Istanbul grain deal is an important about-face

Just a few weeks ago, it seemed that the Kremlin is determined to stick on its blockade of Ukrainian ports in the Black Sea, so today's Istanbul grain deal is an important about-face. What might have changed Putin's calculus, and is he sincere? Some brief thoughts.

Blockade of Ukrainian grain exports served two purposes:

1. Strangling of the Ukrainian economy, denying Kyiv an important source of cash flow;
2. Putting more pressure on the West through engineering a crisis (refugee flow from MENA etc.) and then putting the blame on US and European sanctions.

This tactic has alarmed Russia's partners in  Middle East and North Africa (MENA), including such diverse players as Turkey, Egypt, Saudi Arabia, Israel, and Iran, among others who would have been hit economically and politically if flows of Ukrainian grain and Russian grain & fertilizers would be significantly curtailed.

Signals that the food crisis might have significant consequences for the whole region, and that instability can hit Russia too, have been part of Moscow's communication with regional capitals - both announced (Lavrov's trip, Putin's phone calls etc.) and unannounced.

Moscow's U-turn on the grain issue is to a large extent a reaction to the asks key MENA partners, particularly Turkey that now serves as the major formal and informal channel to connect sanctioned Russia to the outside world, including diplomacy, trade, money, and even yachts.

Turkey's pragmatic and transactional approach of has positioned Ankara well to be the powerful broker, and the Kremlin is also happy to help Erdogan to score points and earn money since Turkey will be one of the hubs to process grain from Russia and Ukraine.

Another element in the Kremlin's motivation is financial, since export of grain and fertilizers will be an important revenue source for Putin's war chest amid looming EU oil embargo, steep discounts Moscow has to provide to Asian buyers etc.

Efforts by the United States & the European Union to reduce sanctions risks, clarify rules for transactions on Russian grain & fertilizers for shippers, insurers, bankers etc., are not a formal part of the Istanbul process, but develop in parallel and have been a Russian precondition.

It's important to note that grain & fertilizers money will flow not only to the state budget, but also some well-connected players in Russian agrarian industry that's overseen by minister Dmitry Patrushev (son of Nikolay Patrushev, secretary of the Russian security council).

As for Ukraine, the deal will be very helpful, but can't be a silver bullet for the ag sector that has suffered immensely through the horrors of war.

Finally, when it comes to the Kremlin's geoeconomic war against the West, Moscow still has plenty of sharp objects in its toolbox beyond grain exports - and gas is the most powerful one.

Today's deal is a good news, it deserves praise, and we can only hope that it holds. However, the disastrous second-order and and third-order effects of this tragic war are only starting to become more evident, so there are many more dark pages in front of us.

Source: Twitter thread by Alex Gabuev