Donald Trump’s original proposal for the US to get a massive share of Ukraine’s mineral wealth got a frosty reception, but the latest amendments mean Kyiv is now on the brink of signing.
The latest draft, published today by European Pravda, still does not commit the US to providing Ukraine with concrete security guarantees.
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But it would tie US financial interests to Ukraine’s long term security by requiring that the largely American-owned mineral revenue fund would be invested in the “safety, security and prosperity of Ukraine,” and by preventing the US from selling its share without Ukraine’s agreement.
Donald Trump has promised his supporters a speedy end to the war in Ukraine. American taxpayers have footed the bill for the €114 billion in aid – around 0.5% of American GDP – that the US has supplied to Ukraine, including €64 billion worth of military resources.
But as the British-American historian Niall Fergusson recently pointed out in an online spat with Trump’s vice president, J.D. Vance, peace deals often take years to negotiate.
Moreover, Trump no doubt has American companies whispering in his ear about the potential value of Ukraine’s rare minerals to his own country’s technology and defence industries.
The minerals deal is “Trump’s way to demonstrate to his voters that he is able to achieve quick wins,” argued Olena Prokopenko, senior fellow for Ukraine-US relations at the German Marshall Fund, a transatlantic think tank.
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From ‘colonial arrangement’ to ‘balanced agreement’
In an interview with Euractiv, Prokopenko said the latest changes to the deal make it far more palatable for Ukrainians.
“From the initial colonial arrangement that Trump was trying to impose on Ukraine, it’s evolved into a more balanced agreement,” she said.
For her, the pending agreement is a sign that Trump is becoming “more realistic about the fact that Putin keeps rejecting the ceasefire – he [Putin] doesn’t want peace anytime soon.”
She welcomed the fact the new version contains “explicit mentions of security, and how the contributions to the fund will be aimed at achieving security.”
She said the current draft agreement is essentially a “memorandum of intent” to lay the groundwork for a more detailed treaty. That means this agreement does not need to be ratified by the Ukrainian parliament, but a final deal will.
“It’s a good sign that security references are explicitly made even at the stage of this preliminary agreement,” Prokopenko said. Nevertheless, the negotiations to come will have to make good on the provisions “in specific and tangible terms,” she warned.
The preamble to the agreement states that “American people desire to invest alongside Ukraine in a free, sovereign and secure Ukraine.”
A seat at the table for Ukraine
But on paper, the agreement still demands far more of Ukraine than it does of the US, which is not directly obliged to ensure Ukrainian freedom, sovereignty or security in any way.
Kyiv would commit to paying 50% of the revenues from the “future monetisation” of various government-owned natural resources – including minerals, oil and gas – into a joint investment fund that would be largely under US ownership.
But while the deal itself barely commits the US to anything, it effectively buys Ukraine a seat at the table for peace talks, Prokopenko said.
“It was President Zelensky who included this point in the initial victory plan,” she said.
“He suggested the US consider cooperating with Ukraine on the extraction of rare earth minerals, so now it’s very difficult to go back on that offer completely,” she argued. “Doing so would exclude Ukraine from the negotiation process entirely.”
More immediately, if Trump turns off the American spigot of military aid, Ukraine will struggle to keep fighting. That would leave it with the weakest possible hand in the forthcoming peace negotiations. Zelenskyy has a strong incentive to please the notoriously fickle and thin-skinned Trump in whatever way he can.
The Art of the Deal
As for what America gets out of the deal, the benefits, though potentially very substantial, are less obvious than they might appear at first glance.
For example, the the “future monetisation” of Ukraine’s resources – or alternatively, “future sources of revenues” – excludes any existing revenue sources that Ukraine already receives, the agreement states.
In other words, Trump’s fund won’t get any money until Ukraine is at peace and secure enough for there to be new development of the country’s natural resources.
Meanwhile, the Ukrainian veto on any American attempt to cash-out means the US can only profit directly from the fund through its investments in Ukrainian infrastructure.
That “makes long-term security a condition for this partnership to be worthwhile,” Prokopenko said.
The deal “would require lasting peace in order to yield any tangible profits,” she argued.
“If Russia regroups and invades Ukraine again, all foreign investments, including those made under this deal, will be threatened.”
She added that getting wartime insurance for any major projects, including the mineral mining that Trump covets, is extremely difficult.
But even in the long run, there’s no guarantee that Ukraine’s natural resources will generate enough revenue for the fund to match US aid to Ukraine so far, Prokopenko cautioned.
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