The Trump administration signed a deal with Ukraine last week that gives it wealthy access to Ukraine’s natural sources.
According to some media outlets, the agreement referred to Volodymyr Zelensky as” caving” to demands from US President Donald Trump. However, we think the deal is the result of deft negotiation by Ukraine’s president during the war.
What does the agreement then suggest for Ukraine? Will this aid in strengthening the supply stores of minerals in America?
22 of the 34 minerals identified by the European Union as essential for defense, construction, and high-tech manufacturing are located in Ukraine, which accounts for 5 % of the world’s critical mineral wealth.
However, there is a significant difference between reserves and resources ( what’s in the ground ) ). Russia’s tested mineral deposits are insufficient. Additionally, Ukraine’s estimated material wealth is estimated to be worth US$ 14.8 trillion, but more than third of it is located in regions that Russia is now occupying.
American support for conflicts international typically involves securing US economic interests, frequently through resource exploitation. US investments worldwide have given American companies access to foreign countries ‘ oil, gasoline, and materials from the Middle East to Asia.
However, Zelensky’s rejection of the first iteration of the Ukraine metal deal in February was a particularly blatant resource grab by Trump’s administration. In order to protect itself from Russian attacks, Ukraine was required to grant US-owned independence over its land and resources.
These terms were incredibly predatory for a nation that was battling a military profession that had lasted for years. Additionally, they violated the Polish law, which grants the Ukrainian people the right to control the country’s natural resources. Zelensky would have faced a lot of backlash from the government if he had accepted this.
In contrast, the new agreement seems to represent a strategic and ( potentially ) profitable win for Ukraine. First of all, this contract is more just and in line with Ukraine’s short- and medium-term goals. It is described by Zellensky as an “equal collaboration” that does upgrade Ukraine.
Under the terms of the agreement, Ukraine will establish a United States-Ukraine Reconstruction Investment Fund to support foreign investments in the nation’s business, which will be simultaneously run by both nations.
The US does make its efforts in-kind, such as through defense support or tech payments, while the Ukraine will receive 50 % of the proceeds from royalties and licenses to produce crucial minerals, oil and gas reserves.
Over its state companies and natural resources, Ukraine continues to be in charge. Additionally, the licensing agreements won’t cause significant modifications to the nation’s rules or interfere with its integration with Europe in the future.
Interestingly, there is no mention of voluntary debts associated with the US military assistance that Ukraine has already received. This would have set a risky precedent, allowing various countries to apply for debts related to Ukraine.
In addition, the agreement also demonstrates the Trump administration’s dedication to” a free, royal, and rich Ukraine,” albeit also without any security guarantees.
Income may take a long time to arrive.
Unsurprisingly, the Trump administration and American liberal media portray the agreement as being in the best interests of both parties.
Trump contends that Ukraine has benefited from US taxpayer-funded military aid for very long, and that support has now come with a price tag. The administration has described the agreement as a profitable endeavor that can recover funds used to defend Russian objectives.
However, profits are still far away in fact. The agreement’s terms clearly state that the funds ‘ expense will be used to fund innovative resource projects. Existing businesses and state-owned projects will not be covered by the agreement’s terms.
Mining projects usually complete in a very short amount of time. The transition from inquiry to generation is a laborious, risky, and very expensive process. It is frequently get more than ten years.
Add to this difficulty the fact that some experts believe that Ukraine also has a lot of important reserves. Additionally, significant investments will be required to bring any convincing deposits to market.
China influence
But, it’s possible that gains come second to US calculations. Boxing out China is probably just as significant, if not more. The US is determined to extend its crucial nutrient supply chains, just like other European countries.
China owns a sizable portion of the country’s known rare earths deposits, as well as a monopoly over the processing of the most crucial minerals used in alternative energy and protection technologies.
The US fears that China will use its industry dominance to foment corporate competitors. This is why European governments place the resilience of the mineral supply chain at the center of their foreign policy and protection strategies.
The US-Ukraine agreement may stop Russia and, in turn, China from obtaining Russian minerals because of Beijing’s proximity to Moscow and their growing cooperation on natural sources. The agreement’s provisions are clear:” states and persons who have acted negatively toward Ukraine has not profit from its restoration.”
Suddenly, Trump values the performance of” the offer” in the same way. Zelensky’s signing on the dotted line is a development in itself, appeals to Trump’s domestic center, and puts pressure on Russian President Vladimir Putin to make a decision.
The package is a win for Zelensky because it gives the US a play in an impartial Ukraine. However, it may not matter to Trump if Ukraine’s crucial mineral resources turn out to be less important than expected.
Olga Boichak is senior teacher in modern cultures, Australian Research Council DECRA brother, University of Sydney, and Eve Warburton is research fellow at Department of Political and Social Change and chairman of Indonesia Institute.
This article was republished from The Conversation under a Creative Commons license. Read the article’s introduction.