By Michelle Nichols
UNITED NATIONS (Reuters) -U.N. Secretary-General Antonio Guterres has proposed to Russian President Vladimir Putin that he extend a deal allowing the safe Black Sea export of grain from Ukraine in return for connecting a subsidiary of Russia's agricultural bank to the SWIFT international payment system, sources told Reuters.
Russia has threatened to ditch the grain deal, which expires on Monday, because several demands to dispatch its own grain and fertilizer abroad have not been met. The last two ships traveling under the Black Sea agreement are currently loading cargoes at the Ukrainian port of Odesa ahead of the deadline.
A key demand by Moscow is the reconnection of the Russian agricultural bank Rosselkhozbank to the SWIFT international payment network. It was cut off by the European Union in June 2022 over Russia's invasion of Ukraine. An EU spokesperson said in May the EU was not considering reinstating Russian banks.
However, the EU is considering connecting to SWIFT a subsidiary of Rosselkhozbank to allow specifically for grain and fertilizer transactions, three sources familiar with discussions told Reuters on Wednesday. The European Commission did not immediately respond to a request for comment.
Guterres has proposed to Putin that Russia allow the Black Sea grain deal to continue for several months, giving the EU time to connect a Rosselkhozbank subsidiary to SWIFT, two of those sources familiar with discussions told Reuters.
Guterres sent a letter to Putin on Tuesday proposing a way forward to further facilitate Russian food and fertilizer exports and ensure the continued Black Sea shipments of Ukrainian grain, a U.N. spokesman said on Wednesday.
"The objective is to remove hurdles affecting financial transactions through the Russian Agricultural Bank, a major concern expressed by the Russian Federation, and simultaneously allow for the continued flow of Ukrainian grain through the Black Sea," U.N. spokesman Stephane Dujarric told reporters.
He gave no further details on the proposal, but added that Guterres was engaged with all relevant parties on the issue and was willing to further discuss his proposal with Russia.
A spokesperson for the Kremlin did not immediately respond to a request for comment.
The United Nations and Turkey brokered the Black Sea Grain Initiative with Russia and Ukraine in July 2022 to help alleviate a global food crisis worsened by Moscow's invasion and blockade of Ukrainian ports.
To convince Russia to agree to the Black Sea deal, a three-year memorandum of understanding was struck at the same time under which U.N. officials agreed to help Russia get its food and fertilizer exports to foreign markets.
While Russian exports of food and fertilizer are not subject to Western sanctions imposed after the invasion of Ukraine, Moscow says restrictions on payments, logistics and insurance have amounted to a barrier to shipments.
As a workaround to the lack of access to SWIFT, U.N. officials have gotten U.S. bank JPMorgan Chase & Co JPM.N to start processing some Russian grain export payments with reassurances from the U.S. government.
The United Nations is also working with the African Export-Import Bank (Afreximbank) to create a platform to help process transactions for Russian exports of grain and fertilizer to Africa, the top U.N. trade official told Reuters last month.
(Reporting by Michelle Nichols; editing by Kanishka Singh, Mark Heinrich and Diane Craft)