As world powers scramble for control of crucial rare-earth minerals, the US has a controversial proposal: reparations from Ukraine.
President Donald Trump has demanded ownership of 50% of Ukraine’s mineral resources, arguing that the US is owed $500 billion in return for Washington’s military support – which so far amounts to just under $70 billion since 2014. “They may make a deal, they may not make a deal,” Trump told Fox News. “We are going to have all this money in there, and I say I want it back.”
Volodymyr Zelenskyy was told he had “an hour” to agree to the memorandum, sources told The Economist. The Ukrainian president declined before his team agreed to negotiate. But Trump’s approach has “enraged” European allies, said the Financial Times. Officials at the Munich Security Conference compared it to “mafia blackmail tactics” and “colonialism”.
What are Ukraine’s critical minerals?
Ukraine is thought to have vast reserves of minerals, worth up to $11.5 trillion, said the FT. According to Kyiv, the country has deposits of 22 of the 34 minerals identified as critical by the EU, including rare-earth minerals. It claims about 10% of the world’s lithium, critical for electronic vehicle battery production – probably the biggest reserve in Europe – but none has been mined so far.
Ukraine also has the largest titanium reserves in Europe, according to Mining.com. Titanium is used in the production of aircraft and ships and Ukraine is capable of meeting US and EU demand for more than 25 years.
What is Trump’s proposal?
The idea of giving the US a stake in Ukraine’s mineral wealth originated in Zelenskyy’s “victory plan”, which he presented to Joe Biden and Trump in October. The plan promised to open up Ukraine’s rare-earth elements to US companies, in return for America helping Ukraine build “non-nuclear strategic deterrence”. Trump “appears to have read only its first half”, said The Economist.
This proposal “goes far beyond US control” over Ukraine’s critical minerals, according to a draft of the contract seen by The Telegraph. It covers “everything from ports and infrastructure to oil and gas”, and amounts to “economic colonisation of Ukraine, in legal perpetuity”. It equals “a higher share of Ukrainian GDP than reparations imposed on Germany” after the Second World War.
Why does Trump want them?
One big reason, said The Guardian: China. Most of the world’s capacity to process and refine those minerals is in China. It also accounts for almost half the world’s rare-earth elements, according to US Geological Survey data, and its share of refining them is nearly 90% – an “overwhelming” dominance.
With Trump “effectively instigating a trade war with China”, US access to critical minerals is “potentially under threat”. Minerals are “the building blocks of the economy of the future, and if the US doesn’t get its hands on them, someone else will”.
What are the problems with it?
Ukraine’s mineral deposits have “not undergone any significant exploration or development”, said the FT. To benefit from them would take decades, and face major bureaucratic hurdles.
More than 20% of Ukraine’s minerals are now in areas under Russian control, Kyiv admits. It could be as much as 40%, said The Guardian. Russia “may have offered a backchannel proposal to the Trump team for access to those resources”, said The Economist.
Others argue that estimates of the country’s mineral wealth are based on outdated Soviet-era studies. The sums are “make-believe”, said The Telegraph. Ukraine “cannot possibly” meet Trump’s $500 billion demand. The proposal is “iron-fist coercion by a neo-imperial power against a weaker nation with its back to the wall, and all for a commodity bonanza that exists chiefly in Trump’s head”.
What does Ukraine say?
Zelenskyy said the proposal contained none of the post-conflict security guarantees that Ukraine needs. “We can think about how to divide resources once security guarantees are clear,” he said in Munich.
This is crucial because Ukrainians believe the US and UK already “failed to live up to their obligations” to protect it, under an agreement signed at the end of the Cold War when Ukraine gave up its nuclear weapons, said The New York Times. The deal could “hand Russia a propaganda win by casting the war as a battle for resources” rather than protecting democracy, according to a former diplomat.
The draft may also violate Ukrainian law. According to Ukraine’s constitution, its mineral resources belong to its people.