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BRUSSELS – European Union ambassadors agreed on Friday to allow Ukrainian wheat into the bloc without tariffs for another year, while providing more than $100 million in aid to farmers in EU countries where crop prices have collapsed with a flood of further imports. cheap.
The four countries – Poland, Bulgaria, Hungary and Slovakia – recently imposed unilateral bans on Ukrainian food imports to address the issue. But the ban has frustrated officials in Brussels and Kyiv, and illustrates how the EU’s tariff exemption, implemented last year to support Ukraine against a Russian invasion, has created unintended consequences that threaten to derail the bloc’s united front in the war.
“We have a solution to solve the problems of farmers in neighboring countries and Ukraine,” said Valdis Dombrovskis, the EU Trade Commissioner, on Friday. videos announced the deal, which made some concessions for the countries of the European Union affected by wheat. Mr. Dombrovskis said it would include a financial support package of 100 million euros, or about $110 million, for farmers in neighboring member states, from the EU’s emergency fund that is usually provided to compensate in the event of a natural disaster.
“In return, neighboring member states will withdraw unilateral measures,” he said, referring to the Ukrainian import ban.
The European Parliament is set to give formal approval next month, and Ursula von der Leyen, president of the European Commission, praised the agreement is “a deal that preserves Ukraine’s export capacity to continue feeding the world, and the livelihoods of farmers.”
Raising the EU tariffs was initially considered an emergency measure in response to the Russian invasion: a way to create a cheap and safe land route for essential grain supplies to leave Ukraine and to alleviate the global food crisis, which was made worse by the Russian naval blockade. Ukrainian port on the Black Sea.
The United Nations and Turkey struck a deal with Ukraine and Russia that allows grain transport from some of those ports, but the mechanism must be renewed every three months and Russia said this week it was considering withdrawing.
The European Union’s decision to raise tariffs on Ukrainian wheat spurred shipments to enter neighboring countries by road. But the policy backfired for the EU’s closest neighbor Ukraine. Tons of Ukrainian grain, which is cheaper than the EU equivalent, flooded the market and, instead of traveling, was stored in warehouses, causing prices in the country to fall.
The pain was immediately felt in Poland and other countries, where the pro-Ukraine government faced protests from farmers, an important political constituency.
On Friday, the four countries that banned Ukrainian wheat, and Romania, won some concessions from the European Union to agree to an extension of the tariff-free policy, Mr. Dombrovskis said.
Under the agreement, he said, some types of Ukrainian grains – among them wheat and sunflower seeds – will only be allowed to pass through the country on the way to other destinations, and will not be sold there. Officials hope that this will reduce the effect on farmers in neighboring Ukraine.
Details are being finalized and it is likely to be adopted in the coming days, Mr. Dombrovskis said.
The extension of the tariff exemption comes as Russia puts new pressure on the Black Sea grain deal that was first struck last July.
Speaking at a press conference at the United Nations this week, Russian Foreign Minister Sergey V. Lavrov said the pact was at an “impasse”. He repeated the Kremlin’s complaint that an agreement to allow grain ships to come and go from Ukrainian ports was accompanied by assurances that Russian agricultural products and fertilizers would also enter world markets, Western sanctions imposed as the invasion continues to hurt Russian sales.
The Black Sea deal has come a few days after it expired twice before, in November and in March. Each time, Moscow agreed to extend the agreement, but the latest extension came with a warning: It said the renewed agreement would expire in 60 days, on May 18, if the United Nations failed to resolve “five systemic problems” around Russian agriculture. export.
Russian officials say the grain deal is unfair to Ukraine at Russia’s expense. This month he made several demands, including reconnecting Russia’s agricultural banks to the SWIFT payment system, which facilitates cross-border payments; lift sanctions against fertilizer companies and people associated with them; and lifting restrictions on maritime insurance.
“We are listening to the parties’ views, and we try to resolve disagreements through discussions at all levels,” Farhan Aziz Haq, a UN spokesman, said on Friday.
He added: “The more food and fertilizers are supplied to the world market, the more we can reduce the harmful effects of the cost-of-living crisis and benefit vulnerable populations around the world. I hope all parties recognize the benefits and global value of the agreement mentioned and committed to supporting its continuation.
Many analysts are skeptical of Russia’s request, saying that the Russian economy – which depends above all on oil and gas – has managed to weather sanctions through large currency reserves, careful economic management and energy sales to countries like China and India.
In certain areas of agriculture, Russian farmers have even seen some benefits from sanctions, because competitive Western products have largely been excluded from the domestic market, said Timothy Ash, a Russian expert at BlueBay Asset Management in London.
He added that Russia’s demand to lift restrictions on maritime insurance had less to do with exporting grain than Moscow’s desire to facilitate marine oil exports. The European Union and the Group of 7 countries have banned Western maritime insurance providers from insuring ships carrying Russian oil that costs more than $60 a barrel.
“Russia is just trying to use the Black Sea grain deal to gain leverage to ease sanctions on Russia more generally,” he said.
Cora Engelbrecht and Liz Alderman contribute reports.
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