The long-awaited agreement grants America preferential access to the Eastern European country’s mineral resources
The US and Ukraine have signed a natural resource deal that gives Washington access to the country’s vast mineral deposits in exchange for help in Ukraine’s economic recovery. Hardball diplomacy over the deal went on for months and became a major point of contention in relations between Washington and Kiev.
Here’s what we know about the outlines of the deal.
Preferential access for US
The agreement establishes a joint US-Ukraine reconstruction investment fund to attract investment in the Ukrainian economy, particularly with regard to resource exploration projects.
According to Ukrainian Deputy Economy Minister Taras Kachka, the US will be given preferential access to investments in the extraction of rare-earth minerals.
However, Ukrainian Economy Minister Yulia Sviridenko said the fund would operate as an “equal partnership,” with neither side having a dominant vote. Ukraine will retain “full control over the resources” – including the subsoil – and will continue to determine the conditions and locations of extraction. The deal also does not transfer any state-owned companies into private hands.
50/50 split
Ukraine will contribute 50% of new rents for new licenses for new extraction to the fund, with the money inside to be invested exclusively in Ukraine. For the first ten years, profits will not be distributed, but will be fully reinvested in the Ukrainian economy, according to the Ministry of Economy. Neither contributions nor profits are taxable.
No security guarantees for Kiev
Conspicuously absent from the deal, however, is any mention of the US providing Ukraine with security guarantees, although this was “one of its initial goals,” as described by Reuters.
According to the New York Times, the idea of security guarantees was rejected by the US “early in the process.”
Nevertheless, US State Department spokeswoman Tammy Bruce insisted that the deal will strengthen the country’s security: “When America is your friend and your partner, your nation is going to be better off. And there is a security component just in our presence.”
Past US aid not included
The resource deal “focuses on future, not past, US military assistance,” the Ukrainian Economy Ministry has said, adding that revenues from already active projects are not included in the joint investment fund. According to Sviridenko, the agreement “includes no provisions regarding any Ukrainian debt obligations to the United States.”
The US previously portrayed the deal as a way for Ukraine to pay back past military assistance, which the administration of US President Donald Trump estimated at $350 billion. Ukraine has insisted that the past aid was provided unconditionally, while estimating it at $90 billion.
Following the signing of the deal, Trump suggested that the US could “in theory” get much more than $350 billion out of the deal.
Initial reactions
US Republican Senator Lindsey Graham described the deal as “tremendously beneficial to the American economy,” adding that it will improve ties between Washington and Kiev.
The New York Times suggested that the “deal will have little significance” if Russia and Ukraine fail to reach a sustainable ceasefire.
Former Russian President Dmitry Medvedev said the US has essentially forced Ukraine to pay for American aid with minerals.
Thorny road to agreement
Negotiations over the agreement dragged on for months, though the sides had planned to sign it in late February during Vladimir Zelensky’s visit to the White House. However, Zelensky’s televised meeting with Trump resulted in a heated exchange, with the US president accusing the Ukrainian leader of ingratitude and “gambling with World War III.” Since then, the US has on several occasions criticized Ukraine for making slow progress on the deal, with Trump at one point demanding that Kiev sign it “immediately.”
