Ukraine may end up winning in the mining deal with Trump
Text in which the author advocates ideas and draws conclusions based on his interpretation of facts and data
The US minerals deal with Ukraine may not be the colonial-style asset grab it seems.
Giving Washington a share of critical minerals and other resources was an idea that Volodymyr Zelensky brought up in September to then-candidate Donald Trump. After the election, Trump began talking about some $500 billion that he expected as “repayment” for US support over the past three years.
The deal will require Kiev to pay half of the revenue it extracts from natural resources to a special fund controlled by the United States, according to the New York Times . The fund will have to reinvest some of it in Ukraine, in order to attract foreign capital. The United States dropped the demand for 500 billion euros, which never made much sense. Washington's support has amounted to 114 billion euros, according to the Kiel Institute for World Economics. Europe has sent 132 billion.
A big unknown is the scale of the assets. Local authorities have a poor picture of the resources, which include uranium, lithium, oil and gas. The last mapping of rare earths was completed decades ago, and the deposits may not be economically viable. Moreover, some of the coveted elements are in territory occupied by Russia.
Besides, the revenues will take time to come. kyiv will have to build or rebuild mines and repair the energy grid. The promise of future profits could spur U.S. investment, thus kick-starting the country’s reconstruction (the World Bank estimates it will cost $524 billion). Zelensky wanted any deal to be conditional on the U.S. helping to police a truce. That appears to have run up against Trump’s opposition to military involvement in Europe. But Trump has also said that giving the U.S. a stake in the country’s economic future would achieve the same result. In fact, Moscow doesn’t like the deal, and has offered Washington a mining deal of its own.
Zelensky might also conclude that a blanket deal covering unknown assets with distant revenues may not be binding on kyiv. By the time the mines are up and running, the White House might have a friendlier president. Ukraine could then revise the contract or tear it up altogether. It’s a negotiating strategy Trump might even admire.
The authors are columnists for Reuters Breakingviews . The opinions are their own. The translation, by Carlos Gómez Abajo , is the responsibility of CincoDías
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