According to two Russian sources who spoke to Reuters, although the United States permitted JPMorgan (JPM.N) to handle payments for agricultural exports via the Russian Agricultural Bank, the agreement was not a substitute for re-connecting the bank to the SWIFT system. One of Moscow’s primary requests in talks over the future of the Black Sea grain export agreement, which the UN claims aids in addressing a worldwide food crisis that has been made worse by the Ukraine war, is access to the SWIFT payment system for the Russian Agricultural Bank. The Kremlin has frequently warned that unless the West lowers barriers to Russian grain and fertiliser exports, the agreement won’t be extended until May 18.
iWestern sanctions implemented after the February 2022 invasion of Ukraine do not apply to Russia’s exports of grains and fertiliser, but Moscow claims that Western limitations on payments, logistics, and insurance are a hurdle to shipments. Sanctions imposed on Russia by the European Union and the United States have also had a widespread chilling effect, making businesses reluctant to do business with Russia even if it is legal. Under the condition of anonymity, a Russian source claimed that the U.S. Office of Foreign Assets Control had given JPMorgan permission to handle the transaction. The first Russian source claimed, “The process is difficult, but JPMorgan received permission from OFAC to carry out payment for agricultural procure.”
According to a second Russian source, JPMorgan and the Russian Agricultural Bank were both allowed unique exemptions to carry out a single transaction. The second Russian source stated that it concerned grain and was paid in dollars. A third source confirmed that the deal involved grain. UN VERIFICATION Reuters was unable to identify the exporter or the supply’s final destination. The JPMorgan method was suggested as a substitute for re-establishing communication between the Russian Agricultural Bank (also known as Rosselkhozbank) and SWIFT, although it could be discontinued at any time, according to the first Russian source. The source said, “This cannot take the place of SWIFT.”
In a briefing at the UN on Tuesday, Russian Foreign Minister Sergei Lavrov said that one bank “kindly consented to finance one operation,” but that this was not a workable long-term solution. Lavrov omitted mentioning the bank. The United Nations committed to try to remove any barriers to Russia’s grain and fertiliser exports as part of a treaty that was struck in July of last year. Russia is typically the world’s top exporter of wheat.
