Analytics

Ukraine and the US create a joint subsoil development fund: what it means

On the night of April 30-May 1, Ukraine and the United States signed a strategic agreement to establish an Investment Fund for the Restoration and Cooperation in Critical Minerals.

The signing of this document was announced by First Vice Prime Minister and Minister of Economy Yulia Svyrydenko. She signed the agreement together with U.S. Secretary of the Treasury Scott Bessent.

“Together with U.S. Treasury Secretary Scott Bessent, we have signed an agreement to establish the U.S.-Ukraine Recovery Investment Fund,”

– Svyrydenko said.

The fund is being created as a joint project of both countries with an equal share of participation – 50% each. All funds from this fund will be used exclusively for the development of the Ukrainian economy – in particular, for the extraction of natural resources, oil and gas, as well as for infrastructure and processing projects. At the same time, Ukraine retains full sovereignty over its subsoil and resources and independently determines the terms of their use.

The agreement contains the following key provisions:

• Full ownership and control remain with Ukraine. Subsoil is Ukrainian property, and only the state determines what to extract.
• Equal partnership. The fund is created 50/50, with joint management, and no one party will have a majority vote.
• National property is protected. There will be no changes in privatization processes or management of state-owned companies. Companies like Ukrnafta or Energoatom will remain in state ownership.
• No debts. The agreement does not mention any debt obligations to the United States.
• The agreement complies with the Constitution and does not change the European integration course. The document is consistent with national legislation and does not contradict any of Ukraine’s international obligations.
• 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.
• Legislative changes are only point changes. Only amendments to the Budget Code are envisaged for the Fund’s operation. The agreement itself will be ratified by the Rada.
• The US will help attract additional investments and technologies.
• The agreement provides tax guarantees. The Fund’s income and contributions are not taxed in the United States or Ukraine.

How the Investment Fund will work under the subsoil agreement

• The United States makes a contribution to the Fund. In addition to direct funds, they can also 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, and we are talking about cooperation for decades to come.
• The Fund then invests in mining and oil and gas projects, as well as in related infrastructure or processing. Specific investment projects will be determined jointly by Ukraine and the United States.
• Ukraine expects that for the first 10 years, the fund’s profits and revenues will not be distributed, but can only be invested in Ukraine – in new projects or reconstruction. These conditions will be discussed further.

“This is an agreement that reflects the trust and strategic partnership between our countries. The United States recognizes Ukraine’s contribution to global security and reaffirms its support for our recovery and long-term peace,”

– Svyrydenko said.

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Reconstruction Investment Fund: an economic window of opportunity or a challenge for the system?

Anatoliy Amelin, executive director of the Ukrainian Institute for the Future think tank, commenting exclusively for "Komersant Ukrainian" on the agreement on the establishment of the Investment Fund for the Reconstruction of Ukraine, emphasizes the need to fully familiarize oneself with the official documents.

“Until I see the full text of the document, it would be incorrect to provide in-depth analysis. But based on the public statement by First Vice Prime Minister Yulia Svyrydenko, the situation looks much better than previous versions of similar agreements,”

– Amelin says.

The expert emphasizes that, according to the announced parameters, the key achievement is that Ukraine retains control over the resources:

“It is important that the resources remain in the ownership of Ukraine. But it is even more important to remind that these resources belong not only to the state, but also to citizens. They should be the beneficiaries of this process,”

– said the expert.

At the current stage, the fund has only been announced – its creation requires a separate agreement and new legislation:

“The fund has not been created. It will be formed after the development and adoption of a separate regulatory act. Only then will it be possible to talk about its full-fledged work,”

– Amelin emphasizes.

Debt-free is a plus, but the issue of financing remains open

One of the key advantages of the new approach is the absence of debt, but the key success factor, according to the expert, is the development of internal resource processing

“We don’t need another “extract and export” model. We need to build processing infrastructure, create final products in Ukraine and export the added value,”

– says Anatoliy Amelin.

According to him, this is a matter not only of the economy but also of jobs.

“Extraction means tens of thousands of jobs. Processing means hundreds of thousands, and possibly millions. In a joint study with our colleagues, we described 40 national projects that could create up to 2.5 million new jobs,”

– the think tank says.

The volume of investments is $250 billion over 10 years

The expected funding for the projects, according to the analyst, is more than a quarter of a trillion dollars:

“This is more than Ukraine has ever attracted. But in the global market, this is a small amount. The US and EU have no room for productivity growth, they need new markets. Ukraine is one of them,”

– Amelin said.

According to the expert, the implementation of the agreement will require a phased approach.

Basic stages:

1. Adoption of new legislation – tentatively by the end of 2025.
2. Establishment of the fund – early 2026.
3. The first funds will bedisbursed in the second half of 2026.
4. Investments in infrastructure and production – from 2027.

“The standard cycle from project start to production launch is 3-5 years. Therefore, Ukraine will be able to feel the first serious effects on the economy in 2029-2030,”

– the expert predicts.

However, a faster scenario is also possible:

“If we reduce bureaucracy, digitalize processes, and modernize the management system, the first new jobs may appear as early as 2027,”

– says Anatoliy Amelin.

So, the agreement can be a historic chance for Ukraine. But it will not work by itself. Without an effective economic policy, a favorable investment climate, and a focus on processing, the effect will be partial. According to experts, with the right conditions, we can radically change the structure of the economy.

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