Satisfying Trump’s appetites: Why does Ukraine need a minerals agreement with the U.S.?

Mineral Agreement: What Does It Actually Say

Georgiy Tikhiy, a representative of the ministry, stated yesterday that there are currently no mentions of debts in the text of the mineral agreement. "It's very important for us that the text does not mention Ukraine's debt. Neither the 500 billion nor any other debts," Tikhiy reported. He added that the provision regarding the reimbursement of future U.S. assistance at a ratio of 2 dollars for 1 has also been removed. He further noted that the mineral agreement is of a framework nature, meaning it represents a first step and the beginning of a process.

The text of the mineral agreement was recently published by the "European Truth" publication. It states the intention to create an Investment Recovery Fund that will establish a partnership between Ukraine and the USA through joint ownership. However, specific details regarding the cooperation between the countries in the field of mineral extraction are expected to be outlined in another agreement that still needs to be ratified by the Verkhovna Rada. For now, the text mentions that the new Fund will collect and reinvest revenues contributed to it, as well as generate profits from the monetization of all natural resource assets owned by the state of Ukraine.

The Ukrainian government will contribute 50% of all revenues generated from the future monetization of all natural resource assets identified as mineral deposits, hydrocarbons, oil, natural gas, etc., that are in state ownership. However, the sources of revenue will not include those currently included in Ukraine's overall budget revenues. This means that state-owned companies like Naftogaz, Ukrnafta, Ukrgazvydobuvannia, and others will not share their revenues with the new Fund established by Ukraine in collaboration with the USA. The agreement also states that contributions made to the Fund will be reinvested in Ukraine at least once a year to promote the security, protection, and prosperity of the country. However, there is no detailed description of how this will happen. It is likely that the specifics will be outlined in the next agreement.

The mineral agreement grants the USA a priority right to develop Ukrainian mineral deposits.

According to Prime Minister Denys Shmyhal, as a result of signing the agreement with the USA, Ukraine will gain a double benefit: attracting American investments and technologies for recovery, as well as accumulating resources for the implementation of strategic projects aimed at ensuring the welfare of every Ukrainian.

Economics or Politics: What Dominates the Mineral Agreement

In his opinion, if investments from the USA materialize, new jobs will be created in Ukraine, new mineral deposits will be developed, and there will be prospects for both extraction and processing of minerals, reinvestment of funds, and significant development of this crucial sector for Ukraine.

However, not all experts agree with the economic prospects of the agreement with the USA regarding minerals. Vladimir Omelchenko, director of energy programs at the Razumkov Centre, warns against expecting a massive influx of investments from American companies. In his view, the main priority for the Ukrainian government right now is not inviting American companies to extract titanium or lithium in Ukraine, but to establish relations with Donald Trump's administration and to try to renew aid to Ukraine, to engage Trump in resuming assistance, and this is precisely why the mineral agreement is necessary.

The goal of the mineral agreement is to attempt to establish relations with the USA, says Vladimir Omelchenko.

"For Trump, the main task is not rare earth metals or minerals. This is a very long story, because you know that it needs to be explored, further explored, then prepared for exploitation, and start operating, well, that takes a good 15-20 years. The main task is to record the so-called 'mythical debt' that Mr. Trump mentioned, but we see that it is not documented in the agreement text. For us, this agreement is neutral. But the whole question is for Trump — why does he need an agreement where the supposedly documented debts of Ukraine, which he has mentioned many times before, are not recorded?" — comments Vladimir Omelchenko. He adds: in reality, a good outcome of such a mineral agreement would be the absence of any real results.

"Let’s hope this will be a new 'Budapest Memorandum' — about nothing. Perhaps something will be signed just to establish business ties, more productive ones with Trump, so that negotiations on arms supplies and so on can continue regarding assistance to Ukraine. I think that the main task is to create a positive environment for interaction with the USA," says the expert, urging not to expect any mythical American investments.

Security Guarantees: Are the USA Ready to Guarantee Anything to Ukraine and Will the Mineral Agreement Help?

In his opinion, there was also a significant risk of a negative precedent related to future peace negotiations. "If we had agreed to the USA's ultimatum, then tomorrow there would be a similar, perhaps even worse ultimatum regarding peace negotiations," the expert believes. He explained: the initial idea was to attract American business so that the USA would have an incentive to protect Ukraine, meaning that the security of Ukraine was the main interest in the entire saga of minerals and the agreement for their extraction by American companies. Unfortunately, the USA refused to include any security guarantees in the agreement. Ultimately, the document published in the media left one phrase: 'The U.S. government supports Ukraine's efforts to obtain the security guarantees necessary for establishing lasting peace.'

"The guarantee should be in subsequent agreements, and this is certainly not a guarantee, it's just words that are worth nothing. For it to be a guarantee, a separate agreement is needed, and this agreement must be ratified by the U.S. Congress and signed by the U.S. President; then it will be a guarantee. It would be a guarantee like, for example, between the USA and Israel, the USA and South Korea, the USA and Japan. In essence, Ukraine needs a bilateral security treaty with the USA that goes beyond this investment agreement," says Vladimir Omelchenko.

He believes that neither the USA nor any other country will provide security guarantees to Ukraine. "There will be neither a nuclear umbrella, as within NATO for Europe, nor a willingness to fight for us. The reason is simple — it is a war with Russia, and that carries the risk of nuclear war. My prediction is that such security guarantees will not exist," believes Volodymyr Fesenko. He noted that the main security guarantee for Ukraine is to maintain a powerful army and to have weaponry that can deter Russian aggression. "So one of our guarantees is the army and armament, and the other is partnerships with countries, the development and strengthening of defense ties, and security relationships with several of our partners who are willing to cooperate with us," the expert explained.

Meanwhile, U.S. President Donald Trump stated that Putin will keep his word regarding a potential agreement to end the war in Ukraine and that physical U.S. involvement in ensuring Ukraine's security will not be necessary.