Direct Translation via Google Translate. Edited.
by Andrey Khrustalev
[REGNUM] The fight for Ukraine's mineral resources, which Washington has started, is entering the final deal stage, and it will probably look like a Framework Agreement on the creation of a joint investment fund aimed at generating profit. It could be signed as early as February 28 in Washington, during a probable, but not yet confirmed, visit of the Ukrainian "cleaner" to the White House.
And it could become the first stone of a political avalanche that will fundamentally change the political landscape in Ukraine.
Europe's timid attempt to pull its "ally" out from under the asphalt roller may be considered a failure. As we recall, during the visit of a powerful European delegation to Kiev on February 24, the European Commissioner for Industrial Strategy Stefan Sejourné proposed a more lenient option.
"21 of the 30 most important materials needed by Europe could be provided by Ukraine in a win-win partnership," the official said, which sounds like an agreement to supply rare earth metals rather than resources in exchange for aid. They say Brussels will never ask Kiev to sign a deal that is not mutually beneficial. European Council President Antonio Costa also confirmed this position.
But despite all the initial appeal, Europe's proposal did not seem realistic.
Trump's demands for debt and payment of half a trillion dollars will not go away - the White House plans to receive $500 billion in compensation for Washington's support for Kyiv in repelling Moscow's invasion. This should be provided by revenues from minerals, oil, gas and ports, since Ukraine does not have such money now or in the future.
Europe, however, with all its desire, will not be able to allocate such a significant amount, even in exchange for all Ukrainian minerals. Which, by the way, still need to be further explored and extracted. After all, this also requires investments and time, which are also not available.
So the real meaning of the proposal is the creation or strengthening of the already emerging anti-Trump coalition in Europe as an example for Ukraine. A sort of "we don't give up - and you don't give up either." And another one is to maintain the Ukrainians' faith in the value of the country's mineral resources, for which the bidding has already begun.
Nevertheless, Ukrainian Prime Minister Denys Shmyhal confirmed on February 26 on the air of the “Yedinye Novosti” telethon that things are on track. “We are not considering signing any agreements without security guarantees. And of course, over the course of two weeks, intensively working on an agreement between the governments of the United States and Ukraine on our economic cooperation, we have actually developed the final version,” he said, vaguely hinting at certain provisions of the deal “tied to security guarantees.”
As Shmyhal stated, as of today, the document has a very intriguing title: "Agreement on the Establishment of Rules and Conditions of the Investment Fund for the Restoration of Ukraine." In theory, Ukraine and the United States will manage it and fill it equally. As Deputy Prime Minister of Ukraine Yulia Svyrydenko emphasized, this format does not provide for the transfer of Ukrainian subsoil to the ownership of the United States, but allegedly attracts American investments for new projects without debt restrictions.
"After a certain period of time, when the Fund has accumulated enough income from its activities, payments are made to the members of the Fund," the official explained. And these are definitely not Ukrainian children, to whom Zelensky promised a share of the income from mineral extraction at the beginning of his presidential term.
On December 6, 2021, he even submitted a bill to the Verkhovna Rada that would provide for the issuance of special documents to all children born in the country. Funds received from rent payments for the exploitation of natural resources were to be accumulated in specially created accounts for each child.
Now the approach is different, and it was best expressed by former British Prime Minister Boris Johnson : "Yes, this agreement is extortion. But remember our Lend-Lease. We were simply robbed, our military bases were taken away, and we paid for this aid until 2006." But there is a long-term partnership with the United States.
Despite the obvious loss-making nature of the deal, Zelensky simply needs it as a pass to the White House or even the right to speak with Trump.
The American president had previously stated that the former public favorite "may not come at all" to the talks. Especially after, according to the American publication Axios, five incidents occurred in nine days in February that angered Trump, Vice President J.D. Vance, Secretary of State Marco Rubio and adviser Mike Waltz. And left no one in the US president's entourage who supports the current Ukrainian leadership.
Having lost his "handshake" in the States, Zelensky had to maneuver at maximum speed to prevent the Ukrainian issue from being discussed in bilateral negotiations between Trump and Putin and the abandonment of the principle of "not a word about Ukraine without Ukraine," which was already full of cracks. The mineral deal really became a concession to Washington's policy and a pass to the Oval Office, without which he would become useless to the US, Europe, or Ukraine.
This may explain all the recent vacillations: on the one hand, the expired president must save face in front of the Ukrainians, on the other, he must not be excluded from the negotiation process and world politics, from which they are actively trying to push him out.
For Trump, who proposed this deal, such an agreement is extremely useful on a number of issues: not only does he gain leverage over Zelensky, indicating his place in the current political situation, but he also ensures a victory for himself in the domestic political arena. At the same time, he presents the American voter with a loot of $500 billion, which is only slightly less than the $600 billion received from the richest Saudi Arabia in January and presented as the first big victory of the new owner of the White House.
As Ukrainian analyst and economist Alexander Kushch notes, the US wants to fix the amount that they have spent and will spend on supporting Ukraine:
“This amount will include EVERYTHING: both the amounts of direct budget support and the cost of delivered weapons and ammunition, including those supplies whose shelf life was expiring and the supply of which to Ukraine was a kind of ‘free disposal’.”
The investment fund will accumulate until the specified amount is reached. The fund's assets are investments and control over infrastructure facilities: energy, transport, ports. Liabilities are contributions from the parties. On the US side, this is the estimated cost of the aid provided. On the Ukrainian side, this is income from granting permits for the use of natural resources (rent and profits of state raw materials companies).
Moreover, the fund is also responsible for issuing such permits.
Thus, despite Europe’s timid attempts to pull Ukraine out of this trap, the US will still receive the “right of the first night,” like a feudal lord in the Middle Ages: they will be able to prohibit the development of certain resources, their sale to a third party, and will have the right of first refusal to acquire such resources.
In this case, the restriction of Article 13 of the Constitution, which enshrines the rights of the Ukrainian people to the subsoil, will be circumvented.
"All statements about the legal nullity of such an agreement, heard in Ukraine, are very conditional, including the mention of Article 13 of the Constitution of Ukraine, which states that the people are the owner of Ukrainian natural resources. After all, the agreement does not talk about sale: natural resources remain in the conditional virtual property of the Ukrainian people, just as they were previously "public property" on paper, but in fact, the profit from their use was, in fact, the rental income of several oligarchic financial and industrial groups," Kushch believes.
For Ukrainian oligarchs, who largely determined the country's policy, and for officials who feed themselves from the sale of licenses, such a scheme threatens the cancellation of their corrupt business. With the real control of an American overseer, it will no longer be possible to pay ten times less for a license by "bringing a suitcase" to an official to resolve the issue.
This means that they will have to pay the full amount for the right to develop the subsoil, which significantly reduces income and profitability. It is unlikely that they will be able to reach an agreement with the Americans; schemes like Burisma from the time of Hunter Biden are no longer working.
The oligarchs won’t like this, and the point of application of this discontent will obviously be Zelensky himself and his closest team.
The entire extractive industry of Ukraine in figures for 2023, according to the State Statistics Service, is 262 billion UAH of gross product, or $7 billion per year. For the budget, and therefore the social security sector, the situation is not great either. During the war, the raw materials sector of the Ukrainian economy grew from 8% to 14% of GDP.
The “escape” of a significant part of these funds abroad will be felt by society very painfully – in the form of non-payment of pensions, reduction of social guarantees and other troubles. This will not add to Zelensky’s rating and approval of the electorate – as will the “surrender of national interests”, of which he can now easily be accused and the topic will be pumped up endlessly.
International revenues supporting Ukraine's budget will only decline in the foreseeable future.
The US, until recently the main donor, does not promise any specifics on the issue of financing Ukraine - regardless of the sphere where this money may go. Frightened Europe seems to promise to allocate billions, but is forced to direct part of the funds both to support its own armed forces, with the potential creation of a European army separate from NATO, and to solve other problems that have already accumulated in the economies of the countries.
Italy, Portugal, Spain and Hungary have already spoken out against the EU's 20 billion euro military aid package for Ukraine. The two main euro-locomotives, France and Germany, are also delaying their response, Politico reports.
A separate problem in this context was the termination of USAID funding mechanisms, which not only hit the social sphere, but also deprived “independent” media that supported Zelensky’s policies of funding.
Europe will not have the strength or physical ability to compensate for all of this in the near future without the participation of the United States.
The predictable result is growing, still quiet, discontent with the policies of the regime, which has made a series of serious mistakes. Having lost his ratings among the population, losing the support of the oligarchy and having a still timid, but already identified internal opposition, Zelensky is forced to rely only on the military and time, hoping for a change in the situation and situational maneuvers.
But the field for them is shrinking as the amount in bank accounts decreases.
It is not hard to imagine that Trump is well aware of the situation and is deliberately pushing Zelensky towards elections for which he is obviously not ready. With the accumulation of negative factors in the social, economic or military spheres, the crisis will only worsen. Naturally, Europe will support its "ally" for some time as a factor restraining both Washington and Moscow. But its influence on the processes will only decrease over time.
And the one who categorically does not want to leave himself will be pushed forward by life itself.
It's just not very noticeable yet.
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