Kyiv Seeks Better Air Defense to Boost Exports Via the Black Sea
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(Bloomberg) -- Ukraine’s Black Sea grain corridor is performing better than expected, but stronger air defense is needed to quicken ship loading times and better shield ports, according to Kyiv’s top infrastructure official.
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The war-hit nation has exported almost 10 million tons of commodities, mostly grains, through the passage since August despite a short period of unfavorable weather, deputy prime minister and Minister for Restoration Oleksandr Kubrakov told Bloomberg News. While the volumes are lower than last year’s exports through a UN-backed corridor approved by Russia, Kubrakov said Kyiv “will catch up.”
His comments come as more than $100 billion in US and European Union aid to Ukraine is held up in political tangles. Ukrainian President Volodymyr Zelenskiy left Washington earlier this month with no guarantees on more aid. Separately, Hungarian Prime Minister Viktor Orban vetoed the EU’s planned financial support package.
Read more: Zelenskiy Feels the Chill From Ukraine’s Allies in a Tough Week
The flagging financial aid from its allies makes it even more crucial for Ukraine’s economy to ensure its grains and oilseeds reach the global markets. The safety of the unilateral Black Sea shipping passage — announced in August but really in use since October — is vital to that goal.
The government has been working to assure traders can continue shipping, including a promise to help reduce insurance costs for such companies. Kyiv’s deal with Lloyd’s of London and brokers Marsh McLennan allowed it to cut insurance costs by half, Kubrakov said.
Marsh is able to provide insurance cover for ships exporting grain from Ukraine at a third of the market rates under its Unity facility, according to Marcus Baker, global head of marine, cargo and logistics. The program has backing from the Ukrainian government, that’s compensating underwriters up to a total of $20 million for any losses.
All that has helped the new corridor keep trade ticking, although challenges remain. Russia stepped up shelling of Ukrainian ports in the Black Sea and on the Danube — the pilot of a commercial vessel was killed in a strike last month — and grain exports are down 23% in the period between July and mid-December. Strong shipments are needed to clear this year’s larger-than-expected harvest.
“Now it looks like normal shipping, as it was before the war,” Kubrakov said. Still, some mainstream shipowners have been wary of using the corridor.
Several dozen firms are now using the passage, including large international traders, according to the Ministry of Restoration.
As Kyiv and Moscow trade drone and missile attacks, protecting port infrastructure in the southern Odesa region remains key for the safety of the shipping corridor, Kubrakov said. More modern air-defense, including US-made F-16 fighter jets, should help, he added.
“It is clear that civil vessels are not a difficult target,” Kubrakov said, adding that Moscow likely understands that attacking trading vessels will elicit retaliation. “They understand that there might be a response.”
--With assistance from Megan Durisin and Áine Quinn.
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