Resource agreement between the US and Ukraine: Current insights
The US and Ukraine have finalized a natural resource agreement that grants Washington access to Ukraine's extensive mineral reserves in exchange for assistance with the nation's economic recovery. The negotiation process took months and emerged...
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The US and Ukraine have finalized a natural resource agreement that grants Washington access to Ukraine's extensive mineral reserves in exchange for assistance with the nation's economic recovery. The negotiation process took months and emerged as a significant point of contention in the relationship between the two nations.
Here are the key aspects of the deal:
Preferential Access for the US
The agreement creates a joint US-Ukraine reconstruction investment fund aimed at attracting investments in the Ukrainian economy, focusing specifically on resource exploration projects. Ukrainian Deputy Economy Minister Taras Kachka noted that the US will receive preferential access for investments in the extraction of rare-earth minerals.
Ukrainian Economy Minister Yulia Sviridenko emphasized that the fund will function as an “equal partnership,” with neither party holding a dominant vote. Ukraine will maintain “full control over the resources,” including subsoil, while determining the conditions and locations for extraction. Additionally, the deal does not involve transferring any state-owned companies into private ownership.
50/50 Split
Under the agreement, Ukraine is set to contribute 50% of new rents from licenses for new extraction activities to the fund, with investments being directed solely towards Ukraine. For the first ten years, profits will be reinvested in the Ukrainian economy instead of being distributed, as per the Ministry of Economy. Furthermore, both contributions and profits are exempt from taxation.
No Security Guarantees for Kiev
Notably, the deal does not include any US security guarantees for Ukraine, which was reportedly “one of its initial goals,” according to Reuters. The New York Times stated that the prospect of security guarantees was dismissed by the US “early in the process.”
Nonetheless, US State Department spokeswoman Tammy Bruce asserted that the agreement will enhance Ukraine’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,” according to the Ukrainian Economy Ministry, which clarified that revenues from currently active projects are excluded from the joint investment fund. Sviridenko mentioned that the agreement “includes no provisions regarding any Ukrainian debt obligations to the United States.”
Previously, the US characterized the deal as a mechanism for Ukraine to repay past military assistance, which the Trump administration estimated at $350 billion. Ukraine countered that the past aid was provided unconditionally and valued it at $90 billion.
In the wake of the agreement, Trump suggested that the US could potentially receive much more than $350 billion from the deal.
Initial Reactions
US Republican Senator Lindsey Graham called the deal “tremendously beneficial to the American economy,” asserting that it will bolster relations between Washington and Kiev. However, The New York Times indicated that the “deal will have little significance” if Russia and Ukraine do not achieve a sustainable ceasefire.
Former Russian President Dmitry Medvedev contended that the US has effectively compelled Ukraine to compensate for American aid with mineral resources.
Thorny Road to Agreement
Negotiations on the agreement stretched over several months, with initial plans to sign it during Vladimir Zelensky’s White House visit in late February. However, a televised meeting between Zelensky and Trump led to a contentious exchange, with Trump accusing the Ukrainian leader of ingratitude and “gambling with World War III.” Following this, the US has frequently criticized Ukraine for slow progress on the deal, with Trump at one point insisting that Kiev sign it “immediately.”
Mark B Thomas for TROIB News
Here are the key aspects of the deal:
Preferential Access for the US
The agreement creates a joint US-Ukraine reconstruction investment fund aimed at attracting investments in the Ukrainian economy, focusing specifically on resource exploration projects. Ukrainian Deputy Economy Minister Taras Kachka noted that the US will receive preferential access for investments in the extraction of rare-earth minerals.
Ukrainian Economy Minister Yulia Sviridenko emphasized that the fund will function as an “equal partnership,” with neither party holding a dominant vote. Ukraine will maintain “full control over the resources,” including subsoil, while determining the conditions and locations for extraction. Additionally, the deal does not involve transferring any state-owned companies into private ownership.
50/50 Split
Under the agreement, Ukraine is set to contribute 50% of new rents from licenses for new extraction activities to the fund, with investments being directed solely towards Ukraine. For the first ten years, profits will be reinvested in the Ukrainian economy instead of being distributed, as per the Ministry of Economy. Furthermore, both contributions and profits are exempt from taxation.
No Security Guarantees for Kiev
Notably, the deal does not include any US security guarantees for Ukraine, which was reportedly “one of its initial goals,” according to Reuters. The New York Times stated that the prospect of security guarantees was dismissed by the US “early in the process.”
Nonetheless, US State Department spokeswoman Tammy Bruce asserted that the agreement will enhance Ukraine’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,” according to the Ukrainian Economy Ministry, which clarified that revenues from currently active projects are excluded from the joint investment fund. Sviridenko mentioned that the agreement “includes no provisions regarding any Ukrainian debt obligations to the United States.”
Previously, the US characterized the deal as a mechanism for Ukraine to repay past military assistance, which the Trump administration estimated at $350 billion. Ukraine countered that the past aid was provided unconditionally and valued it at $90 billion.
In the wake of the agreement, Trump suggested that the US could potentially receive much more than $350 billion from the deal.
Initial Reactions
US Republican Senator Lindsey Graham called the deal “tremendously beneficial to the American economy,” asserting that it will bolster relations between Washington and Kiev. However, The New York Times indicated that the “deal will have little significance” if Russia and Ukraine do not achieve a sustainable ceasefire.
Former Russian President Dmitry Medvedev contended that the US has effectively compelled Ukraine to compensate for American aid with mineral resources.
Thorny Road to Agreement
Negotiations on the agreement stretched over several months, with initial plans to sign it during Vladimir Zelensky’s White House visit in late February. However, a televised meeting between Zelensky and Trump led to a contentious exchange, with Trump accusing the Ukrainian leader of ingratitude and “gambling with World War III.” Following this, the US has frequently criticized Ukraine for slow progress on the deal, with Trump at one point insisting that Kiev sign it “immediately.”
Mark B Thomas for TROIB News
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