Ukraine and US finalise details of minerals agreement

The revised minerals agreement does not grant the US full ownership of the joint fund with Ukraine, but neither does it contain clear security guarantees.

Source: text of the agreement dated 24 February, which is available to Ekonomichna Pravda

Details: The document is set to be signed by Ukraine’s Foreign Minister Andrii Sybiha and US Secretary of State Marco Rubio. Under the agreement, the US and Ukraine will establish an Investment Reconstruction Fund.

The revised agreement removes the clause that granted the US 100% control over the commercial fund. As per the new wording, the US will hold the maximum financial share in the fund permitted by US law.

Ukraine’s and the US’s joint ownership of the fund will be determined on the basis of their actual contributions. Both countries will co-manage the fund, but the US will retain decision-making authority within the framework of US law.

A new clause has been added, stipulating that neither Ukraine nor the US may sell or transfer their share in the fund without the other party’s prior written consent.

The fund will receive 50% of the revenues from Ukraine’s natural resources and related ports and infrastructure (even those indirectly owned by the Ukrainian government) to reinvest in Ukraine’s economy.

Sources of contributions to the fund will not include those already allocated as part of Ukraine’s budget revenue. The timing, volume and stability of contributions will be determined in a future agreement on the fund.

The fund may, at its discretion, credit or reimburse actual costs incurred by the Ukrainian government on new projects. 

Contributions to the fund will be reinvested in Ukraine’s economy at least once a year, with the stated goal of promoting security and prosperity. The future fund agreement will also specify how funds will be distributed over time.

A clause that aimed to double investments in Ukraine for every dollar contributed has been removed from the revised version of the agreement, as has the goal of restoring Ukraine’s GDP to its 2021 level.

A clause allowing revenues from facilities currently under Russian occupation to exceed 50% after de-occupation has also been removed.

Another major change is the removal of a provision that required Ukrainian contributions to the fund to continue until they reached US$500 billion. A clause stating that all US financial aid would count towards Ukraine’s obligations to the fund has also been omitted.

According to the agreement, the US intends to make a financial commitment to assist Ukraine, but the specific amount will be determined separately. However, the agreement contains no clear security guarantees, which President Volodymyr Zelenskyy had previously mentioned.

The fund agreement will aim not to conflict with Ukraine’s other international commitments or its future integration into the EU or other organisations.

Ukraine and the US have committed to immediately begin drafting the separate agreement that will outline a detailed framework for the future fund.

Ukraine’s Economy Ministry will be responsible for preparing this agreement.

Read more: Trading metals for security: which resources interest Trump, and what can Ukraine offer?

Background:

• On 13 February, US Treasury Secretary Scott Bessent visited Kyiv to discuss economic cooperation. At the time, Zelenskyy stated that the US had presented Ukraine with an initial draft of the "partnership agreement", which includes investments in Ukraine’s mineral resources in exchange for future assistance.
• Media reports indicated the Trump administration had proposed that Ukraine grant the US a 50% stake in the country’s rare-earth minerals, but Zelenskyy refused to sign the document.
• On 15 February, Zelenskyy stated that Ukraine was not rejecting the minerals agreement proposed by US President Donald Trump but that the document was not yet ready for signing.
• The previous version of the agreement proposed the creation of a commercial fund in which the US would have 100% control, while Ukraine would allocate funds to it.
• Zelenskyy had previously stated that he would not accept an agreement that would leave Ukraine owing US$500 billion to the US. He also noted that the presence of American businesses in Ukraine alone would not guarantee security.

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