What’s Next For The U.S.-Ukraine Minerals Deal?

The US-Ukraine minerals deal has unsurprisingly captured the attention of the world. From a dramatic confrontation in the White House involving Zelensky to Trump’s increasingly souring attitude towards Putin, the deal has a captivating personal dimension. The agreement itself represents the culmination of many critical structural trends present today. These include the elevation of emerging energy sources to the same level as hydrocarbons and the war in Ukraine’s capacity to remake the international system.

Appreciation of these structural facets has resulted in much of the popular discourse neglecting the fine details of this agreement and treating the agreement as if it were reality. In truth, the agreement is merely the first step of many, and is quite different from its original incarnation and there is still a perilous journey towards realization.

What’s In The US-Ukraine Minerals Deal?

Originally, Trump championed the deal as a means of forcing Ukraine to repay all military and financial assistance from the US, and secure American economic dominance in Ukraine at the expense of other outside actors. Despite the White House’s loud and persistent declarations of victory, almost none of the Trump administration’s efforts have been realized. In its original form, the agreement resembled American control over huge parts of the Ukrainian economy and budget. That is now gone.

The agreement does not apply to previously delivered aid to Ukraine, despite Trump considering that as a debt that needed to be repaid. It only refers to future hypothetical revenues, not benchmarked against any static metric, meaning returns are far from guaranteed. Furthermore, much of the agreement’s provisions for compensation of aid are contingent upon a hypothetical economic recovery. While, as I wrote as far back as June 2022, such a recovery is possible, it is also not guaranteed. Zelensky has thus avoided immediate payments while securing a contingency to prevent impossible future repayments if recovery lags.

Under the terms of the agreement, Ukraine is also not obligated to give up other arrangements or exclusively prioritize American investments. This means the liquid assets already mortgaged to mostly European actors remain intact, while the physical assets in areas such as agriculture, energy, telecommunications, etc… that are still intact will stay with their previous owners. All language demanded by the US involving “right of first refusal” and other special privileges was removed from the document after subsequent rounds of negotiation. Comparatively, the EU and UK safeguarded their interests via a 100-year comprehensive agreement with Kyiv.

Many of these stipulations, while significant, are legally cast as non-binding declarations. While these can still signal intent and create constituencies interested in their enforcement, they’re not at the level of treaty obligations. Even if all parties were locked into this agreement with iron-clad sincerity, outdated Soviet-era geological maps, the final lines of territorial control, and sundry logistical difficulties mean implementation would be challenging.

America’s dream of securing dominance in one of the world’s breadbaskets, home to vast resources and human capital at the expense of Europe and Russia, has been deftly parried. On one level, this agreement represents a failure for Trump’s much vaunted business acumen. On the other, it may represent a strategic opportunity.

Strategic Implications Of The US-Ukraine Minerals Deal

Trump’s deal, even if far short of his ideals, has inadvertently recast the war in Ukraine from “Biden’s Blunder” to “Trump’s war too”. As, ironically, Steve Bannon warned and many foreign policy professionals in Washington hoped, Trump has repeated a similar dynamic to Richard Nixon in Vietnam. The Vietnam War similarly transformed from “Johnson’s War” to a bipartisan American blunder when Nixon ultimately chose to continue engaging with the conflict after his election. Ukraine, unlike Vietnam, doesn’t demand an immediate exit strategy for America and offers far more immediate and concrete strategic benefits.

This failure for Trump may represent an inadvertent success for America. The deal has allowed the resumption of American military aid to Ukraine, something many traditionalists in the foreign policy establishment have been yearning for. The failure to secure American dominance in Ukraine may also help close the widening gap in Euro-American relations opened by Trump.

The reasons for this turnaround and shortfall are unclear. Trump may have been convinced by messaging from traditional Republicans emphasizing that Putin thinks Trump is weak, or maybe even some Republican politicians using Russian social mores to call Putin “woke”. It could have been EU and UK leaders using Zelensky as leverage and outmaneuvering Trump. In the final balance, European assets were protected with American commitments, and Europe retained its prime position in the Ukrainian economy, meaning Trump may have swallowed the bait and been duped into once again “protecting Europe”.

Until this question is a matter of historical record, we won’t know why exactly the Trump administration backed down on its demands on Ukraine. Incompetence, European conniving, intra-party politics, personal slights, and strategic reassessments are all possible answers. What is not debatable is that the US-Ukraine minerals deal, while hollow in immediate extractive gain for the US and in many respects a Trump defeat, heralds a new age. Trump’s Ukraine mineral agreement, intentionally or otherwise, has ushered in a new era of American diplomacy and minerals-focused energy concerns.