Trump’s new Ukraine proposal looks like an offer it must refuse

The draft accord sent by Washington to Kyiv gives US first pick of Ukrainian natural resources and infrastructure projects.

President Volodymyr Zelensky and US President Donald Trump. Picture: AFP

The Trump administration expects Ukraine to quickly sign a new agreement that gives Washington broad power over its ally’s economy. The problem is that Ukraine almost certainly can’t accept the terms.

The mismatch in expectations threatens to set up the US and Ukraine for a new round of conflict over what President Trump can get in return for supporting Kyiv in its fight against Russia’s invasion. A previous, less-expansive economic agreement underpinned a blow-up in the White House between Trump and Vice President JD Vance on one side, and Ukrainian President Volodymyr Zelensky on the other.

“Ukrainians feel that they cannot give up their entire economic sovereignty for nothing,” said Daniel Bilak, a lawyer and a partner in the Kyiv office of Kinstellar, a law firm.

What started out with Trump saying in early February that he would like to get his hands on Ukraine’s “rare earths,” a set of minerals used in modern technologies from cellphones to electric cars, has grown into a plan for the US to draw profits from Ukrainian economic projects across metals, oil, gas, and other natural resources, as well as infrastructure projects including ports and pipelines.

The 55-page draft, a copy of which was viewed by The Wall Street Journal, is aimed at fulfilling Trump’s demand to claw back billions in military and financial aid from Ukraine that has sustained its resistance to Russia’s invasion since 2022. Trump has put the US contribution at $350 billion, well above estimates by Ukraine of around $100 billion.

Workers operate machinery at an open-pit titanium mine in the Zhytomyr region, in February. Picture: AFP

The draft, sent to Kyiv by the US Treasury Department earlier this week, proposes a limited partnership registered in Delaware and called the “United States-Ukraine Reconstruction Investment Fund.”

The draft is unusual for a deal between states as it resembles a commercial agreement, said Tymofiy Mylovanov, president of the Kyiv School of Economics and a former Ukrainian economy minister.

“I don’t know how you can write an intergovernmental commercial agreement,” Mylovanov said.

Investment from the European Union, World Bank and the International Monetary Fund, among other entities, would be incompatible with this agreement, he said, adding that the Ukrainian parliament would never pass it.

The White House has presented the proposed deal as mutually beneficial and a way to strengthen ties.

“The mineral deal offers Ukraine the opportunity to form an enduring economic relationship with the United States that is the basis for long-term security and peace,” said National Security Council Spokesman James Hewitt. “The deal will help make Ukraine prosperous and reflects America’s past and current commitment to Ukraine.”

Ukraine has responded cautiously and is still working on an official response. The draft lacks security guarantees that Ukraine has been seeking and reopens the question of whether Ukraine should repay the US for the military aid it has been providing since 2022 — a question that wasn’t in a previous proposal.

“Any public discussions about the text of this agreement at this stage only harm the negotiations and hinder constructive dialogue with our American partners,” Yulia Svyrydenko, Ukraine’s economy minister, told Ukraine’s parliament on Friday.

Analysts said many of the emerging details would be hard for Ukraine to swallow.

The fund would have the right of first refusal on all natural resource and infrastructure projects in Ukraine that the country is seeking investors for, both new and existing.

Those projects would pay profits into a fund managed by a board of directors consisting of three US and two Ukrainian representatives, essentially giving Washington control of the fund’s management. The fund’s projects would have to avoid exporting critical minerals to strategic competitors of the US.

The document states that the money from the fund would go toward repaying assistance the US has provided to Kyiv since Russia’s invasion. The document doesn’t say what money would go toward much-needed rebuilding — even as Ukraine struggles to maintain its essential services amid Russian bombings.

If the document is signed, Ukraine would have 45 days to come up with a list of resource projects already licensed by Ukrainian authorities.

Even if Kyiv wanted to find other investors for its vast mineral and natural resources, it would first have to present the project to the fund’s board. In the event that the fund declined to take it on, Ukraine couldn’t offer other potential investors better economic terms in the following year.

U.S. Treasury Secretary Scott Bessent hopes to sign a deal quickly with Ukrainian President Volodymyr Zelensky. Picture: AFP

Ukraine’s caution is spurred by how Zelensky’s questioning of the original proposal set off a downward spiral in relations that culminated in the heated exchange at the White House. The US halted military supplies and some intelligence sharing after the meeting.

Rachel Rizzo, a senior fellow at the Atlantic Council think tank in Washington, said no one should assume Trump has a plan for what follows if Ukraine doesn’t sign the deal.

“Seems like the administration is sort of winging it, at this point, when it comes to supporting Ukraine. I would assume, though, that there is a plan to put heavy pressure on the Ukrainians to get them to bend to whatever the Trump team wants them to do,” she said. “Supporting Ukraine is not on this administration’s agenda the way it was for Biden.”

Other analysts said that the Signal chat debacle has put pressure on the Trump team to get a foreign policy win — or at least not a clear loss.

If Ukraine rejects this version of the deal, Washington would have to negotiate a new one with Kyiv. And after Trump acknowledged Russia was dragging its feet in negotiations, senior Trump administration officials are aiming not to look too pro-Moscow.

“Both sides still want this,” said Shelby Magid, deputy director of the Atlantic Council’s Eurasia Center. “But I certainly don’t rule out another period of tension over agreement terms and negotiations.”

Wall Street Journal