Photo credit: www.yahoo.com
Donald Trump’s $500 billion demand from Ukraine extends far beyond just the control of critical minerals. It encompasses a wide range of assets, including ports, infrastructure, and the nation’s oil and gas reserves, along with the overall resource portfolio of the country.
The proposed agreement delivered to Volodymyr Zelensky a week ago indicates a potential US economic presence in Ukraine that could be deemed tantamount to colonization, entrenching liabilities that seem insurmountable. The situation has resulted in significant concern and unease within Kyiv.
A draft of this pre-decisional agreement, which is marked “Privileged & Confidential” and dated February 7, 2025, was reviewed by The Telegraph. It stipulates the creation of a joint investment fund between the US and Ukraine, intended to restrict benefits from Ukraine’s reconstruction to hostile entities.
The text outlines how the “economic value associated with resources of Ukraine,” including its mineral, oil, and gas resources, as well as its ports and other infrastructures, shall be managed, yet lacks clarity on the full extent of the resources included. Its governance is set to follow New York law, disregarding conflicting legal principles.
According to the terms, the US is to receive half of the recurring revenues from resource extraction in Ukraine and half of the financial ends of all new licenses awarded for resource monetization. Furthermore, the agreement suggests a lien on these revenues for the US, indicating that reparations would take precedence over essential domestic needs.
The draft gives the US a right of first refusal for all future licenses regarding exportable minerals, effectively granting it near-total control over Ukraine’s resource economy. The stipulations seem to reflect a contractual setup more typical of arrangements with nations that have been defeated in war, rather than partnerships between allies.
President Zelensky initially proposed to Trump in a meeting last September that the US should take a share in Ukraine’s critical minerals and rare earth elements, with the hope of facilitating continued military support from the US.
Zelensky believed this strategy would encourage US companies to establish operations in Ukraine, serving as a deterrent against further aggression from Russia. However, he likely did not foresee the harsh terms that would accompany such a proposition, which many view as too punitive.
A new Versailles
Should this draft be accepted, the demands set forth by Trump could exceed the reparations imposed on Germany after World War I, potentially claiming a larger proportion of Ukrainian GDP than what was stipulated in the Treaty of Versailles.
Donald Trump recently stated in an interview that Ukraine had “essentially agreed” to his $500 billion proposal, emphasizing the vast resource wealth of the nation. He warned that failure to accept these terms could lead to Ukraine falling entirely under Russian influence.
Trump has highlighted that the US has spent around $300 billion supporting Ukraine in the ongoing conflict, describing any further financial assistance as unwise. Recent congressional agreements, however, total considerably less at $175 billion, with a portion dedicated to weapons production and humanitarian aid.
Republican Senator Lindsey Graham has suggested that Trump’s demands might be a strategic maneuver aimed at gaining popular American support for Ukraine. He posited that the arrangement would bolster Ukraine’s economic narrative and bind US interests to a potential resolution.
During discussions at the Munich Security Conference, Ukrainian delegates had to navigate a sensitive landscape, expressing optimism about the mineral agreement while simultaneously raising concerns that its current terms violate Ukrainian law and require significant adjustments.
Discourse around Ukraine’s mineral wealth has reached hyperbole, with figures suggesting its reserves may total as much as $26 trillion. However, such valuations may not align with the current realities of global mineral markets.
While Ukraine is believed to have large lithium reserves, the market has seen an 88% drop in lithium prices since 2022, and abundant discoveries worldwide may not favor Ukrainian resources. The largest lithium deposit is currently found in the United States, which could shift market dynamics significantly.
In terms of rare earth elements, the situation mirrors the narrative around lithium. The low profitability from these resources caused companies to shift focus, leading to a dependence on China for critical supply chains—a scenario that US authorities are now trying to rectify.
Ukraine also has cobalt, yet recent advancements in battery technology have reduced this elements’ necessity in electric vehicles. These economic realities complicate the narrative around Ukraine’s resource potential.
Furthermore, while Ukraine possesses shale gas reserves, geopolitical constraints and high extraction costs hinder viable development, challenging the perception of Ukraine as an energy exporter.
The second violation of Ukraine
Meeting Trump’s demand for $500 billion appears unrealistic within any foreseeable timeline. This demand raises ethical questions regarding the treatment of a nation that has borne the brunt of conflict in the defense of democratic values.
Trump has expressed that his approach to negotiations is characterized by aggressive ambition. In contrast, genuine negotiations typically allow for substantial maneuvering space, which may not apply in this tense geopolitical context.
For Zelensky, the challenge remains stark: he must reconcile the military threats from Russia with the economic pressures exerted by an ally, leaving him in a precarious position with few appealing options.
Source
www.yahoo.com