The United States and Ukraine have finally signed a long-awaited agreement on Ukraine’s postwar reconstruction – and, at first reading, the details appear more favourable for Kyiv than many observers expected.
At the core of the “economic partnership agreement” is the exploitation of Ukraine’s mineral wealth. Ukraine will get access to US investment and technology, and the US will eventually get a share of the profits. The rest will finance the war-torn nation’s recovery if and when a peace agreement is signed with Russia.
Several aspects of this deal stand out as positive for Ukraine. Unlike in previous drafts, the country retains ownership of its natural resources. All profits are to be invested in Ukraine for ten years after the agreement comes into force.
Washington can also make its contribution in the form of new military aid, although it will be down to the US president to decide whether or not to do that.
Earlier in the negotiations, a major sticking point was the demand from the US president, Donald Trump, that the agreement include compensation for past US aid to Ukraine, which he insisted amounted to US$350 billion. Many analysts estimate the figure is closer to $120 billion.
Before the deal was signed, Ukraine’s prime minister, Denys Shmyhal, said the deal would “not include assistance provided before its signing.” And the Ukrainian government announcement stated that the new agreement “focuses on further, not past US military assistance.”
But when the US Treasury Secretary, Scott Bessent, spoke to journalists, he described the deal as “compensation” for “the funding and the weapons.”
Whether Bessent’s statement represents political spin, or whether there is still distance between Washington and Kyiv on this critical point, remains to be seen. The formal text has not been released, and many details remain to be ironed out. Trump can be an erratic negotiator who is prone to sudden changes of direction.
Indeed, the signing of this agreement is just the latest twist in a broader effort to bring the war in Ukraine to an end – one which probably still has many surprises ahead. Trump appears to be losing patience with what he views as Russia’s refusal to engage with the peace process. Signing the deal may have been intended as a warning to Moscow to get serious about ending the conflict.
The new agreement reportedly states that the US and Ukraine share a “long-term strategic alignment.” That’s a far cry from Trump’s rhetoric only a few months ago, when he called Ukraine’s president, Volodymyr Zelensky, a “dictator” and blamed Kyiv for starting the war with Russia. But given Trump’s changes of mood, this agreement is unlikely to be the final word on how he views the conflict.
Despite talk of a long-term strategic alignment, one thing the deal doesn’t contain is any explicit security guarantees for Ukraine. But the White House argues – and other observers hope – that US investment in Ukraine will give the US an implicit stake in the country’s security. That might deter Russia from attacking Ukraine again, out of fear the US would act to protect its investment.
However, once we move from the realm of politics and security to economics, several glaring flaws in this logic become apparent. They all come down to whether the mineral wealth at the heart of this agreement can be profitably exploited – and, indeed, whether it even exists.
Game-changing deal?
The American humorist Mark Twain is said to have once defined a mine as “a hole in the ground owned by a liar”. Assessing the precise scale of underground mineral deposits is notoriously difficult – and not every deposit can be extracted in a profitable fashion.
In Ukraine, the exploratory work has simply not been done. Even the supposed size of the deposits, which are based on old Soviet surveys conducted in a superficial fashion, is not certain.
Many of the minerals that supposedly lie under Ukraine’s surface are so-called “rare earths”, which are critical to hi-tech supply chains. But they are also expensive and time-consuming to exploit, requiring a massive upfront investment that may eventually be lost. Even in successful cases, it generally takes over a decade to get production onstream.
Today, there are few rare-earth projects under development anywhere in the world outside China – even in countries that are not current (and possibly future) war zones. Most of Ukraine’s supposed deposits lie in the east of the country in areas vulnerable to Russian attack, making investment risky.
All of this makes the economic partnership agreement of doubtful long-term significance for the broader peace process. The potential gains from it are too hypothetical to make much difference within a meaningful timescale.
The deal is unlikely to generate much real economic incentive for the US to defend Ukraine, and so is unlikely to become a new source of military assistance for Kyiv.
For the Russian president, Vladimir Putin, the deal doesn’t change a lot. While it might indeed be a signal that Trump is running out of patience with Russia, it does little to change the underlying realities of the conflict.
We can’t rule out the possibility that Trump, as unpredictable as ever, might make a more meaningful commitment to Ukraine in the future, one that changes the course of the war. But – at first glance, certainly – this minerals deal is not it.
Andrew Gawthorpe is lecturer in history and international studies, Leiden University
This article is republished from The Conversation under a Creative Commons license. Read the original article.
The spoils of the Ukrainian war divided, broadly speaking. The United States, eighty percent of minerals; Russia, twenty percent of everything; Ukraine, freedom, democracy and sovereignty; Britain and the European Union, next to nothing.
I don’t think Ukraine will get freedom and sovereignty because there are two axes hanging on her neck.
US can name any $ it wants for any weapon she “sells” to Ukraine as I don’t think Ukraine has any say.
Russia hasn’t show her hand or demand for a peace deal and yet a deal with US has been signed.
The deal means US will “sell” weapon to Ukraine and that means the war will continue, no peace for Ukraine. At the same time, US can start mining while the war continues.
Russia? What is Russia? It’s an army (Putinkim) funded by a gas station.
The Yanks didn’t want Putin to win, but they didn’t want him to lose. Lose and it’s civil war (Gazprom has 60k ‘security guards’ ie a private army).
While that sounds OK, what about if nuke material gets sold to bad actors to pay for soldiers.
That was the entire reason for Minsk – get the nukes under Russian command – away from Russ or Ukr corrupt oligarchs (aka mob).
So Trump has offered the deal of a lifetime to Putin, and he want to keep fighting. I have no doubt the Sepo’s are in contact with oligarchs who want to return to the W houses and boats and are sick of the ‘SMO’.
When Prigohzin rebelled the Army did nothing. Lucky for Vlad his mucker called it off (and then mysteriously died in a plane crash).
Like Hitler in the Wolfschanze if you want to decapitate the leader, don’t miss.
I also think Ukr deserves to take a place of pride in the world’s nations.
Althought the mineral deal has not been published, there are reports that say that the US claimed $350 billion will be considered as the US capital investment into the newly developed fund that requires a similar match from Ukraine.
When the deal goes ahead Ukr will be part of the Western sphere of influence, lost to Russia.
Nice job, Vlad. You have turned a brother Slavic people (who have fought and suffered side by side with Russians for 300yrs) into a generational enemy.
Meanwhile the ethnic Russ TFR has been below replacement since the late 70’s, while people from the Mohammedan Central Asian Republics take over cities like Moskau, and Chinese swarm in to Siberia.
This is why term limits are essential. Putin did a good job in the 2000’s, but since the start of his 2nd reign has stopped listening to other points of view – surrounding himself with ‘yes’ men.
Take note Winnie Xi Pooh.
Oh come on, you maroon, always the same tune from you!
What’s Ukraines’ TFR, btw?
And where are these mythical ‘Chinese’ swarming Siberia? Isn’t your head already full of little Putin’s already? Where do you have all that place on there? Oh wait, you lack a brain so plenty of space in there…
Maroon? You mean a Queensland Rugby League player ?
Ukr’s TFR’s are also well below replacement, as are Europe’s. But not for as long as Russia’s – since 1979 when Brezhnev attempted to increase TFR’s (in ethnically Russian areas only).
Have you been to Siberia? I have worked there and I get updates from friends I made there.
You can also google how Russian nationalists are worrying about the amount of Central Asian Muslims in Moskau.
I know it’s upsetting for you to hear, but Putin was good in the 2000’s – Russian TFR’s increased. Since he took back the reins from Medvedev TFR’s have gone backwards. It’s evidence of a demoralised country.
Just like USA & EU. Or China.
Now please find a ‘safe space’ in case you get upset…….
Putin has surrounded himself with ‘yes’ men and no one is willing to say ‘remember you are mortal, Caesar/Czar’. Hence the total disaster of the 6wk SMO. No one was willing to tell him the Russian Army was poorly trained and supplies were diverted due to corruption.
I heard an interesting opinion why the Septic Tanks have supplied only enough to keep Ukr in the game, neither winning or losing.
They don’t want Putin to win, but also not to lose.
The Russian Oligarchs all have private armies (security – Gazprom 60k) and the country will fall into another civil war, with nukes for sale to the Mo hamedans. China will of course intervene to ‘stop nukes falling into the wrong hands’. And like the Soviets in 1945 Europe, they won’t leave Siberia.
Stop pretending your not from India.
Stop pretending you aren’t a Wumao.
And it’s you’re (you are) not your.
And no, Putin does not live rent free in my noggin. I regard him as another Hitler. Someone who ended up destroying his country and taking down Western Christianity too.