Signing of US-Ukraine mineral agreement an important political stepping stone

On April 30, the Ukraine and the United States signed an agreement creating the United States-Ukraine Reconstruction Investment Fund into which proceeds from new mineral extraction ventures in Ukraine will be deposited. The agreement offered better terms that the previous proposal from the Trump administration, which required that Ukraine also reimburse the US for military and other assistance provided in the earlier phases of the Ukraine war. The agreement now only applies to new projects, and exempts Ukraine’s state-owned oil & gas companies, which contribute significantly to government budget revenues. Under the agreement, 50 % of the income generated by the new projects must be deposited in the fund. From the US perspective, all military assistance will now be treated as a US contribution to the fund.

The agreement is important to Ukraine because it increases confidence on continued US commitment to supporting Ukraine. More concrete significance of the agreement is only expected to shape out over the longer term as development and planning of mining projects may take decades and are difficult to implement in wartime conditions.