der Leyen and the Eastern governments, it was also agreed that the Commission send a package for 100 million euros to be distributed among the five nations.

However, this would be nothing more than a small band-aid for a wound that could turn out to be larger than expected.

In fact, from Brussels they have admitted that the problem is more serious than what had been estimated in March and Von der Leyen has urged the entire community of the Old Continent to join in the efforts for a solution to safeguard Ukraine.

Paradoxically, those most affected by this crisis are, at the same time, those who tend to promote measures in favor of kyiv.

Source: Elcomercio