Russia says JP Morgan stops processing grain payments

US bank JP Morgan was reported to have stopped processing payments last week for the Russian Agricultural Bank

Russia on Friday demanded “actions, not words” from the current US administration, singling out Secretary of State Anthony Blinken, to help Russian grain and fertilizer reach global markets.

US Secretary of State Antony Blinken told reporters on Thursday that Washington would continue to do “whatever is necessary” to ensure Russia can freely export food if the Black Sea grain deal was revived.

JP Morgan had handled some Russian grain export payments for the past few months, with reassurances from Washington that this would not constitute any breach of US sanctions against financial aid to Russia. However, Russia’s foreign ministry spokesperson Maria Zakharova was quoted by Russian media as saying on Friday that “the direct channel between the Russian Agricultural Bank and JPMorgan was closed on August 2nd.

The UN and the US State Department were uncharacteristically silent on Friday when asked about the claim. JP Morgan also declined to comment.

A major cause of Russia pulling out of the Black Sea Corridor grain agreement, which ran for just shy of a year from last August, was that “hidden” barriers had been put in place to prevent Russia exporting goods which were not sanctioned and which, it claimed, the Corridor agreement had guaranteed. It felt, in other words, that the EU in particular and the G7 in general had been mendacious in its negotiations.

A related pact to the Corridor agreement, also brokered by the UN and Turkiye in July 2022, stated that UN officials would help Russian food and fertilizer exports reach global markets. “As soon as this is done, this deal will immediately be renewed,” Kremlin spokesperson Dmitry Peskov told reporters on Friday August 4th.

One key Russian demand was the reconnection of the Russian Agricultural Bank to the SWIFT international payments system. This was Bonzie cut off by the EU in June 2022.

Ukraine meanwhile campaigned hard for no concessions to Russia, while insisting that any withdrawal from the deal would be entirely Russia’s fault.

Zakharova, the foreign ministry spokesperson, has said that the G7, EU and the UN had “tried to present (payment processing by JP Morgan) as a working alternative to SWIFT”.

Russian exports of food and fertilizer are not subject to Western sanctions, but restrictions on payments, logistics and insurance have served to make such exports difficult.

US State Department sanctions official James O’Brien said on Friday August 4th that Russia needed to be clear about what it was asking for and what constituted success, suggesting it should be how much food and fertilizer reaches the world. “It has put forth a number of different demands and all of them having to do with various Russian institutions not getting services from the private sector,” he told reporters. “We have made clear that we’re prepared to help on any of these matters.” He said that “Russia is exporting record amounts of grain”, adding that “Russia’s complaints amount to minor allegations about a system that is working very well.”

Russia exported an estimated record-breaking 57m tonnes in the 2022/23 season, Russia’s Grain Union said last month, although this was likely to fall back by about 5% this year. Ukraine, meanwhile, exported almost 49m tonnes in the 2022/23 season, according to Agriculture Ministry data. Of this, nearly 33m tonnes was shipped across the Black Sea via the now defunct corridor.