On the last day of April the USA and Ukraine signed a contract of minerals born in torment and strife. It gives the Americans half the profits from any future mining projects in Ukraine. Especially valuable in this context are uncommon earth minerals. According to Ukrainian data, the country has 5 percent of the world's mineral resources, including 23 out of 50 minerals considered crucial by the U.S. government.
From a political point of view, the agreement primarily changes the dynamics of the peace process. Each country has gained something from it, but everyone has lost something, which can have a large impact on further developments. These are the main gains and losses resulting from the agreement for Ukraine, the USA and Russia.
Ukraine – good agreement, bad guarantees
Ukraine yet managed to negociate a much better deal than the 1 the Americans proposed at the beginning of the talks. However, Kiev failed to push through its main safety-related postulate.
Pros. First of all, Ukrainians enter into a deal with Americans without colossal debtWho tried to push Trump. This debt was intended by his predecessor military aid to Ukraine.
Trump calculated it as skyrocketing amounts – erstwhile in $500 billion, another time at 350 billion dollars. Eventually, the U.S. Department of safety determined the scale of aid at $182 billion. (European calculations are even lower), but no debt was included in the mineral agreement. This means that the Ukrainians will pay their resources only for future military aid.
Also In economical terms, the agreement is much more favourable for Kiev than her erstwhile versions. The U.S.-Ukrainian Investment Fund for Reconstruction will not be controlled by Americans, as previously proposed, but will be managed jointly by both countries.
What's more, Kiev will hold the full ownership of its resources and infrastructure. According to erstwhile proposals, they were to partially control it all, along with specified key elements as mine elements, gas- and oil pipelines, ports and even roads.
Finally, this Ukraine will decide what minerals and erstwhile to mine.
A deal where possible profits can go into hundreds of billions of dollars could besides be strong motivation for the US to direct further military aid to Kiev. After all, the vast deposits of minerals desired by Washington lie on the Donbasa, which is presently being fought for. The Americans seem to realize this aspect of the agreement. On the day of its signature, the White home approved the sale of 50 million dollars worth of weapons to Ukraine.
Minus. The key disadvantage of the deal is no safety guarantees from the United States. Thus the Ukrainians failed to push through their main postulate. The "long-term strategical match" agreements between both countries and "US support for Ukraine's security, prosperity, reconstruction and integration into the global economical framework" contained in the text are besides general terms to be treated as minimum guarantees from Washington.
Although the Americans gained considerable motivation to safe Kiev with military aid, work for their own safety inactive rests full on Ukrainian shoulders. If the transactional focus in Trump's global accounts — or any of its successors — considers that the profits from the interest are not satisfactory, The Americans will be able to just withdraw..
The Ukrainians who tried to join the European Union were hard to negociate specified a expression of the agreement so as not to close this door, yet the agreement has a dispute. potential to make tensions with European partners.
Indeed, the agreement states that it must not be contrary to Ukraine's intentions to join the EU, but the agreement itself clearly favours the United States in terms of future benefits for the usage of Ukraine's resources and reconstruction of Ukraine. This may not delight European countries that have invested more in the financial dimension in helping Ukraine than the US. In this sense, Kiev treads on thin ice.
USA – political success for cat in bag
For Trump, the agreement with Ukraine is the first success in an unexpected painful process for him to reconstruct peace in the region. However, in business terms, he decided on an highly uncertain project.
Pros. Peace in Ukraine was to be 1 of the main objectives of the Trump administration, but despite the noisy announcements, the American president failed to accomplish it either within “24 hours” or even the first 100 days of his presidency. The mineral deal is something Trump can yet present to voters as his success in a bumpy peace negotiations process.
The agreement means another political accomplishment for Washington. The US has guaranteed itself the anticipation of blocking trade in Ukrainian resources with another countries, in peculiar those that favoured Russia in the war. This is primarily about the main geopolitical competitor of America – China. The agreement undoubtedly strengthens the global position of the US, securing supply chains for this country in an crucial country of our region.
The same applies to the future reconstruction of Ukraine: “No state or individual who has financed or supplied the Russian war device will be able to benefit from the reconstruction of Ukraine,” says the text of the agreement. It is worth reminding here that only 4 days before the signing of the agreement in this version, the Chinese Agency for global Cooperation for improvement signalled – not the first time – the country's readiness to participate in the post-war reconstruction of Ukraine. In this sense it is an undeniable success of the United States.
Although profiting from future extraction of uncommon earth minerals is simply a highly uncertain interest, much more concrete and faster profits will aid bring Ukrainian oil and gas. The extension of the oil, gas and another hydrocarbons profit agreement is simply a clear concession of Kiev to Washington. It is in this area that Americans can see tangible benefits in the foreseeable future.
Minus. From a purely financial point of view, the mineral agreement is to a large degree buying a cat in a bag. Let's start by saying Even though experts are surpassing themselves in measuring the decks of Ukrainian minerals and calculating their values for always larger billions of dollars, we do not truly know much about them..
The vast majority of geological investigation in this respect was carried out inactive in the times of the USSR, many of which in the 1960s. This means that the measurements made by outdated methods are highly imprecise. Therefore, we do not know the precise size of deposits, but we besides do not know at what depth they are located, which in many cases makes the cost-effectiveness of their extraction questionable.
The essential condition for major American players to enter mining business will be to make them multi-annual safety guarantees. According to Gracelin Baskaran, manager of the Mineral safety Program at the Center of strategical and global Studies in Washington, D.C., on average, mine construction in the planet takes about 18 years and requires investment of between 500 million and 1 billion dollars so that the mine can operate for about 50 years. Is anyone today, including the US, able to supply civilian business with specified a temporary safety cushion in this 1 of the world's most unstable regions? In this context, it is worth remembering that a crucial number of Ukrainian deposits are located in areas located close to the front.
Another business problem is that present as many as 63 percent of coal mines and half of deposits of manganese, caesium, tantalum and uncommon earth elements are found under Russian occupation. A peculiar problem may be that on the Russian side of the front there are as many as 2 of the 4 Ukrainian deposits so desired by Americans of lithium deposits, which is simply a key component of lithium-ion batteries.
There's another possible problem for Americans in the full deal. present it is in the hands of both countries, so both have an interest in achieving it. But as I have already written, this region is peculiarly susceptible to the most unexpected changes. Division 50/50 in the management of the US-Ukrainian Investment Fund for Reconstruction He doesn't give Washington any control of possible shocks. – whether it's war or political.
Russia – an unexpected change of places
A fewer hours after signing the U.S.-Ukrainian agreement, Moscow reacted in a distinctive way – She launched a rocket attack on Odessa, which caused crucial harm and fatalities.. This rage is understandable. Until recently, Putin skillfully played the American counterpart, placing impossible conditions and dragging negotiations to infinity. The boy to beat in that game was Ukraine.
Suddenly, the roles turned around. Businessman-Trump gained a vital business to side with Kiev. At the same time, the first signs of impatience flow from Washington to Moscow – The last 1 was discontent with Putin's only three-day suspension of fire.
Although the agreement is simply a crucial failure of Russia, there is 1 hope for Russia – this is the deficiency of American safety guarantees for Ukraine already mentioned. Now much will depend on the degree to which the US will put military support for Kiev.
