Trump’s Ukraine minerals agreement is a terrible deal for the US
When Ukrainian President Volodymyr Zelensky
visited the White House in February, he was supposed to leave Washington DC with a coveted agreement that would turn the United States into one of Ukraine’s major economic partners. A table and chairs were set up in the next room, where presidents Trump and Zelensky would sign the accord and shake hands. We know how that played out. Trump and vice-president JD Vance dressed Zelensky down in full view of the cameras and
the Ukrainian president was asked to leave the premises.
Now the
US-Ukraine minerals deal is finally done. Weeks of intense talks, in which US and Ukrainian negotiators exchanged drafts, rejected each other’s maximalist terms and pressed one another in the media, have culminated in a framework that is far more preferable to Kyiv than the Trump administration first sought. The Ukrainians are giddy, if only because they avoided the White House’s original idea, which was essentially a full-blown American capture of Ukraine’s natural resources.
Based on the terms that have been publicly disclosed, the deal looks like an ordinary US investment pact. Ukraine will retain
sovereign control over its natural resources and get to determine when (and where) they are extracted. A joint United States-Ukraine Reconstruction Investment Fund will be established, with both countries contributing. For the first 10 years, profits from new licenses are expected to be re-invested in Ukraine’s reconstruction. Any additional US military support to Kyiv will be counted as an investment.
It’s a pretty solid deal for the Ukrainians. Less so for the United States. Trump, who is obsessed with countering the perception that the US is being ripped off by foreign nations, won’t be getting paid back for the tens of billions of dollars Washington has already handed Kyiv in the form of
military and economic assistance. Nor will the US own Ukraine’s rare earth minerals; the rights seem to remain firmly in Kyiv’s hands. Trump will play up this entire scheme as evidence of his amazing deal-making prowess, yet despite the fund’s joint ownership structure, Trump didn’t get the repayment he was once demanding.
In fact, the whole negotiation was a bit odd. It made perfect sense from Kyiv’s point of view. Zelensky pitched the plan to Trump last year, hoping that offering financial incentives would persuade the US to take more interest in Ukraine’s long-term future. Trump presumably bought into the idea because it was an investment opportunity of potentially gargantuan proportions, had to do with rare earths (and let’s face it: Trump is fixated with rare earths), and gave him the chance to trumpet a big, beautiful economic bonanza that other presidents could only dream of.
Yet outside scratching a vanity itch, it’s unclear why Trump devoted the time and attention to such an endeavour in the first place. Indeed, the agreement doesn’t really guarantee anything at all. Its implementation depends entirely on whether the war in Ukraine ends. And despite the Trump administration’s ongoing diplomacy, there isn’t much evidence that a
peace deal is any closer today than it was earlier in the year.
Putin is still demanding full Russian control over five Ukrainian regions, three of which Russian forces are still fighting over. He has rejected or stonewalled every US bid to get a serious ceasefire off the ground, first by raising technical questions and then by predicating any halt to hostilities on US and European sanctions relief. Putin’s unilateral ceasefires, including an upcoming three-day cessation beginning May 8, seem geared more towards softening any future punishments Trump may have in mind than in creating momentum for a genuine peace process.
Zelensky, meanwhile, remains emphatic that Ukraine will never, ever, formally recognise Crimea or any other Ukrainian region that
Moscow now occupies as Russian territory. He wants an immediate 30-day ceasefire to kick off the process, and only then will direct talks occur. The Russians continue to resist this plea, and as much as US officials like Marco Rubio, Steve Witkoff and Keith Kellogg are trying to keep talks alive, all of them appear to be getting increasingly frustrated.
In short, the most likely scenario is more war in the weeks and months to come, which means the US-Ukraine economic deal finalised this week will be a stack of documents sitting on the shelf, collecting dust.
It’s also ironic that Trump – who has long viewed US stakes in Ukraine to be low, the risks of escalation high, and the entire war as a suck on the US taxpayer – thought it was a smart idea to approve an agreement that entangles Washington further in Ukraine’s affairs. Trump is setting the stage for further US involvement there in the future, especially if the mooted American investments come under threat.
Is this wise strategically? While Russia hawks in Washington and European capitals will argue that it is, one must weigh it against other long-term considerations. Does this help or hinder any future US administration’s efforts to
rebuild a working relationship with Russia after the war ends? Will this help or hurt Washington’s professed goal to push Europe into taking far more responsibility for security in its own neighbourhood? More fundamentally, was any of this even debated before Trump green-lit these economic negotiations?
Trump is going to have a hard time justifying why the juice of Ukraine’s mineral wealth is worth the squeeze.