The text of the agreement on Ukraine’s mineral resources contains important opportunities for Ukraine, but also several macroscopic traps for Kiev: from the “eternal” duration to the clause on military assistance.
By Federico FUBINI
What did the face-to-face meeting between Donald Trump and Volodymyr Zelensky under the shelter of St. Peter’s Basilica bring? Is the agreement on Ukraine’s mineral resources an act of colonial subjugation of the Russian-occupied country to its American protector, or does it leave Kiev with hope – as the agreement itself says – of being able to remain “free, sovereign and secure”? The text signed in Washington by Deputy Prime Minister Yulia Svyrydenko and US Treasury Secretary Scott Bessent contains important opportunities for Ukraine, but also some macroscopic pitfalls.
TRAPS IN THE AGREEMENT
The most obvious concerns US military aid: the text of the agreement stipulates that any supply of weapons and other defense equipment from Washington will be counted as a payment by the United States to the “Reconstruction Investment Fund” jointly with Kiev. Thus, the principle is adopted that US military aid to Kiev must be paid, but also that its cost will change the balance of power in the “joint” fund for the exploitation of Ukraine’s fossil and mineral resources. Or for the development of the country’s infrastructure.
Therefore, there is a risk that control and profits of the “mutual” Fund will increasingly shift in Trump’s favor, modifying the equity stakes in Washington’s favor and thereby increasing over time America’s ability to control Ukraine’s natural resources and infrastructure. The devil will be in the details of the executive agreements, which are still lacking. But let’s look at it point by point.
FIRST POINT: CHINA IS ISOLATED
First, the agreement seems to be aimed at cutting off any economic benefits that flow from Ukraine’s reconstruction or resources to Russia, but also to China. But it does so only after acknowledging, at least in words, Ukraine’s role and aspirations. It states, “The United States and Ukraine recognize the contribution that Ukraine has made to strengthening international peace and security by voluntarily abandoning the world’s third-largest nuclear arsenal.” In other words, Zelensky managed to make the agreement a reminder that Kiev had to give up the most powerful means of deterrence at the insistence of the United States, with the 1994 agreements.
To signal that the pact is not colonial in nature, the text also states that Ukraine “possesses, under international law, sovereignty over its natural resources located on its territory.” Then comes the penalization clause for Russia (which Kiev is interested in) and China (which Washington is interested in). It states that “the United States and Ukraine intend to ensure that states and others that have acted hostilely against Ukraine in the conflict do not benefit from the reconstruction of Ukraine after a lasting peace has been achieved.” So Beijing’s companies are out of the reconstruction business, at Trump’s behest.
POINT TWO: 50-50 PARTNERSHIP (FOR THE MOMENT)
On this basis, a “Reconstruction Investment Fund between the United States and Ukraine in the Form of a Partnership” is created on the basis of a 50/50 division of invested capital and income for each of the two parties. But this is only for now. We will soon see that the Trump administration reserves the right to change the agreements in its favor, while denying Kiev the same right to change them even in the event of subsequent changes in the law in Ukraine.
Zelensky managed to insert here – and get the Americans to sign – important words on a principled level: “The reconstruction of Ukraine requires not only financial investments, but also structural, institutional and technological transformations in accordance with democratic values, market principles and the rule of law.”
The message is: no more abuses, the era of the oligarch-dominated economy is over. But Zelensky also receives another important statement of principle from the US. Ukraine and the United States express “the broad and long-term strategic partnership between their peoples and governments and a tangible demonstration of US support for Ukraine’s security, prosperity, reconstruction, and integration into the global economy.” They may be just words, but they are significant.
LAST POINT: THE THREE (MAJOR) ISSUES TO TRUMP
The White House gets three points in its favor that objectively make the deal very unbalanced. Let’s look at them one by one.
– First of all, any American income or investment in the partnership is exempt from any tax in Ukraine, with a special tax privilege treatment of full privilege. In return, Trump has graciously pledged to “not impose tariffs” through executive orders from the White House on “any item resulting from market rights over the purchase of production.” In other words, there will be no taxes on minerals that Americans will extract in Ukraine and bring back to their country.
– The second major concession Trump has made is that the current agreement between Kiev and Washington overrides any changes to the law that Ukraine wants to make in the future. Essentially, Ukraine’s hands are tied forever, even if its voters in the future demand that the government withdraw from the agreements with the United States.
The text reads as follows: “The Ukrainian government ensures that, regardless of any new Ukrainian legislation that may be adopted in the future, the agreement (on the common fund, ed.) will continue on no less favorable terms.” Moreover – and most importantly – “in the event of any inconsistency between Ukrainian law and this agreement, this agreement shall prevail over such inconsistency.” In short, the pact signed the other day is stronger than the Kiev parliament and government itself, even in the future and without time limits. “The agreement will remain in force until the parties agree to terminate it,” the text says. But since Ukraine cannot change it by law, this means that the US could decide to make it last forever. Russian-British historian Sergey Radchenko of Johns Hopkins University comments, “This is a crazy clause. Even Stalin, when he imposed ‘joint ventures’, for example in China, limited himself to 25-30 years. This is without a time limit.”
– Then there is the third and biggest omission, which is related to military assistance. Here it is: “If (after the entry into force of the agreement, ed.) the United States government provides the government of Ukraine with new military assistance in any form (including weapons systems, ammunition, technology, or training),” – the text of the agreement states – “the capital contribution (of the Fund, ed.) by the United States shall be deemed to have increased in accordance with the estimated value of the military assistance.”
In other words, the American share in the partnership is initially 50%, but it seems likely that it will gradually increase as the Americans empty their warehouses of old weapons by sending them to Kiev, training Kiev’s soldiers, or providing internet connectivity via Starlink. All these “contributions” will increase America’s participation and control in the Fund, which will manage all of Ukraine’s mineral resources, including gold, uranium, cobalt, graphite, oil, and natural gas. This is an extremely controversial clause that will be the subject of much discussion. All the more so since the “Joint Fund,” that is, the “Kiev-Washington partnership,” will also have the right of first refusal for any investment project in Ukraine, for example in energy or other types of infrastructure.
Therefore, the country risks ending up completely under American control, and its future revenues will almost all go to the United States.
RATIFICATION BY THE PARLIAMENT OF KIEV
It will be important to see whether the substantive executive agreements, which have not yet been signed, will be able to mitigate these risks for Ukraine. And whether the exploitation of mineral resources will be truly profitable and economically sustainable: that remains to be seen. Of course, on May 8, Kiev’s parliament, the Verkhovna Rada, will have to ratify or reject the current agreement. For Zelensky, a trial by fire on which a good part of his political future depends.
