uKraine’s government is planning to approve a contract with the US to jointly utilize Ukrainian mineral resources later today after painful negotiations. The document is expected to be signed by Donald Trump and Volodymea Zelensky at a face-to-face meeting held in Washington, DC on February 28th, bringing both leaders back from the war of words that have damaged them. Trump will undoubtedly declare his victory. It is not so clear that it actually links Ukraine.
Trump’s ready-to-play contract for Sharpie Pen is a framework transaction, the first step in a two-part settlement. Many of the details should be decided in future negotiations. However, Ukraine appears to have challenged America’s first brave, extractive demands to something closer to a co-investment venture. The deal is nothing more than a $500 million “recovery” that Trump demanded from Ukraine. It itself is a much-increasing bill envisaged for past military and financial aid, independently valued, like $120 billion.
Read more about recent reports on the Ukrainian War
The draft text removes all the most controversial US requests, according to accounts from the authorities. At one point, the Ukrainians were given “time to sign.” Another six minutes. What the text is doing now is to commit both sides to the idea of creating a joint fund for investment in Ukraine. Ukrainians are expected to contribute 50% of revenue from future government-owned resource projects, including minerals, hydrocarbons, oil, gas, infrastructure such as LNG terminals and ports. Importantly, however, this does not include current businesses such as large oil and gas projects that have already contributed a large sum of money to Ukraine’s budget.
There has been no mention of Trump’s $500 million bill. The US demand for 100% ownership of the investment fund has also been removed. Instead, ownership is “proportional” to the amount invested by both parties, indicating the prospect of continuing American support. The clause requiring Ukrainians to pay the fund twice as much as future aid compared to its debts by “10 generations of Ukrainians.” Much is still shady, especially from the extent to which the US will manage the new fund and what that governance arrangement will turn out. This is where things contradict each other. According to one clause, the United States controls the “maximum amount” allowed under its own laws. It may contradict other provisions that demonstrate proportionality.
The economist reveals that the later agreement will clarify such management issues and security assurances Zelensky originally wanted as a QUID professional to provide the country’s mineral resources in September. I understand that. As far as guarantees go, the framework simply mentions “multiple investment protection.” However, the preamble to this refers to the broader “…Agreement Architecture” and “Support to Obtain Security Guarantees…”. According to government sources with knowledge of negotiations, Zelensky said he would not sign a second full agreement that does not include broader security guarantees. The first framework document does not require congressional ratification, but future agreements are required.
After two weeks of pressure from Trump’s envoys, Ukraine may feel it has managed to survive the naked knuckle fight. The framework transactions arising from this process are somewhat vague and mostly theoretical. The true scope of Ukraine’s wealth of resources is unknown. There was no serious evaluation of mineral deposits using modern exploration techniques. Many of them are too low for deep in the ground or profitable extraction. Perhaps 40% of the metal resources are in Russian occupied territories. Furthermore, the contract does not provide details about the processing and refining facilities for facilities where actual value occurs. There are many other skins too. But by agreeing to something, Ukraine offered Trump the results and bought time back from the brink. In the world, it unexpectedly found itself.■
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