Page 17 - UKRRptAug22

The deal allows not only for Ukraine to export more grain, but also Russia. Russia is enjoying a bumper harvest and earns tens of billions of dollars from its own exports. Easing sanctions to facilitate Russian agricultural exports wasn’t officially a part of the Istanbul grain deal but was successfully negotiated in parallel talks with the United States and European Union. In 2021, Russia took in $11bn from exporting grain and with wheat prices currently at record highs it could earn even more this year.
And the deal will put money into the pockets of the Kremlin’s elite. Several high government officials have interests in the agriculture business.
Agriculture Minister Dmitry Patrushev has been deeply involved with Russia’s agricultural business. He is the former chairman of the state-owned Rosselkhozbank, the Russian agricultural bank that provides loans for farmers and considered one of the most corrupt and inefficient banks in the sector. He is also the eldest son of Security Council secretary Nikolai Patrushev, a former FSB chief, a close confidant of Putin and also a possible successor to the president.
Another former agricultural minister, Alexander Tkachev, owns Agrocomplex, another big player in the agro-business.
Demetra Holding is Russia’s second-biggest grain exporting company and part-owned by structures within the Marathon Group that belongs to Alexander Vinokurov, son-in-law of Russian Foreign Minister Sergey Lavrov.
And the Linnik brothers that own Miratorg, Russia’s largest meat producer and a major landowner, have been linked to former president Dmitry Medvedev’s wife.
Finally, the state-owned banking major VTB Bank has been buying up grain traders and was a major player in the grain business. Last year VTB acquired two major Black Sea grain terminals and has agreed to buy control of rail-freight operator RTC Group. It’s also in talks to purchase a stake in another Black Sea port facility, Grain Terminal Complex Taman. The bank was in the process of building up a grain-based business that it intended to eventually IPO. The bank has reportedly sold many of these businesses after it was put under sanctions.
In general, Russian banks will also benefit from the Istanbul deal, as some of those involved in the business have had capital unfrozen to facilitate the export of Russian grain and get it to market quickly. Banks that have benefited from this include the sanctioned Bank Rossiya (owned by Putin’s friends Yury Kovalchuk and Nikolai Shamalov) and Promsvyazbank, which was taken over by the state during a near-miss banking crisis in 2018 and is now tasked with servicing the defence sector.
Imports will also be made easier. Despite the size of Russia’s agricultural sector and years of heavy investment by the state, Russia remains heavily dependent on the import of agricultural equipment and products.
While Russia is entirely self-sufficient in wheat seeds – the most important crop – it relies heavily on the import of seeds for most other grains. For example, 90% of potato seedlings are imported, 70% of rape seeds and 30% to 90% of fruit and berry seeds, according to Carnegie.
17 UKRAINE Country Report XXXX 2018 www.intellinews.com