Dr Jiayi Zhou and Dr Artem Gergun
The signing of the minerals deal between the United States and Ukraine on 30 April is one of several headline stories about the Russian war in Ukraine. The agreement and its demands, a precondition for continued US support for Ukraine, would have been unthinkable only a few months ago. While substantially improved from its earliest iterations, the profit-sharing deal overrides Ukrainian domestic legislation without offering any formal security guarantees in return. The agreement also comes at a time when the USA is pressuring Ukraine to cede territory while considering economic concessions to Russia in its attempts to secure a peace deal. This now represents a new geopolitical reality and baseline, for Ukraine’s advancement towards either a negotiated peace or a continued fight against Russian aggression.
The minerals deal’s underlying logic—that economic incentives create political stakes in peace and development—is a sensible one in theory. The deal could make it easier for Ukraine to access international capital markets and help it to attract much-needed post-war reconstruction and industrial projects. An active and long-term US stake in the safety and profitability of Ukrainian economic assets may also serve as a low-level deterrent to Russia. Indeed, the impetus for the deal first came from Ukraine, which for several years had been making overtures to Western investors and partners, advertising its subsoil wealth and the potential economic payout of partnership.
However, as this essay argues, the deal is also predicated on several flawed assumptions and short-sighted ideas. First of all, it is far from clear that Ukraine’s minerals sector has any significant level of revenue windfall potential. The deal may amount to very little financially, for all the diplomatic bluster during its months-long negotiation. Second, Russia is actively blocking access to significant mineral resources in the occupied territories, while subsuming these subsoil resources, as well as related industries and even export facilities, into its own economic networks. On these issues, as in the wider peace talks, the USA has been placing pressure on the wrong counterpart. Finally, implementation of the minerals deal is likely to focus on hydrocarbons and resource extractivism as opposed to sustainable value chains—and risks making Ukraine less, rather than more, resilient in environmental, economic and even social terms.
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