aFor painful negotiations, Ukraine is committed to approving a contract with the United States to jointly exploit the minerals of the troubled country. Ukrainian Presidents Donald Trump and Volodimia Zelensky will sign documents when they meet in Washington on February 28th and be pulled back from the harmful war of words. Trump believes it’s a victory for America. What this means for Ukraine is vague.
A contract is just the first step. Many of the details have not been organized yet. However, Ukraine appears to have eased Trump’s first bravely extractive demand to something closer to a co-investment venture. That’s far below the $500 million “recovery” that Trump had been asking America for past military and financial aid.
Read more about recent reports on the Ukrainian War
Draft text removes the most controversial American demands. At one point, the Ukrainian was clearly told “an hour to sign.” At another point, it was only six minutes. The latest text outlines the Ukrainian co-investment fund that contributes to half the pot. This will be sourced through state-owned projects in minerals, oil, gas, LNG terminals and ports. Importantly, this does not include current businesses such as oil and gas, which have already contributed significantly to Ukraine’s budget.
Trump’s $500 million figure has not been mentioned. And US demand for 100% ownership of investment funds has declined. Instead, ownership is “proportional” to the amount invested on each side, increasing the prospects for ongoing US support. There is also no longer a clause that required Ukrainians to pay the fund twice their future aid. Zelensky likened it to the debt of “10 generations of Ukrainians.”
There’s still a lot to be blurred, including the extent to which America manages the fund and how it will be managed. This is where inconsistencies can occur. According to one clause, the United States controls the “maximum amount” allowed under its own laws. However, it may conflict with phrases that indicate proportionality.
This may be revealed in subsequent negotiations, along with Zelensky’s initial demand in September, in conjunction with subsequent negotiations, in conjunction with the US security guarantees as his Quid Pro Quo to provide his country’s resources. So far, the framework only mentions a vague promise to “protect mutual investments.” However, a preamble refers to a broader “architecture” of agreement and support for efforts to “get security guarantees.” According to an informed government source, Zelensky said he would not sign the overall agreement without broader security guarantees. The first framework document does not require ratification by Congress, but full future agreements will be required.
The framework trade is rough, but Ukraine may feel it is avoiding the naked knuckle fight. Moreover, the true scope of wealth in natural resources is unknown. The latest technology has not yet been used to assess its mineral deposits. Many of them have concentrations that are deep or too low to be profitable. And perhaps 40% of the metal resources are in Russian occupied territories. The framework also does not provide processing and purification details. This adds much of the value.
But by agreeing to something, Ukraine gave Trump the results and bought time. In the state of abuse, it is very important. ■
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