Erdogan vs. Putin: Tough Talk and Icebreakers

The meeting between the President of Turkey, Recep Tayyip Erdogan, and the President of Russia, Vladimir Putin, left a sense of incompleteness. However, it would have been better if Putin had agreed to Erdogan's proposals instead of resorting to the usual blackmail regarding the renewal of the Black Sea grain deal. This is because, amid Russia's muscle-flexing, Ukraine, with Turkey's support, is building an independent maritime export corridor not reliant on Russia. This goes beyond food exports. Just days before Erdogan's meeting with Putin in Sochi, two ships departed from Ukrainian ports and successfully reached their destinations loaded with metallurgical products. If this isn't a signal of Ukraine's rejection of Russia's blackmail, then what is?

The one-day talks between the President of Turkey, Recep Tayyip Erdogan, and the President of Russia, Vladimir Putin, in Sochi (on the Black Sea coast, Krasnodar Krai, southern Russia) revolved around three main topics: the (non)renewal of the Black Sea grain deal, the export of Russian gas through Turkey and to Turkey, and some other, albeit significant, less-publicized matters, including Russia's nuclear power plant construction program in Turkey.

However, it's the first two points - the grain deal and the gas project - that remain in a somewhat suspended state.

Putin's Grain Blackmail

To recap, the agreement on unhindered maritime transportation of foodstuffs from Ukraine was reached on July 22, 2022, in Istanbul. Separate document were signed between Ukraine, the UN, and Turkey, with the latter serving as the guarantor of the agreement. Separate document were also signed between Russia, the UN, and Turkey.

This agreement, which was repeatedly extended until July 2023, averted a global food crisis. The presence of Ukrainian food on the world market, consumed by approximately half a billion people globally, helped stabilize prices not only for poorer countries but also benefited wealthier EU countries. For instance, European farmers could produce cheap eggs, meat, and dairy products due to the availability of low-cost Ukrainian corn.

However, on July 17, 2023, Russia unilaterally terminated the agreement. This blocked the movement of cargo ships carrying food from Ukrainian ports, leading to a rapid spike in global food prices. Soon after, prices began to normalize with the arrival of new harvests from countries in the northern hemisphere. Nevertheless, Russia tried to resort to blackmail.

Photo: After the price shock in July, the global wheat market quickly stabilized. Source: The Gaze, CBOT.

During the talks in Sochi with Recep Erdogan, Putin once again insisted on his demands, including:

Restoring access to the SWIFT system for international payments for Rosselkhozbank, the Russian state bank responsible for agricultural exports.

Resuming operations of the ammonia pipeline from Tolyatti (Russia) to Odesa (Ukraine), which crosses the frontlines in northeastern Ukraine.

Lifting sanctions on the export of machinery to Russia under the pretext of agricultural machinery needs.

Removing sanctions on insurance and logistics for freight transport from Russian ports.

Ukraine is strongly insisting on keeping these sanctions in place because Russia, through its attacks on Ukrainian export infrastructure, has sought to achieve two goals at once: to push Ukrainian suppliers out of the global agricultural market and to provoke an increase in global food prices.

For example, even during the implementation of the Black Sea Agreement, Russia conducted missile attacks and drone strikes on port and warehouse facilities in Ukraine. After the termination of the Black Sea Agreement in July 2023, Russia significantly escalated its attacks on these mentioned targets. It even went so far as to launch drone strikes on a Romanian port located near the Ukrainian border in early September.

Photo: Ukraine is actively utilizing alternative water routes. A cargo ship on the Danube River. Source: Getty Images.

Therefore, Kyiv's stance is quite clear: Russia should not benefit from attacks on peaceful transport corridors. However, following the negotiations in Sochi, President Recep Tayyip Erdogan told journalists, "Ukraine needs to soften its position in order to facilitate joint actions with Russia."

Kyiv is not willing to agree to this proposal, as made clear by Ukrainian Foreign Minister Dmytro Kuleba. He stated on Ukrainian television that Kyiv would not change its position but would take into account how Turkey portrays the Sochi negotiations.

What's Next for Grain

"After our meeting in Sochi, as Turkey, we believe that we will reach a solution that meets expectations in a short time," Erdogan said. In the coming days, he will participate in several international platforms where he announced he will promote the restoration of the grain agreement. Specifically, Erdogan will attend the G20 summit in India on September 9-10, followed by the United Nations General Assembly in New York from September 18-26. He has already announced that he will hold talks with UN leaders on the possibility of restoring the Black Sea grain agreement.

"On August 28, UN Secretary-General Guterres, in a letter he sent, proposed a mediation mechanism that would result from a SWIFT transaction, not directly from SWIFT, as the Russians wanted," Erdogan said. "They also said that work is underway on the issue of insurance," he added.

However, these decisions would mean capitulating to Putin's blackmail and allowing Russia to more strongly finance its invasion of Ukraine. Therefore, Kyiv stands its ground and explores maritime routes without Russia's approval. As of the evening of September 5, four large-tonnage ships have already departed from Ukrainian ports in the Black Sea towards Romania and Turkey, and then on to their final destinations. The first two ships were loaded with food, while the third and fourth carried metallurgical products. These were the Anna Theresa (formerly Filia Glory) and Ocean Courtesy, which reached Romania's Constanta on September 3.

Photo: Owners of the bulk carrier Ocean Courtesy disregarded Russian threats. Source: marinetraffic.com.

It's worth noting that all of these ships had been in Ukrainian ports since February 2022 and were unable to sail due to Russia's blockade. In other words, these ships were not headed to Ukraine after the start of hostilities in the Black Sea.

What's next? Kyiv hopes for an even larger grain and oilseed crop than in 2022, so the need for exports will be urgent. There is no doubt that Ukraine will seek asymmetric responses to Russia's grain blackmail. In the coming week, the EU is expected to make a decision on the extension of the transit regime for Ukrainian foodstuffs through the European Union, which should help overcome Russian blackmail. And surely, the movement of ships with Ukrainian cargoes along the Romanian and Turkish coasts in the territorial waters of these countries will continue.

Natural Gas and Nuclear Power Stations

The Kremlin is in a frantic search for alternative gas export routes after the restrictions placed on the Nord Stream 1 and Nord Stream 2 pipelines. Gazprom, Russia's state-owned gas company, now has only two real supply channels to the west.

The first channel, somewhat surprisingly, runs through Ukraine, where the gas pipeline crosses the border in the far northeast, an area with limited active combat operations. However, transit through Ukraine can be halted at any moment if Russia were to destroy the pipeline or compressor stations near the Ukrainian border. Kyiv has no interest in halting this transit, primarily because it doesn't want to create problems for its Western allies, who actively support Ukraine in countering Russian aggression.

The second channel involves pipelines running along the bottom of the Black Sea and through Turkey. These are the "Blue Stream" and "Turkish Stream" pipelines, with a combined capacity of just under 48 billion cubic meters per year, though they are not currently operating at full capacity. Eventually, Russian gas enters the networks of South European countries through Turkey. This arrangement could potentially deliver an additional 10 billion cubic meters of Russian gas to Europe by 2025.

Negotiations are also ongoing about establishing an electronic hub based on these pipelines, where natural gas prices for Western Europe and Turkey would be quoted. However, this remains in the planning stage as of discussions in Sochi on September 4th.

Photo: The nuclear power station Akkuyu, expected to satisfy 10% of Turkey's electricity needs. Source: Anadolu Agency.

Additionally, Ankara continues to cooperate with Moscow on the construction of nuclear power plants. The first unit of one such plant could start operating as early as next year, despite initial plans for operation start on 2025. This facility, named Akkuyu NPP, is located in southern Turkey between the cities of Alanya and Mersin and is expected to reach a capacity of 4,800 MW once all four units are operational. Another plant is planned near the city of Sinop on the Black Sea coast.

Turkey's cooperation with Russia in the field of nuclear energy has raised numerous questions, especially considering the events of the past two years. This includes nuclear blackmail, which Russia resorted to immediately following its full-scale invasion of Ukraine. Moscow's status as a nuclear blackmail actor makes it a highly contentious partner in the sensitive field of nuclear technology.