After Russia announced the withdrawal from the agreement with the United Nations (UN) on the transportation of grain across the Black Sea during the weekend before last, the West is again trying to find a solution to transfer tons of grain produced in Ukraine to world markets.
While there may be a last-minute diplomatic solution to keep the deal, which expires on November 19, alive, all eyes may now be on Brussels to increase the possibility of Ukrainian goods reaching the market via other routes through the European Union.
The bloc already made such a partially successful deal during the summer, but the question remains whether it has enough money, time and capacity to repeat it - if necessary.
Why is export via the Black Sea important?
Ukraine is one of the main countries in the production of agricultural goods, mainly wheat, corn and sunflower oil, and exports are necessary both for the national treasury of that country and for the suppression of hunger in the so-called countries. Third World, especially around the Horn of Africa. This is why the world was afraid of the consequences of the blockade of Ukrainian ports on the Black Sea earlier this year.
90 percent of all Ukrainian agricultural products were exported from the port, and soon 20 million tons of grain were stuck in warehouses. The EU's response came in early May with the launch of the so-called "Solidarity Roads" - a kind of logistics network between the bloc and Ukraine that included rail, road and inland waterways, as well as cooperation between customs and state authorities on both sides of the border.
From May to October 20, more than 14 million tons of grain and an additional 15 million tons of non-agricultural products, such as steel and oil, were exported via "solidarity routes". This was one of the least noticed, yet most significant contributions of the European Union to Kyiv since the outbreak of war.
Some policy measures to speed up transport at the EU-Ukraine border were taken immediately; the zero VAT rate on Ukrainian goods until the end of 2022 - likely to be extended beyond - was significant. Other measures include derogations from quotas and tariffs until June next year and the abolition of some phytosanitary checks on animal products not intended for the EU market.
Despite this, it should be borne in mind that the transport of Ukrainian products through the Black Sea ports is cheaper and easier in normal times, because ships can move larger quantities of goods in one go.
Fourteen million tons transported by land in five months is impressive, but it is worth remembering that the Black Sea grain agreement, since it came into force in mid-July, has so far enabled the export of 9,5 million tons. And only from a few selected ports.
What more can Brussels do?
At least 12 cargo ships left Ukrainian ports on Monday (October 31st), but the question remains what can the EU do if all the ships remain at anchor again?
Already at the end of September, EU officials announced that they began to see capacity constraints and bottlenecks on two main lanes - the "Northern routes" through Poland and the "Danube route" leading to the port of Constanta in Romania.
They also warned that waiting makes up 40 percent of the total logistics costs, which means that each ton of grain increases the cost of transportation by 80-90 euros. Now it is necessary for Brussels to get involved once more and find ways to reduce the kilometer-long queues on its borders with Ukraine. This implies other measures besides already existing waivers of additional checks, duties and taxes.
In other words, an economic investment is necessary. And it is necessary quickly. Because there are problems on both sides. The EU budget for 2022 is already quite "stretched", and the Brussels agreement on financial aid to Ukraine in 2023 is not in sight.
There remains hope that 18 billion euros will be available, mostly in loans, but how much of that amount will go to improving "roads of solidarity" when Kiev has so many urgent needs?
There is also a race against time. Cleaning up the Danube to increase commercial traffic on that river is necessary, but it will not happen overnight. The same situation is with the railways between Ukraine and Poland. The result of the first study on how to synchronize them will be published next year.
On the other hand, there are small wins and investments here and there that can make at least some difference in the short term. Scanners for faster vehicle load checks could speed up the process, but they cost three million euros each and take 12 to 18 months to procure.
That is why it will be a challenge for some EU countries how to donate them to frontline countries, such as Poland.
Other possible solutions include more parking spaces for freight traffic at borders, additional lanes to separate commercial and private traffic, or even entirely new border crossings. The renovation of one border crossing on the Ukrainian-Slovak border and two new crossings on the border of Ukraine and Romania could be completed this fall.
EU officials are also hoping another aspect will go their way: Ukraine's accession to the Common Transit Convention on October 1. The agreement, which was already in force between the EU and several non-member European countries, offers common procedures for the international transit of goods and significantly reduces the amount of paperwork.
EU officials have described Kiev's accession as a "potential game changer", which can cut customs clearance times "from minutes to seconds".
However, they warn not to expect a magical solution to all issues, as Ukraine needs a period of gradual introduction into the processes.
EU diplomats enthusiastically announce that the ways of solidarity are "here to stay" and will become even more important in the future - both when it comes to the reconstruction of Ukraine and the future approach to the single market. That is certainly good news - for the future. Until then, don't expect them to replace the Black Sea export routes when they are most needed - now.
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