There were various potential names for the rare earths, minerals, natural resources and economic agreement that the US and Ukraine had hoped to conclude immediately after the inauguration of US President Donald Trump in January.
In the end, after a number of attempts and amendments, an agreement to establish a United States-Ukraine Reconstruction Fund was signed between Washington and Kyiv on April 30.
It consists of just 10 pages, with a two-page appendix. “Together with the United States, we are creating the Fund that will attract global investment into our country,” Ukrainian First Deputy Prime Minister Yulia Svyrydenko posted on Facebook. The agreement does not mention any Ukrainian debt obligations to the US, nor does it change Kyiv’s course towards European integration.
What is the fund supposed to do?
Svyrydenko said that the US would make contributions to the fund. In addition to direct funds, she said, it could include air defense systems for Ukraine. For its part, Kyiv will contribute 50% of revenues from new licenses for extracting raw materials to the fund and can also make additional contributions.
The idea then is that fund invest the money into projects for extracting fossil fuels, oil and gas, as well as intor related infrastructure or recycling, she said. Accordingly, Ukraine and the USA are to jointly determine the specific investment projects for which the money will be used. The fund may only invest in Ukraine.
“We expect that the first 10 years of profits and income of the fund will not be distributed, but can only be invested in Ukraine, in new projects or reconstruction. These conditions will be discussed further,” the minister posted on Facebook.
The US-Ukrainian minerals deal still needs to be ratified by the Ukrainian parliament. But the opposition European Solidarity faction is unhappy that lawmakers were not included in the negotiations and has demanded that Ukrainian President Volodymyr Zelenskyy hold talks with representatives of the parliamentary groups and factions.
When will the first investments come?
“An agreement with the US is essential for Ukraine today,” Ilya Neskhodovskyi, head of the analytical department of the Ukrainian think tank National Interests Advocacy Network, or ANTS, told DW.
“We pay and give up part of our revenues, but in return we receive military and financial support as well as American investment,” he said. “As the Americans will control the way the investments are made, it is assumed that they will then be more willing to invest in the Ukrainian economy.”
However, the money will not start flowing immediately. Experts believe that investment can only be expected after the end of the “hot phase” of Russia’s war against Ukraine, a freeze in the conflict, or the signing of a peace agreement.
“New projects are out of the question now during the war. I don’t think they will be possible before the middle of next year,” said Anatoliy Amelin from the Ukrainian Institute for the Future. “Companies that plan to invest in Ukraine, be it in raw materials, mining or processing, must take this into account in their budgets for next year,” he added, speculating that, at best, US investment would come to Ukraine from 2027 and 2028. “The US is still motivated to help us, but the next aid will accumulate as debt obligations in the fund.”
Will US military aid be resumed?
At the same time, experts also pointed out that the agreement is politically advantageous for Ukraine, as it continues cooperation with the US, including in terms of intensifying military aid. “This is a huge political and diplomatic victory for Ukraine!,” wrote Tymofiy Mylovanov, the head of the Kyiv School of Economics and former Ukrainian economy minister on Facebook. It “gives Trump an internal political victory, and because of this a more positive attitude to Ukraine.”
He continued: “Ukraine was able to protect its interests in this agreement! All the draconian wishes of the other side, despite the insane pressure that is hard to imagine, have been canceled. And the deal seems fair.”
According to media reports, immediately after the agreement was signed, Trump agreed to sell at least $50 million (€44m) worth of weapons to Ukraine for the first time during his second term of office.
