President Donald Trump and Ukrainian President Volodymyr Zelenskyy are set to sign a landmark mineral deal Friday that represents a breakthrough in their relationship, but leaves the work of hashing out the financial details for a later date.
‘This is in some ways an agreement to make an agreement,’ said Doug Klain, policy analyst at Razom for Ukraine.
Even so, it was an abrupt turnaround from last week, when Zelenskyy rejected the initial terms for a deal. Trump, finding Zelenskyy ungrateful for U.S. help, declared him to be a ‘dictator’ and said Ukraine ‘never should have started’ the war.
So how did both parties turn things around? Here’s what we know about the deal so far:
Reconstruction investment fund
Unlike an earlier iteration of the deal, the newest version, approved by the Ukrainian Cabinet on Wednesday, establishes a fund with joint U.S.-Ukraine ownership instead of 100% U.S. ownership.
Ukraine’s Prime Minister Denys Shmyhal said Wednesday Ukraine would be funneling half of its revenues from future oil, gas and mineral projects into the fund, with some of that money being reinvested for more development. The deal would exclude existing natural resources projects.
The deal says that once both sides sign on to the initial framework, negotiations will begin on a ‘subsequent agreement’ on who will control how much of the fund and its operation.
Two sides still far apart on grant repayment
The U.S. initially demanded Ukraine offer $500 billion worth of its rare earths and other minerals as back payment for about $185 billion in aid. The latest versions of the deal do not include a concrete figure for how much of the mineral revenues the U.S. would receive or the size of the stake the U.S. would hold in the fund.
At a Wednesday news conference, Zelenskyy still said his country would not be repaying the U.S. for any of the aid that has already been allocated.
‘I will not accept (even) 10 cents of debt repayment in this deal. Otherwise, it will be a precedent.’
But Trump seemed satisfied with the latest negotiations.
‘We’re doing very well with Russia-Ukraine. President Zelensky is going to be coming on Friday. It’s now confirmed, and we’re going to be signing an agreement,’ he said Wednesday.
The agreement has little in the way of details on how the U.S. would benefit financially.
‘Perhaps U.S. companies will be contracted to do all the work of extraction, and could make big profits that way; perhaps the U.S. government would award itself an annual sum from the fund; or perhaps there would be a stipulation that U.S. companies could purchase the minerals at discounted rates,’ explained Peter Harris, a political science professor at Colorado State and fellow at restraint-minded group Defense Priorities.
But rare earth mining is a long and arduous process. ‘It could be decades before anyone makes a dime from Ukraine’s untapped natural resources,’ said Harris.
What Ukraine wants from the deal: security guarantees
Ukraine is looking for help from across the world to keep Russia out in the future if they can agree on terms to end the war.
But Zelenskyy is desperate for U.S. participation since he does not believe European security guarantees alone are enough to deter Russian President Vladimir Putin from invading again.
U.S. officials have insisted America will not put boots on the ground. ‘I’m not going to make security guarantees beyond very much – we’re going to have Europe do that because we’re talking about Europe is their next-door neighbor,’ Trump said Wednesday.
U.S. officials have also told Ukraine to read between the lines: if the U.S. has significant financial interests, potentially even workers on the ground in the region, it will defend those interests.
‘The Ukrainians are not quite convinced by that argument,’ said Klain. ‘It’s reminiscent of 1994, the agreement Ukraine made with the U.S., Russia and others to give up its nuclear arsenal, and the U.S. would say, ‘If anybody threatens your sovereignty, we’ll have your back.”
‘Ukraine does not want to get burned again.’
The agreement includes a vague reference that ‘supports Ukraine’s efforts to obtain security guarantees needed to establish lasting peace,’ according to the Kyiv Independent.
Harris said a ‘backdoor security guarantee’ through a minerals deal amounted to ‘bad policy’ for the U.S.
‘It [does not] serve the U.S. for large numbers of American workers to be stationed in an unstable post-conflict zone,’ he said. ‘Uncertain access to Ukraine’s natural resources is not worth risking a NATO-Russia war.’
Putin dangling Russian-controlled minerals to Trump
Ukraine controls over 100 major deposits of critical minerals, according to the Kyiv School of Economics, along with some oil and gas reserves. Its reserves hold titanium, lithium, graphite, rare earths and other minerals key to the energy and tech sectors.
Trump wants revenues from the minerals as repayment, but he could also be looking to break China’s monopoly on the rare earth metals used in phones, solar panels and other electronics.
Putin, meanwhile, said he is open to offering the U.S. access to rare minerals, including those from Russia’s ‘new territories’ – those captured in its war on Ukraine.
He said a U.S.-Ukraine mineral deal is not a concern and Russia ‘undoubtedly has, I want to emphasize, significantly more resources of this kind than Ukraine,’ in televised remarks.
‘As for the new territories, it’s the same. We are ready to attract foreign partners to the so-called new, to our historical territories, which have returned to the Russian Federation,’ he added.