Ukraine potentially has large deposits of crucial minerals, but it will take peace and billions of dollars to unlock them.
Originally, minerals were part of a peace deal pushed last year by Ukrainian President Volodymyr Zelenskyy. The package also included an invitation to join NATO and a commitment by the West to continue arming Ukraine.
Only the minerals are left from that effort, and they’re turning into an existential problem for Ukraine.
Kyiv was dumbfounded when Treasury Secretary Scott Bessent showed up in Ukraine in February with a draft agreement to hand over half of the country’s rare earth minerals to American companies. Zelenskyy reacted with outrage.
After Ukraine’s pushback, the two sides negotiated a more equitable agreement that Zelenskyy was supposed to sign in the White House Feb. 28. But that meeting turned into a disaster as Trump and Vice President JD Vance attacked the Ukrainian president, who was kicked out of the Oval Office with no deal.
The U.S. then came back with another proposal that returns to most of the most toxic elements of the first draft.
It offers no security guarantees and no further aid or investment, but gives Washington preferential access to all of Ukraine’s natural resources as well as financial control over the state reconstruction fund and all of its projects — until Kyiv repays billions to the U.S. for military aid that was originally disbursed as grants.
“The current draft significantly undermines the strategic balance, limiting Ukraine’s regulatory and tax autonomy,” said Volodymyr Landa, senior analyst with the Kyiv-based Center for Economic Strategy.
The agreement also jeopardizes Ukraine’s chances of joining the European Union because it violates EU competition and environmental legislation, Landa said. Meanwhile, paying billons to the U.S. is likely to spook investors who might otherwise be interested in helping Ukraine rebuild.
“Other partners are not likely to accept that their aid is being pumped out of Ukraine in favor of a third party,” Landa said.
Source: POLITICO.
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