Producers of Hunger (II)

Contradictory Sanctions

EU sanctions that are affecting Russian fertilizer exports, are based on two components. One is directed against the sector as a whole: In its fifth sanctions package against Russia on April 8, the EU had declared an overall ban on the import of Russian fertilizers into the EU.[1] In the months following this ban, Brussels repeatedly pointed out that it did not formally apply to deliveries to third countries, for example to those in Africa. However, such deliveries were made impossible by the fact that EU sanctions against the Russian transport and financial sectors deprived them of their necessary logistical and financial basis. On August 10, the EU published a statement that transport of Russian fertilizer whether inside or outside the EU would be in breach of EU sanctions. On September 19, Brussels corrected its position by confirming that fertilizer deliveries to non-EU countries are not prohibited. On October 7, the EU added that this would also apply to deliveries transiting through EU territory, for example European ports.[2] The contradictory, often ambiguous rules caused have considerable insecurity – which is very typical for Western sanctions regimes. As a result, fertilizers were still not being delivered, even to non-EU countries.

Insecurity as an Obstacle

This was due to the fact that the second component of the sanction regime has caused uncertainty: sanctions directed at individuals. On March 9, they also targeted Dmitry Mazepin, a Russian billionaire and majority shareholder of Uralchem, one of the world's largest ammonia producers.[3] Ammonia is an essential ingredient in fertilizers. Although Mazepin gave up his majority shares in Uralchem and reduced them to 48 percent in March, uncertainty has persisted, whether this would be sufficient to do major business with Uralchem without risking penalties. Last week, Mazepin told the Financial Times that even though Uralchem and other Russian ammonia or fertilizer producers are de jure not under sanctions, there are always lawyers in a bank, who warn not to do business with targeted Russian companies, because of uncertainty. "We can’t even pay for transportation, when the cargo is humanitarian and is being presented free of charge to Africa," Mazepin complained.[4] The EU has, however, not imposed sanctions on Russian billionaires, on whose companies it depends, for example on Vladimir Potanin, whose company Norilsk Nickel produces 15 percent of the nickel used worldwide and 40 percent of its palladium: The EU itself needs these two raw materials.[5] However, unlike African countries, the EU can do without Mazepin's ammonia.

From Shortage of Fertilizer to a Shortage of Food

Since the spring, considerable anger has been expressed, particularly in Africa, pertaining to the EU’s sanctions policies. On May 24, during a joint press conference with German Chancellor Olaf Scholz, South Africa’s President Cyril Ramaphosa complained that even those countries that are either bystanders – such as African countries – or are not part of the conflict in Ukraine are also suffering from the sanctions that have been imposed against Russia.[6] Already in early August, the African Development Bank had warned that the continent had a shortage of around 2 million tons of fertilizer. Experts were predicting that the lack of fertilizer could lead to a slump in food production in Africa by at least 20% or more. (german-foreign-policy.com reported.[7]) According to the UN’s World Food Program (WFP), in the 82 countries where it is active – including numerous African countries – the war in Ukraine and the West’s sanctions have added around an additional 70 million to the large number of those already suffering under acute food insecurity.[8] Industry experts assume that, due to fertilizer shortage, a 2.4 percent drop in this year’s harvest can be expected in comparison to that of the previous year.[9] The full impact of fertilizer shortages usually takes longer to be felt in food availability.

First Breakthroughs at the UN

Accordingly, since the spring, the United Nations has been working hard to convince the EU to lift its sanctions on Russian fertilizer. The deal brokered by Turkey on July 22, which made the export of Ukrainian grain possible via the Black Sea, had officially committed the EU to allowing Russian fertilizer exports. However, Brussels continued to hide behind its allegation that there are no formal sanctions and refused to create the conditions allowing fertilizer deliveries. One of the first breakthroughs was achieved by the United Nations, when, on November 11, it could announce progress in the negotiations. November 12, Uralchem announced its intention to donate 260,000 metric tons of fertilizer. This was the amount EU states had been blocking for months in their ports. After further delays, it was possible to free a ship in Rotterdam carrying 20,000 metric tons of fertilizers, and it finally set sail to make the delivery to Malawi via ports in Mozambique.[10] However, EU countries remain reluctant to release Russian fertilizers. Latvia, for example, announced last week, it was prepared to release Uralchem shipments blocked in Riga – 200,000 tons of fertilizer – if it is guaranteed that the company would not receive any payment.[11]

The EU under Pressure

In the meantime, because of its fertilizer blockade, which is exacerbating hunger, particularly in Africa, the EU has come under such international pressure that it feels compelled to react in some fashion. Thus, primarily on the initiative of western members, the EU has loosened sanctions on six Russian billionaires, permitting EU countries to again make frozen assets available, when necessary – to avoid famine – to allow delivery of fertilizers. Among the six billionaires, one is the former Uralchem majority shareholder, Mazepin.[12] Poland and the Baltic countries have mounted fierce resistance to the loosening of sanctions, because, the fight against Russia must take priority over Africa’s hunger. The West European EU countries’ change of course has been apparently prompted by the realization that they are risking the complete loss of the African continent with the continuation of their sanctions policy at the expense of third parties. Of the 35 countries that abstained in an October vote at the UN condemning Russia’s annexation policy, about half were African, they explained.[13] To win them back, the EU is apparently prepared to make concessions. However, it is uncertain, whether the concessions will actually allow all fertilizers to be delivered or whether new ways will be found to again block their deliveries.

[1] EU adopts fifth round of sanctions against Russia over its military aggression against Ukraine. consilium.europa.eu 08.04.2022.

[2] EU sanctions – latest updated FAQs on the carriage of certain Russian cargoes including coal and fertilisers. standard-club.com 07.11.2022.

[3] Eleni Varvitsioti, Henry Foy, Valentina Pop: EU adds 14 more Russian business chiefs to its sanctions list. ft.com 09.03.2022.

[4] Polina Ivanova: Russian fertiliser billionaire pushes for ammonia exports. ft.com 13.12.2022.

[5] Katharina Wagner: Der Oligarch ohne Sanktionen. faz.net 31.05.2022.

[6] Ramaphosa: Russia sanctions hurt ’bystander’ countries. businesslive.co.za 25.05.2022.

[7] See also Producers of Hunger.

[8] Sam Fleming, Andy Bounds: Member states press EU to amend sanctions to unblock Russian food shipments. ft.com 07.12.2022.

[9], [10] How a donation of fertilizers for countries in Africa comes not a minute to soon. wfp.org 09.12.2022.

[11] Russian mineral fertilizers released following request from Guterres. bnn-news.com 12.12.2022.

[12] Andrew Rettman: Russian fertiliser kings to get EU sanctions relief. euobserver.com 16.12.2022.

[13] Sam Fleming, Andy Bounds: Member states press EU to amend sanctions to unblock Russian food shipments. ft.com 07.12.2022.