By Daphne Psaledakis and Humeyra Pamuk
NEW YORK Washington urged JPMorgan to "be patient" before the U.S. bank stopped processing agricultural payments for Moscow after it quit a deal allowing the safe Black Sea export of Ukraine grain, a senior State Department official told Reuters on Wednesday.
JPMorgan had handled some Russian grain export payments for a few months with reassurances from Washington. However, that cooperation stopped in early August, said Russia's Foreign Ministry, after Moscow quit the Black Sea grain deal in July.
"It was JPMorgan's decision, and in fact, we had ... made clear to the Russians that if they could show signs they were returning to the deal, it would be much easier to keep this payment system alive," James O'Brien, head of the State Department's Office of Sanctions Coordination, told Reuters.
He said that JPMorgan made a "completely commercial decision based on business and reputational factors." JPMorgan declined to comment.
"We did not encourage it. In fact, we encouraged them to be patient if Russia would show any sign," O'Brien said during an interview on the sidelines of the annual gathering of world leaders at the United Nations in New York.
Western countries have accused Russia of using food as a weapon of war by quitting the Black Sea deal, which had helped bring down global food prices, and then carrying out repeated air strikes on Ukrainian ports and grain stores.
UNDERMINING U.N. EFFORTS
U.N. Secretary-General Antonio Guterres told the Security Council on Wednesday that Russia's bombardment was undermining U.N. efforts to help facilitate Russian food and fertilizer exports. To convince Russia to agree to the Black Sea deal, U.N. officials agreed to help Russian exports reach global markets.
"The bombardment is also undermining our efforts," Guterres said. "It has led many of those whose goodwill is needed, notably in the private sector, to question whether there is any real interest in re-joining the Black Sea Initiative."
Russia quit the pact - a year after it was brokered by the United Nations and Turkey - complaining that its own food and fertilizer exports faced obstacles and that not enough Ukrainian grain was going to countries in need.
While Russian exports of food and fertilizer are not subject to Western sanctions imposed after Russia's February 2022 invasion of Ukraine, Moscow has said restrictions on payments, logistics and insurance have hindered shipments.
Guterres sent Russia's Foreign Minister Sergei Lavrov a letter in August outlining measures that the United Nations could facilitate to improve Russia's grain and fertilizer exports in a bid to convince Moscow to return to a deal.
The Russian Foreign Ministry has expressed skepticism at the proposals made by Guterres.
(Reporting by Daphne Psaledakis and Humeyra Pamuk, writing and additional reporting by Michelle Nichols; Editing by Michael Perry)
