Can the Subsoil Agreement Really Be Used Against Russia: Analysis
6 May 10:48
The minerals agreement between the United States and Ukraine can be used, among other things, as an additional factor of pressure on Russia. This was stated by US Treasury Secretary Scott Bessent, according to
According to Bessent, the initiative to sign such an agreement belongs to President Trump personally, who sees several strategic advantages in it. One of the main goals is to strengthen the US position in negotiations with Russia.
“First, it will create additional leverage for him in negotiations with the Russian leadership when the time comes,”
– the Treasury Secretary emphasized. However, he did not explain when exactly that moment might come and what it would look like.
But Bessent explained that this agreement has an important symbolic meaning for Ukrainian-American relations:
“It was meant to be a symbol for Ukrainians that the United States remains close by. It was also meant to be a signal to a tired American public that is skeptical of new financial commitments that it is possible to share prosperity with Ukraine. And in a sense, it would be a tacit guarantee of security through economic partnership.”
According to the official, the agreement demonstrates that “there is no disagreement between the United States and the Ukrainian people,” thus emphasizing the unity of the two countries’ positions.
Читайте нас у Telegram: головні новини коротко
Subsoil agreement: key provisions
Full ownership and control remain with Ukraine
All resources on our territory and in our territorial waters belong to Ukraine. It is the Ukrainian state that determines where and what to extract. Subsoil remains in Ukrainian ownership – this is enshrined in the agreement.
Equal partnership
The Fund is being created on a 50/50 basis. We will manage the Fund jointly with the United States. Neither party will have a majority vote, and this will reflect the equal partnership between Ukraine and the United States.
National property is protected
The agreement does not change the privatization process or the management of state-owned companies – they will continue to belong to Ukraine. Companies such as Ukrnafta or Energoatom will remain state-owned.
No debts
The agreement does not mention any debt obligations of Ukraine to the United States. The implementation of the agreement will allow both countries to increase their economic potential through equal cooperation and investment.
The agreement is consistent with the Constitution and does not change Ukraine’s European integration course
The document is consistent with national legislation and does not contradict any of Ukraine’s international obligations. It is important that the agreement will signal to other global players that it is reliable to cooperate with Ukraine in the long term – for decades.
The Fund will be filled with revenues exclusively from NEW licenses
We are talking about 50% of the funds from new licenses for projects in the field of critical materials and oil and gas that will go to the budget after the Fund is created. Revenues from projects already launched or budgeted revenues are not included in the Fund. The agreement refers to further strategic cooperation.
Legislative changes are only pointwise
Only amendments to the Budget Code are required for the Fund to function. The Agreement itself must be ratified by the Verkhovna Rada.
The US will help attract additional investments and technologies
The Fund is supported by the U.S. government through the DFC agency, which will help us attract investment and technology from funds and companies in the U.S., the EU and other countries that support our fight against the Russian enemy. Technology transfer and development is an important component of the Agreement, as we need not only investment but also innovation.
The Agreement provides tax guarantees
The Fund’s income and contributions are not taxed in the United States or Ukraine to ensure that investments yield the greatest possible results.
How the Fund will work
The United States makes a contribution to the Fund. In addition to direct funds, they can contribute NEW assistance, such as air defense systems for Ukraine.
Ukraine contributes 50% of the state budget revenues from NEW royalties on NEW licenses for NEW fields. Ukraine can also make additional contributions beyond this basic one, if it deems it necessary. We are talking about cooperation for decades to come.
The Fund then invests in mining and oil and gas projects, as well as related infrastructure or processing. Ukraine and the United States will jointly determine the specific investment projects to which the funds will be allocated. It is important that the Fund can invest exclusively in Ukraine.
Analysis of Bessent’s statement
Minister Bessent’s statement is certainly controversial and rather “empty”. He did not voice any hypothetical mechanisms through which this agreement could exert more or less tangible pressure on Russia.
Arguments in favor of Bessent’s statement
- A geopolitical signal to Russia. The agreement declares a certain level of economic integration between the United States and Ukraine, which may serve as a signal to Russia of the United States’ long-term support for Ukraine. This, in turn, will help to reassure Russia that it is not worth continuing the war because it is futile.
- Economic stability of Ukraine. Attracting U.S. investment in mining could strengthen Ukraine’s economy, which in turn would strengthen its position in the confrontation with Russia.
- Reducing China’s influence. The agreement is also to some extent aimed at limiting the participation of countries that supported Russia in Ukraine’s recovery. This could reduce China’s influence in the region. This point in itself is not positive for Ukraine, but it is supposed to demonstrate the consolidation of Western interests and values in the region.
Arguments against Bessent’s statement
- Lack of security guarantees. The agreement does not contain clear commitments by the United States to Ukraine’s security. It is written as if it has nothing to do with the Ukrainian-Russian war and the current “peace” process.
- Lack of specific mechanisms of economic influence on Russia. The agreement does not contain or provide for any mechanisms of any kind of influence on Russia. It only refers to joint development of Ukraine’s subsoil. This calls into question its effectiveness as a lever of pressure on Russia.
- Limited access to resources. Many of Ukraine’s mineral deposits are located in the territories occupied by Russia, which makes it difficult to use them under the agreement. Thus, the economic integration of Ukraine and the United States is not likely to be very deep.
Conclusion
Secretary Bessent’s statement that the agreement with Ukraine provides the United States with strategic leverage over Russia has more controversial than substantiated aspects. On the one hand, it seems to demonstrate the deep economic cooperation between the United States and Ukraine, which may serve as a signal to Russia. On the other hand, the absence of specific security guarantees and limited access to resources call into question its effectiveness as an instrument of pressure on Russia. In addition, the agreement could be perceived as a way for the US to gain access to Ukrainian subsoil, raising concerns about Ukraine’s sovereignty.
Thus, while the agreement has the potential to strengthen Ukraine’s economy and demonstrate US support, its impact on Russia remains limited without additional security commitments.
ANALYSIS
