The US and Ukraine will create a joint investment and reconstruction fund. How will it work and what do the two sides hope to achieve? Many things remain unclear even after the signing of the agreement.
A rare earth metals agreement, a minerals agreement, or a simple economic agreement - these are the different names for the agreement that the US and Ukraine wanted to conclude immediately after the inauguration of US President Donald Trump. After numerous attempts and changes, on April 30, Washington and Kiev signed an "Agreement on the Establishment of a US-Ukrainian Investment and Reconstruction Fund".
It consists of only ten pages plus an annex of two more. After the signing, Ukrainian Deputy Prime Minister Yulia Sviridenko said that under the document her country would establish a reconstruction investment fund jointly with the US to attract large-scale investments. The agreement does not mention any debt obligations of Ukraine to the US and does not change Kiev's course towards European integration.
How will the fund work?
Sviridenko said that the US would make contributions to the fund - and in addition to direct financial resources, this could include air defense systems. For its part, Kiev must contribute 50 percent of the payments for new licenses for the extraction of important raw materials to the fund, but it can also make additional contributions.
The fund will use the funds for projects for the extraction and processing of minerals, oil and gas, as well as for the related infrastructure. Both sides will decide on the specific investment projects financed by the fund. The fund will invest exclusively in Ukraine.
"We assume that during the first ten years, the profits and revenues of the fund will not be distributed, but will only be invested in Ukraine - in new projects or in reconstruction. The terms are yet to be discussed further," the deputy prime minister added.
The agreement between the US and Ukraine must be ratified by the Ukrainian parliament. However, the faction of the opposition party "European Solidarity" is dissatisfied that the deputies were not included in the negotiations on this agreement. She calls on President Volodymyr Zelensky to hold talks with representatives of the parliamentary political forces.
When will the first investments be made?
According to Ilya Neskhodovsky from the Ukrainian public organization "Network for the Protection of National Interests", the agreement with the US is necessary for Ukraine. "We pay, we give part of the income for our resources, but in return we receive military and financial support, as well as American investments. Since the Americans will control the way investments are made, it is assumed that after that they will be more willing to invest in the Ukrainian economy," he explains.
However, the investments will not come immediately. Experts believe that they can be expected only after the end of the hot phase of Russia's war against Ukraine, after the freezing of the conflict or the signing of a peace agreement.
"During the war, new projects are excluded. "I don't think they will be possible before the middle of next year. Because companies that want to invest in Ukraine - whether in raw materials, mining or processing - should put this in their budgets for next year," Anatoly Amelin of the Ukrainian Institute for the Future think tank told DW.
He suggests that in the best case scenario, American investments will come to Ukraine no earlier than 2027 or 2028.
Will US military aid be resumed?
At the same time, experts point out that the agreement is politically advantageous for Ukraine, as it continues cooperation with the US, including to strengthen US military aid. "This is a great political and diplomatic achievement for Ukraine", wrote on Facebook the head of the Kiev School of Economics and former Ukrainian Minister of Economy Timofey Milovanov.
"The agreement provides Trump with a domestic political success, which also improves the attitude towards Ukraine in the United States. Ukraine has managed to defend its interests. All draconian demands on the Ukrainian side were rejected despite unimaginable pressure. Now the agreement looks fair and opens up opportunities for further American military assistance to Ukraine."
Observers note that immediately after signing the agreement, Donald Trump agreed to sell Ukraine weapons worth at least $50 million - for the first time in his second term.
Did Zelensky receive security guarantees?
At the same time, the signed agreement does not contain any guarantees for Ukraine's security from the United States - although this is precisely the idea that was at the heart of it. President Volodymyr Zelensky did not hide that he wanted to receive guarantees for his country's security in exchange for access to Ukrainian raw materials.
"This is an agreement for the future. It is more of a political nature and is an attempt to restore relations with the United States. But it does not contain any security guarantees, and this is a real problem for Ukraine," says Yevgeny Magda of the Ukrainian think tank Institute for World Politics. In an interview with DW, he also pointed out that Ukraine has already signed over 30 security agreements with international partners that are more useful for ensuring the country's security than the agreement with the US to create an investment and reconstruction fund.
The agreement scared the Russian elite
Meanwhile, in Moscow, representatives of the Russian elite are afraid of a rapprochement between Zelensky and Trump and believe that the Kremlin may miss the chance to conclude a profitable deal for Ukraine, writes "Washington Post", citing sources.
A Russian official, who wished to remain anonymous, told the publication that pressure is increasing on Russian President Vladimir Putin to at least pretend that he is ready to make concessions. According to the official, otherwise Russia is threatened with a new package of US sanctions, which has already been prepared by Senator Lindsey Graham. They would be a serious blow because the budget deficit is already growing, the interlocutor of the "Washington Post" pointed out.
He also stated that despite intense assurances that Russia will successfully cope with the sanctions, concerns about the state of the economy are playing an increasingly important role. "The economy cannot be built only on the basis of a mobilization model."