Trump’s Ukraine rare earths deal: 'The art of the steal'

Among the bombshells coming out of the Trump administration in its first month in office is the president’s demand that Ukraine pledge $500 billion worth of mineral resources to the United States in return for American support. U.S. President Donald Trump appears to see this as payback for vastly exaggerated sums of American military and financial assistance provided to Ukraine since Russia’s full-scale invasion three years ago.

As always, the devil is in the details when assessing how such a deal might work. It is true that the Ukrainian government, as the sovereign owner of mineral rights, can sign agreements for development consistent with Ukrainian laws and the constitution. However, the U.S. government, which is the counterparty to the draft memorandum proposed by Treasury Secretary Scott Bessent in Kyiv on Feb. 12, does not invest directly in mining projects — especially those overseas.

Presumably, Trump envisions the American private sector extracting Ukrainian resources included in the memorandum. Investors in mineral, oil, and gas development (a field I worked in for decades) must conduct detailed geological surveys, assay the quality of the ore or source rocks, carry out pilot projects and feasibility studies, and perform other due diligence to determine whether any project is commercially viable.

Normally, it takes five to 10 years, including regulatory approvals, to reach a final investment decision and secure financing. It is difficult to estimate how long this would take in a war-torn country whose territorial integrity is under attack. If conceding to demands on critical minerals is a condition for security support, then America is no different from Russia’s Wagner Group of mercenaries.

"If conceding to demands on critical minerals is a condition for security support, then America is no different from Russia’s Wagner Group of mercenaries."

The whole concept is a mirage — or worse, a head fake. It is reminiscent of what Trump said in 2019 during his first term about why he was keeping American troops in Syria: “I like oil, we’re keeping the oil.” Observers were left wondering how he planned to seize Syria’s oil production, which in any case was not significant. Of course, nothing came of it.

Now, Trump is fixated on Ukraine’s rare earths. The total value of rare earths produced globally is estimated at $15 billion a year. It is hard to imagine how $500 billion in value could be extracted from Ukrainian rare earths.

Perhaps Trump is confusing rare earths with critical minerals, such as titanium, base metals, and oil and gas, which may be included in the draft memorandum. These resources require larger-scale, long-term investments, and restoring peace and stability is a prerequisite. In 2010, the Pentagon estimated Afghanistan had $1 trillion in mineral deposits. Another decade of American presence in Afghanistan did not lead to their development. A memorandum granting rights to speculative Ukrainian minerals is just as worthless.

A truck transports iron ore at a Ferrexpo excavation site near Horishni Plavni, Poltava Oblast, Ukraine, on July 11, 2019. (Evgeniy Maloletka/Bloomberg via Getty Images)

The U.S. has more important national interests in Ukraine than extracting economic benefits from transactions that are impossible to execute. Does the Trump administration understand this — or is it setting up Ukraine for abandonment under the pretext that Kyiv is unwilling to accept Washington’s new terms for continued support?

That such basic questions can be asked after Russia’s initial invasion in 2014 reflects Washington’s policy confusion about why assisting Ukraine defends core American interests. This is a bipartisan failure, as demonstrated by President Joe Biden’s timid and incremental military support for Ukraine and weak sanctions against Russia. Ironically, Biden left Trump with a stronger hand by finally enacting tougher sanctions on Jan. 10 before leaving office.

Trump could use strict sanctions enforcement as leverage on Russia to reach a just settlement acceptable to Ukraine. Instead of pressuring the victim, he should pressure the aggressor. Given the sorry state of Russia’s military and economy, Putin is desperate to declare victory and pocket any gains handed to him. If this were a game of poker, Putin would be bluffing with a weak hand — while Trump is poised to fold without even looking at his own stronger hand.

The danger to Ukraine is obvious, but the risks to America’s global standing are just as great. If America betrays both its principles and its own interests in Ukraine, every nation will have to recalibrate its relationship with the U.S. Allies and partners would reevaluate the value of American commitments to them, while adversaries would be emboldened to test America’s resolve. Putin overreached after America’s abrupt and chaotic withdrawal from Afghanistan, and the world became a more dangerous place. Losing in Europe would turn the idea of America refocusing on the Asia-Pacific into a sick joke.

Editor’s Note: The opinions expressed in the op-ed section are those of the authors and do not purport to reflect the views of the Kyiv Independent.