After weeks of fierce negotiations, Ukraine and the US finally signed the “economic partnership” deal on April 30. The agreement gives the US what President Donald Trump has been seeking — almost exclusive access to Ukraine’s minerals and other natural resources — without providing Ukraine what President Volodymyr Zelenskyy had been longing for: explicit American guarantees.
Yet, on closer examination, the deal is favorable to Ukraine, as it secures at least something while giving away very little, and formalizes a relationship between an independent Ukraine and the US as business partners.
“This agreement signals clearly to Russia that the Trump administration is committed to a peace process centered on a free, sovereign, and prosperous Ukraine over the long term,” Treasury Secretary Scott Bessent said after signing the deal. He termed it “historic”. Those words, and what they signal, will give pleasure to Kyiv and discomfort to Moscow in equal measure.
The Critical Minerals and Rare-Earths Deal creates a jointly managed investment fund for Ukraine’s reconstruction. The US will support the development of Ukraine’s yet undeveloped energy and mineral reserves, with half of these future revenues contributing to the fund.
By signing the deal in its final form, Ukraine successfully avoided the pitfalls of some earlier US demands. The agreement does not include compensation for previously delivered US military aid. The US will not gain control of the fund or mineral resources, and agriculture production and mineral projects already in development are excluded. The wording of the deal does not hinder Ukraine’s commitments to the EU and does not demand an overhaul of the tax code.
The US gains too. It wins preferential access to Ukraine’s untapped mineral reserves and the certainty that its future military aid to Ukraine will not be a gift because it will instead be considered an investment in the fund. This is all the more striking since it incentivizes the US to continue military aid, a subject the Trump administration has barely discussed in public, at least.
Russia’s schadenfreude was clear. “A vanishing country [Ukraine] will have to pay for arms with its national riches,” wrote Russia’s former president and prime minister, Dmitry Medvedev.
The value of riches, or at least their commercial viability, is unclear.
According to the Ukrainian Geological Survey, Ukraine holds approximately 5% of the world’s total mineral reserves, including those considered “critical minerals” by the US, such as lithium, rare earths, and titanium.
It produces some gallium, graphite, and titanium that is currently worth less than $250m per year. The assessment of its untapped resources relies mainly on Soviet-era geological surveys. Some have been considered too costly to develop and have remained untapped for half a century since their discovery.
True, access to US capital and technology would make these reserves more viable, but it’s likely most of the reserves will remain untapped for some years. There might be more luck with iron ore, coal, uranium, oil, and natural gas. Ukraine is currently producing these and has additional deposits to develop, although the US is less interested in these commodities than in the critical mineral, and if global demand slows due to trade wars, there will be less incentive to extract more of these commodities.
Ultimately, the deal may be more political than commercial. True, it doesn’t give Ukraine any written security guarantees, but it gives it some US skin in the game and a hope that the administration will stick with Ukraine. Given some of the apocalyptic possibilities discussed as possible outcomes during the agreement’s negotiation, the outcome seems positive for both sides.
Alexander Kolyandr is a Non-Resident Senior Fellow at the Center for European Policy Analysis (CEPA) specializing in the Russian economy and politics. Previously, he was a journalist for the Wall Street Journal and a banker for Credit Suisse. He was born in Kharkiv, Ukraine, and lives in London.
Europe’s Edge is CEPA’s online journal covering critical topics on the foreign policy docket across Europe and North America. All opinions expressed on Europe’s Edge are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.
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