Moscow halts grain deal after bridge to Crimea struck

MOSCOW/KYIV (Reuters) -Russia halted participation on Monday in the year-old U.N.-brokered deal which lets Ukraine export grain through the Black Sea, just hours after a blast knocked out Russia's bridge to Crimea in what Moscow called a strike by Ukrainian sea drones.

Russia said two civilians were killed and their daughter wounded in what Moscow cast as a terrorist attack on the road bridge, a major artery for Russian troops fighting in Ukraine.

The Kremlin said there was no link between the attack and its decision to suspend the grain deal, over what it called a failure to meet its demands to implement a parallel agreement easing rules for its own food and fertilizer exports.

"In fact, the Black Sea agreements ceased to be valid today," Kremlin spokesman Dmitry Peskov told reporters on a conference call. "Unfortunately, the part of these Black Sea agreements concerning Russia has not been implemented so far, so its effect is terminated."

Turkish President Tayyip Erdogan, the grain deal's sponsor, said he still believed Putin wanted it to continue. The Russian and Turkish foreign ministers would talk later on Monday, he told reporters.

"I hope that with this discussion, we can make some progress and continue on our way without a pause," Erdogan said.

Russia's foreign ministry said it would consider rejoining the grain deal if it saw "concrete results" on its demands.

The blast on the road bridge to Crimea could have a direct impact on Moscow's ability to supply its troops in southern Ukraine, and reveals the vulnerability of Russia's own Black Sea infrastructure to devices such as seaborne drones: small, fast remote-controlled boats packed with explosives.

Images showed a section of the road bridge had come down and traffic was halted in both directions, although a parallel railway bridge was still operational. Blasts were reported before dawn on the 19-km (12-mile) bridge, which Russian President Vladimir Putin ordered built after seizing and annexing the peninsula from Ukraine in 2014.

Kyiv gave no official account of the blasts but Ukrainian media quoted unidentified officials as saying Ukraine's Security Service was behind it. Ukraine has long maintained that the bridge was built illegally, and its use by Russia for military supplies makes it a legitimate target. It was last hit by a massive explosion and fire in October.

Russia's suspension of the Black Sea grain deal could drive up food prices across the globe, especially in the poorest countries. Ukraine and Russia are both among the world's biggest exporters of grain and other foodstuffs.

The grain deal was hailed as preventing a global food emergency when it was brokered by the United Nations and Turkey last year, halting a de facto blockade of Ukrainian ports by Russia, which agreed to let ships pass after inspections in Turkey.

Global commodity food prices rose on Monday, though the increase was limited, suggesting traders did not yet anticipate a severe supply crisis. The Chicago Board of Trade's most active wheat Wv1 contract was up 3.0% at $6.81-3/4 a bushel at 1056 GMT after earlier rising over 4%.

Putin had threatened last week to walk out of the grain deal, while also saying Russia could return to it if its demands were met.

"We can suspend our participation in the deal, and if everyone once again says that all the promises made to us will be fulfilled, then let them fulfil this promise. We will immediately rejoin this deal," Putin said last week.

Western countries say Russia is trying to use its leverage over the grain deal to weaken financial sanctions, which do not apply to Russia's agricultural exports.

European Commission President Ursula von der Leyen described Russia's suspension of the agreement as a "cynical move" and said the EU would continue to try to secure food for poor countries.


Russia has agreed three times in the past year to extend the Black Sea deal, despite repeatedly threatening to walk out. It suspended participation after an attack on its fleet by seaborne Ukrainian drones in October, leading to a few days when Ukraine, Turkey and the United Nations kept exports going under the deal without Moscow.

Denys Marchuk, deputy head of the Ukrainian Agrarian Council, the main agribusiness organisation in Ukraine, said seaborne exports could proceed again without Russian agreement.

"If there will be safety guarantees from our partners, then why not conduct the grain initiative without Russia's participation?" he told Reuters.

Any such resumption of Ukrainian sea exports without Russia's blessing would probably depend on insurers. Industry sources told Reuters they were studying whether to freeze their coverage.

"Some underwriters will look to take advantage with a hefty increase in rates. Others will stop offering cover. The (key) question is whether Russia mines the area which would effectively cease any form of cover being offered," one insurance industry source said.

The latest blast on Russia's bridge to Crimea follows months of Ukrainian strikes on Russian supply lines as Kyiv pursues a counteroffensive to drive Russian forces out of its territory.

Unverified imagery showed a section of road on the bridge had split and was listing to one side, with metal barriers buckled. Dash cam footage showed drivers braking sharply shortly after the incident.

Russian officials said a Russian Su-25 fighter-bomber crashed into the Sea of Azov on Monday, but the pilot ejected successfully and there was no indication of an attack. The bridge to Crimea spans the mouth of the sea.

The Ukrainian counteroffensive, which began last month, has so far been slow going, capturing a string of small hamlets in the south and some territory around Bakhmut, the small eastern city Russia captured in May after the war's deadliest combat. Kyiv said on Monday its forces had captured another 18 sq km of territory over the past week, bringing the total captured to more than 210 sq km.

(Reporting by Lidia Kelly in Melbourne, Guy Faulconbridge in Moscow, Max Hunder in Kyiv and Reuters bureauxWriting by Peter GraffEditing by Philippa Fletcher)