Trump and Zelenskyy Forge Mineral Deal, Leaving Financial Details Unresolved
President Donald Trump and Ukrainian President Volodymyr Zelenskyy are poised to ink a groundbreaking mineral agreement on Friday, signaling a potential thaw in their relationship but leaving the crucial financial specifics for future negotiations. This agreement, as described by Doug Klain, a policy analyst at Razom for Ukraine, resembles "an agreement to make an agreement," highlighting the preliminary nature of the accord.
The move marks a dramatic reversal from the preceding week, during which Zelenskyy reportedly rejected the initial terms of the deal. Trump, in response, reportedly accused Zelenskyy of ingratitude for U.S. assistance, labeling him a "dictator" and suggesting that Ukraine "never should have started" the war.
Details of the Emerging Deal
The turnaround appears to stem from adjustments to the deal’s structure. Unlike the previous version, the revised agreement, approved by the Ukrainian Cabinet, proposes a jointly owned U.S.-Ukraine fund instead of solely U.S. ownership.
According to Ukraine’s Prime Minister Denys Shmyhal, Ukraine intends to allocate half of its revenues generated from future oil, gas, and mineral projects into this fund. A portion of these funds would be reinvested to fuel further development. Notably, the agreement explicitly excludes existing natural resource projects.
The agreement outlines that upon the initial framework’s signing, both parties will commence negotiations on a "subsequent agreement" to determine the control and operation of the fund.
Previously, the U.S. had sought $500 billion worth of Ukraine’s rare earth and other minerals as repayment for approximately $185 billion in aid. The current iteration of the deal lacks specific figures regarding the U.S.’s share of mineral revenues or the size of its stake in the fund.
Zelenskyy’s Stance on Debt Repayment
Despite the progress, Zelenskyy reiterated his unwavering position against repaying the U.S. for previously allocated aid. "I will not accept (even) 10 cents of debt repayment in this deal. Otherwise, it will be a precedent," he asserted during a press conference.
However, Trump appeared satisfied with the recent negotiations. "We’re doing very well with Russia-Ukraine. President Zelensky is going to be coming on Friday. It’s now confirmed, and we’re going to be signing an agreement," he announced on Wednesday.
Financial Implications for the U.S.
The agreement’s implications for the U.S. remain uncertain. Peter Harris, a political science professor at Colorado State and fellow at Defense Priorities, offered several possibilities: U.S. companies could be contracted for extraction work, potentially generating substantial profits; the U.S. government could allocate itself an annual sum from the fund; or U.S. companies could be granted preferential access to minerals at discounted rates.
However, Harris cautioned that rare earth mining is a protracted process. "It could be decades before anyone makes a dime from Ukraine’s untapped natural resources," he stated.
Ukraine’s Perspective: Security Guarantees and Deterrence
Ukraine seeks global support to deter future Russian aggression, contingent upon reaching an agreement to end the ongoing war. Zelenskyy emphasizes U.S. participation due to his skepticism regarding the adequacy of European security guarantees alone in deterring Russian President Vladimir Putin from further incursions.
While U.S. officials have maintained that American boots will not be on the ground, Trump suggested that Europe would handle security matters for Ukraine because "we’re talking about Europe is their next-door neighbor."
U.S. officials have subtly indicated that significant financial interests, potentially involving American workers in the region, would prompt the U.S. to defend those interests. Klain, however, noted that the Ukrainians remain unconvinced by this argument. He drew a parallel to the 1994 agreement, in which Ukraine relinquished its nuclear arsenal in exchange for security assurances from the U.S., Russia, and others.
Security Concerns and Potential Risks
The agreement includes a vague reference to supporting Ukraine’s efforts to obtain security guarantees needed to establish lasting peace. Harris argued that a "backdoor security guarantee" through a minerals deal constitutes "bad policy" for the U.S.
"It [does not] serve the U.S. for large numbers of American workers to be stationed in an unstable post-conflict zone," he stated, adding that "Uncertain access to Ukraine’s natural resources is not worth risking a NATO-Russia war."
Ukraine’s Mineral Wealth and Geopolitical Implications
Ukraine possesses over 100 major deposits of critical minerals, along with oil and gas reserves, according to the Kyiv School of Economics. Its reserves include titanium, lithium, graphite, rare earths, and other minerals vital to the energy and tech sectors.
Trump may be pursuing revenues from these minerals as repayment for aid, but he could also be aiming to disrupt China’s dominance in the rare earth metals market, which are used in phones, solar panels, and other electronics.
Putin’s Perspective and Alternative Offers
Putin stated that he is open to offering the U.S. access to rare minerals, including those from Russia’s "new territories" captured in its war on Ukraine.
He dismissed concerns about a U.S.-Ukraine mineral deal, asserting that Russia "undoubtedly has, I want to emphasize, significantly more resources of this kind than Ukraine." He added, "As for the new territories, it’s the same. We are ready to attract foreign partners to the so-called new, to our historical territories, which have returned to the Russian Federation."
In conclusion, the mineral agreement between Trump and Zelenskyy represents a tentative step toward improved relations, albeit with crucial financial and security details yet to be resolved. The deal’s ultimate success hinges on the forthcoming negotiations and the ability of both sides to overcome existing reservations and potential risks. The global implications of this deal, particularly concerning geopolitical competition and security in Eastern Europe, remain to be seen.
