Colonial Bargain for Ukraine

Washington quickly changed the status of its war aid to Ukraine from grant to repayment, charging Kyiv to repay the bills. Chisinau, which has also received a record amount of the US financial support since 2022, should keep this situation in mind in its future strategic plans, especially in the context of unclear prospects for establishing relations with the Trump administration

Vladimir ROTARI, RTA: Since the election of Donald Trump, all his actions and statements on the Russia-Ukraine war are geared to meeting two key goals. The first is to achieve, at a minimum, a ceasefire and, at a maximum, a full settlement of the conflict. The second is to compensate for the costs incurred by the United States, which, according to official data, exceeded 100 billion dollars, and according to Trump’s version, more than 300 billion dollars. Such aspirations of the US president are rumoured to have both purely personal ambitions – for example, to win the Nobel Peace Prize – and an overall desire to shade the weakness of the previous administration, which unleashed unnecessary wars overseas that don’t align with American interests spending huge amounts of taxpayers’ money on it. Trump is pushing hard on both fronts, with some success.  In general, in recent months he has managed to launch negotiations at various levels, where small and bigger steps towards a complete ceasefire are being discussed. For instance, a so-called “energy” truce has already been established, which protects some groups of infrastructure facilities from attacks. A “maritime” truce is also being agreed. Although Moscow and Kyiv are constantly accusing each other of violating the agreements and interpreting some of their clauses in their own way, we can say that the process has begun. As for “reparations”, Trump has seized on an idea that Kyiv itself elaborated during Biden’s presidency about critical natural resources. This was part of Zelensky’s so-called “victory plan”. It claimed that Ukrainian territory is home to valuable mineral deposits worth trillions of dollars that could strengthen the “democratic world” in global competition. In essence, this proposal was supposed to be an incentive and at the same time a justification for increasing or at least maintaining the then current rate of funding for Ukraine’s war with Russia. And, most importantly, Kyiv expected to pay with subsoil resources on account of future aid. Without handing them over completely, but only allowing the partners to jointly develop them by concluding special agreements. Donald Trump actually distorted this initiative, seeking access to resources not on account of future but already completed deliveries, which, of course, did not attract Ukraine. Shortly after Trump’s inauguration, his finance minister travelled to Kyiv with a draft resource agreement, which, according to the US leader and his entourage, was met inappropriately. Then Zelensky evaded signing the deal several more times, expecting to soften its provisions. The final document, which was to be signed by the presidents, did not contain anything terrible for Ukraine: there were few specifics, and the details were to be spelled out in a separate annex, which had yet to be negotiated. However, after the scandal in the Oval Office, the US essentially decided to restart the negotiations on minerals and, according to the mass media, to considerably toughen the terms, including not only rare metals in the deal. It’s unclear whether this was a pre-planned scenario or not. According to experts, estimates of Ukrainian resources are very approximate. Many deposits are located in territories seized by the Russians, and the remaining ones require huge investments to start production, which are not likely to pay off, especially given the not so huge market for “rare earth”. And making a profit is a very distant prospect. It was obvious that if Trump really wanted to get some money from Ukraine, he would need something else. “Something else” was found. This week it became known that the Americans had prepared a draft of a new deal, right away detailed this time. Ukrainian MP Yaroslav Zheleznyak yesterday called it a “horror” and outlined the main points. His information was confirmed by Bloomberg and the Financial Times, which also had the opportunity to read the 58-page paper. In the new agreement, the US, without providing security guarantees, wants to create a special fund that will accumulate revenues from profitable Ukrainian assets. The fund will be headed by the Americans and Ukraine will not be able to interfere in its management. It will cover all natural resources, including existing fields, including oil and gas, as well as energy assets. Only Washington will control investments in the relevant infrastructure; it will also have the first right to buy any Ukrainian resources, and it will be able to veto (!) their sale to other countries. Key point: Ukraine would be required to contribute half of the revenues from all natural resource and infrastructure projects to the fund, and the US would be entitled to all profits and 4% per annum until all US wartime aid is repaid. All money will be immediately converted into currency and transferred abroad, and Ukraine will have to pay compensation in case of delays or disputes. It’s obviously an extremely unfavorable deal as it is now, similar to those made by metropolises with their colonies or satellites. Ironically, it is based, as I have already said, on the original Ukrainian ideas, but turned upside down. In fact, the US is not only creating a tool for extracting profits from Ukraine’s remaining profitable assets, but also protecting the country’s natural resources and infrastructure from falling into the “wrong hands”. They will remain under US control even if the fund does not invest in their extraction or modernization. Ukrainians seem to be able to refine certain provisions later to suit their interests, but it is unlikely that they will be able to fend off the existing deal altogether. Trump has shown that he can easily resort to whips when needed, something he has plenty of when it comes to Kyiv. Especially noteworthy, including for our authorities, is how drastically the terms of US aid to Ukraine have changed. Recall that during the previous US administration, all support was provided as grants, i.e. non-refundable. And, to put it bluntly, it is not quite fair and honest to demand its return now. But the White House seems to be not confused by the fact that Kyiv has been fighting for its interests all these three years, nor by the fact that Ukraine will not be able to generate enough income after the war – the main thing is to take what is yours. Now let me remind you that Chisinau has also received record amounts of the US aid since 2022, and also on a seemingly gratuitous basis. But, as we can see, its status can change at any moment. Moreover, according to some reports, our leadership has so far failed to build bridges with the new administration. Besides, some rash and quite ill-considered moves and statements by top Moldovan officials during Washington’s clashes with Kyiv and Brussels have not gone unnoticed in the White House. So, just to be safe, we should brace for scenarios in which we will be offered at some point to strike a “compensatory” deal.