US, Ukraine sign crucial pact on rare minerals

The United States and Ukraine have at last signed the rare minerals treaty by which the US has first access to the rare minerals available in Ukraine. The two countries have committed to set up a joint investment fund by which Ukraine would spend 50 per cent of its earnings from its natural resources on reconstruction in Ukraine, and the US would contribute directly to the fund.

The treaty was signed on Wednesday in Washington by US Treasury Secretary Scott Bessent and Ukraine’s Minister of Economy Yulia Svyrydenko. The text of the agreement is yet to be made public. But the diplomatic and political fallout of the agreement remains significant.

Bessent said that the agreement means that the US was “committed to a process centred on a free, sovereign, and prosperous Ukraine over the long term.” Bessent also said, “President Trump envisioned this partnership between the American people and the Ukrainian people to show both sides’ commitment to lasting peace and prosperity in Ukraine.”

The American statement further said, “And to be clear, no state or person who financed or supplied the Russian war machine will be allowed to benefit from the reconstruction of Ukraine.” This would exclude America’s traditional rivals China, Iran. What is not clear is whether the US is now committed to support Ukraine in the war with Russia.

President Trump still wants to persuade Russia to end the war with Ukraine. The terms of the Ukraine-Russia peace are yet to be spelled out. It is learnt that Trump is in favour of Russia keeping Crimea, which President Vladimir Putin had occupied in 2014, and some other enclaves in eastern Ukraine. Ukraine is not willing to accept but it may not have much say in the matter.

The Ukrainian expectations from the deal are quite high. They believe that the agreement with America means that the US would stand with Ukraine against Russia. But this has not been stated in black and white in the agreement. It is to be assumed that with its new economic stake through the rare mineral deposits in Ukraine, the US has gained economic stakes in Ukraine, and therefore it would defend Ukrainian territorial integrity.

In return, America can demand further economic concessions from Ukraine. Ukraine has said that the US contribution to the reconstruction fund would include military assistance. The Ukrainian Ministry of Economy further said that the fund’s resources would be exclusively invested in Ukraine for the first 10 years, and the profits from the investments made by the fund would be shared equally after that time. The two countries would have equal decision-making power over the fund, and it covers only the future military assistance, and not that made in the past three years by the Biden Administration. The Biden Administration had given more than $70 billion in military assistance sine the war began in 2022.

Svyrydenko in her statement said, “We are gaining not only investment, but also a strategic partner committed to working with us to drive economic growth and innovation.” So, Ukraine is tying itself up with the United States for economic development, which would mean sharing its natural resources with the United States. And because of its economic interests, the United States is expected to stand with Ukraine in the face of Russian threats.

The question is whether this expectation is written into the agreement or not. In the absence of the actual text of the agreement, it seems that as of now it only represents what Ukraine expects from the US. But Ukraine has declared its dependence on the United States as its strategic partner.