US seeks control over Ukrainian resources in new draft deal
The United States is keen to exert influence over major investments associated with the extraction of mineral resources and infrastructure in Ukraine. This manoeuvre would enable the US to sideline Kyiv's other allies and potentially obstruct Ukraine's bid for membership in the European Union, Bloomberg reported on Thursday.
The news agency acquired a draft of the updated US-Ukraine agreement. It reveals that the Trump administration is insisting on a "right of first offer." Should the agreement be concluded in this form, it would signify an unprecedented economic expansion by the US in the largest country by land area in Europe, at a time when Ukraine is endeavouring to forge closer ties with the EU.
The agreement would grant the US preference for profits, which would be channelled into a special investment recovery fund under Washington's control. Notably, the document asserts that the US regards the "material and financial benefits" it has provided to Ukraine since the full-scale Russian invasion in February 2022 as its contribution to this fund. This implies that the White House would compel Ukraine to reimburse all US military and economic support dispensed since the war commenced before Kyiv could earn any revenue from the partnership fund, Bloomberg reported.
New agreement on the table
The Americans presented the revised agreement to Kyiv officials towards the end of last week. Previously, the White House had communicated that the administration is extending beyond the previously negotiated agreements, which included Ukraine's rare earth metals. Discussions between both parties are ongoing, and the final draft may involve adjustments to the terms. Ukraine is anticipated to respond to the American document with its amendments this week, a source familiar with the matter told Bloomberg News.
The comprehensive agreement proposed by the US necessitates "detailed study," with conditions evolving continuously during negotiations, Zelensky said on Thursday to reporters in Paris, where he attended a summit with European leaders. Although it is premature to assert that an agreement has been finalised, "we support cooperation with the US, we don’t want to give a single signal that can prompt the US to stop aid to Ukraine," he stated.
The United States remains committed to swiftly achieving an agreement and ensuring lasting peace for both Ukraine and Russia, said a spokesperson for the US Treasury Department in response to a request for comment.
Ukraine was granted candidate status for the EU in 2022 and is poised to commence accession discussions for full membership. Should the US attain effective control over investment decisions encompassing significant segments of the Ukrainian economy, it could likely complicate matters even further. Previously, Ukraine asserted that an agreement with the US must not contravene its association agreement with the EU. Additionally, it rejected US pressure to classify Washington's past support for Ukraine as its contribution to the joint fund.
Special fund under US dictate
According to the draft document, the US International Development Finance Corporation (DFC) would oversee the investment fund by appointing three out of five board members and possessing veto rights, conferring the ability to block certain decisions. Ukraine would appoint the remaining two members but would not have the authority to interfere in the daily administration of the fund. The government in Kyiv would be obliged to allocate 50% of its revenues from all new natural resources and infrastructure projects to the fund. According to the draft, the US would have the right to all profits plus a 4% annual return until the investments are recuperated.
Ukraine would be mandated to submit all projects to the fund for scrutiny "as early as practicable," and the DFC would secure seats on the board or oversight of all funded initiatives. Kyiv would not be able to offer rejected projects to other parties on "materially better" terms for at least a year.
Furthermore, the US government would have the prerogative to purchase Ukrainian metals, minerals, and oil and gas before other entities on commercial terms, regardless of whether the fund financed the project. The agreement lacks a time limit. Moreover, according to it, Kyiv would not possess the right to sell minerals. The agreement would also prohibit Kyiv from selling critical minerals to countries that are "strategic competitors" of the US, Bloomberg reported.
