Prefer to listen? To hear this entire conversation, and more episodes in the weeks ahead, follow Ones and Tooze wherever you get your podcasts.
The Trump administration is pushing Ukraine to sign a deal allowing the United States to extract some $500 billion of value from the country, including in the form of rights to rare-earth minerals. Ukraine has so far resisted the pressure. But it has yet to develop a clear strategy for dealing with perhaps the most surprising development in its three-year war with Russia: President Donald Trump’s apparent decision to shift U.S. support from Ukraine to Russia.
Can Ukraine afford the Trump administration’s economic deal? What economic interests do the United States and Russia share? And why might Russia welcome Ukraine’s accession to the European Union? Those are just a few of the questions that came up in my recent conversation with FP economics columnist Adam Tooze on the podcast we co-host, Ones and Tooze. What follows is an excerpt, edited for length and clarity. For the full conversation, look for Ones and Tooze wherever you get your podcasts. And check out Adam’s Substack newsletter.
Cameron Abadi: On the most basic terms, can Ukraine afford to accept the $500 billion mineral rights deal that the Trump administration has reportedly put forward?
Adam Tooze: On its face—and it’s difficult to know whether to take it at face value—it is an extraordinary act of extortion. It’s not unheard of for foreign creditors to want security. It’s quite common, in fact. But to transform a relationship that since the beginning of the war was cast in very different terms, all of a sudden, in retrospect, into this sort of hard-nosed bargain is devastating to the previous American interpretation of what this war was about.
And why I’m sort of holding back is it doesn’t make any sense on its face, because the claims about the scale of American aid to Ukraine are exaggerated by a factor of two to two and a half, so most sensible calculations estimate that it’s about $120 billion or so. The EU, taken together, has been a larger backer of Ukraine than the United States. The significance of U.S. support has been that it’s been in the form of military hardware that no one else can quite supply in those terms, plus intelligence and so on. And so even from a purely business point of view, there’s no equivalence here unless Trump is somehow cashing out the value of future security guarantees, which his diplomats have been very reluctant to extend.
And then you look at the mineral deposits themselves, and experts in mineral deposits will tell you they’re all based on out-of-date Soviet geological surveys and the minerals per se are not worth very much. They have to be developed; they have to be explored. And none of that is actually being done. So the whole thing has this ludicrous kind of cosplay. I mean, he’s enacting a pantomime version of a villain, which isn’t really villainous. It doesn’t really add up to a substantial plan for the extraction of actual resources from Ukraine and yet nevertheless completely demolishes and destroys the frame of legitimacy that was wrapped around Western aid for Ukraine whilst clearly indicating the worst possible intent. So it’s like, you know, if you did have bad intent, you’d think you would disguise it. If you were serious about economic exploitation, you’d actually have to be certain there was something to be exploited.
It’s just very unclear what this does other than satisfy a basic Trumpian instinct that America has been ripped off. Remember, he ran a very similar kind of line on Iraq, which was that he didn’t understand why America had spent all this blood and treasure and hadn’t ended up with the oil. This was this bizarre, crude refrain. Whereas I think everyone actually understood that insofar as there was any profit from oil to extract, American companies had been offered it. And then it turns out it wasn’t actually a business they wanted to be in. And clearly from the Ukrainian point of view it’s profoundly shocking, it’s profoundly insulting, and they should definitely say no. The question is what the consequences of that will be, because it’s difficult to know whether Washington can possibly mean this seriously.
CA: The United States and Russia put out a statement after their talks stipulating that both countries were looking forward to cooperating on their joint geopolitical and economic interests. What are the joint economic interests that the United States and Russia share?
AT: Again, this is a weird combination of the appearance of ultra-realist, hard-nosed power politics and a giant pile of bullshit, right? Because if you had looked at the world in 2019 or 2018 and had said to yourself, OK, the great antagonist of the United States is China, we should do a reverse Kissinger and we should tie the Russians to us, that would have made a certain sort of sense. And I think certain people thought maybe that’s what Trump 1.0 would do, and it didn’t happen. But in the early stages of the Biden administration, the Biden people, I think, were trying to reset the relationship with [Russian President Vladimir] Putin. [Former U.S. President Barack] Obama had tried as well. It didn’t fail for want of America trying; it failed because of Putin’s headlong aggression against Ukraine, which Trump is now denying.
So the insanity of this is, of course, it would make sense, in some sense, to organize an American-Russian bloc against China. I mean, everyone has been saying this forever. The problem is not that it doesn’t make sense. The problem is that Russia isn’t the actor that we think it is. We can’t now pretend three years into this war that somehow Russia actually is different. Unless, of course, you’re willing to buy all sorts of deluded stuff.
And the Russians, of course, are only too happy to play into this exaggerated, bullshit-y tendency of the Trump administration. So they apparently came to these meetings in Saudi with the claim that American business was either losing or foregoing—and the accountancy is a little bit vague here—$324 billion in losses that had been suffered by American business as a result. You can see the way this works. You just say [Ukrainian President Volodymyr] Zelensky has 5 percent support and American businesses lost $324 billion, and then all of a sudden you’ve got yourself a deal, right? And the reality, of course, is the devil’s in the detail. And it’s not true that Zelensky’s support is 5 percent. And it’s not true that American businesses have lost $324 billion, either. The best estimate that we have for Western business losses in Russia is somewhere around $120 billion to $140 billion, and those are real. We think there’s about €160 billion worth of assets still trapped in Russia in various forms. Difficult to get out of that business right now. The only way that you get to a loss of $324 billion for American business is either you just make it up or you somehow project massive gains that have been foregone as a result of exiting the, you know, oh-so prosperous Russian market that would generate these huge returns.
The reality is that, of course, there are serious business interests which have lured the West into relationships with Russia, and that they have done so ever since the late 19th century. It was Western interests that developed the Russian oil fields, then-tsarist oil fields in Azerbaijan and Baku. And it was, from the ’90s onward, Western energy interests that piled in. In Europe and Germany they agonize endlessly about gas, but in fact the big revenue generator is oil. And it isn’t German firms in the first instance which are the leaders there, but the big Western oil majors, which all partner up in various oligarchic relationships. And that presumably is what’s on the horizon again, right? Exxon took big losses from its Sakhalin investments, Total, the French major, Shell, BP has an incredibly checkered history in Russia. Of course, there are German interests, but they are overwhelmingly in gas because the Germans are not a player in the oil business. And that presumably is the direction. And there are consumer firms that are interested in Russia. It’s a big middle-income market and it has pockets of real prosperity and affluence like Moscow. And so it makes sense to invest there. There’s profits to be made. So at that level, it’s not pie in the sky. And one could imagine even more extensive things in, you know, Antarctica. But that does take you into the kind of realm of fantasy. There are serious, you know, graspable interests.
But the problem is that Putin started a war gratuitously with Ukraine, and there’s only so far you’re going to get in denying that fact. Which apparently is what the Trump administration has set itself to do. But it’s truth will bite them at some point in one form or another. Either the Ukrainians will just say no, the Europeans will say no, or Putin will act true to character and be totally disruptive to whatever relationship they agree. The Chinese, after all, thought they had a deal with Putin, and he didn’t even inform them ahead of time about the invasion of Ukraine. So what kind of a partner is this that they’re talking about? That’s the issue. The issue is not whether or not you can’t see opportunity. The question is whether it’s real, whether anyone reasonable would imagine it would be real at this point. And that’s why it’s so infuriating that we’re having these conversations, because it’s perfectly obvious given what’s happened since 2022, all of this is nonsense. I mean, you’re not going to get big American businesses to invest in Russia at this point. They’re not crazy.
CA: The Trump administration has said that it wouldn’t support Ukraine entering NATO, but there’s still talk of it entering the EU—an idea that Russia hasn’t vociferously opposed. In the event of a failed peace, and a weakened Ukraine, would Russia welcome deeper Ukrainian integration into the West as a way of Russia itself gaining more influence in Europe?
AT: That’s why European states led by Germany most prominently until 2022 vigorously resisted any suggestion that Ukraine would ever become a full EU member. It’s too big, it’s too agrarian, it’s too poor, it’s too obviously problematic from a geopolitical point of view and its politics are, certainly were, too fragile. Its democratic credentials were too fragile in the Yanukovych regime that was felled by the great demonstrations in 2013. It wasn’t a clean election by any standards, but everyone agreed that it was as good as Ukraine was going to produce, and it was a pro-Russian government that was elected there. So Ukraine really looked profoundly unappetizing to the EU.
It’s somewhat surprising in light of that that the Russians didn’t already at that time have the sense to stand back and just watch the action. Instead, what they did was found their own customs union and act all upset about the fact that Ukraine was drifting toward the EU orbit. If they’d been cool about it, they would just simply have allowed the mess to play out the way it was playing out at the time, which is that there’s no momentum on the part of the EU, outside really extraordinary circumstances, to extend membership to Ukraine. Really zero, none. Because it’s obviously a gigantic policy problem, a type Europeans have not faced before on this scale, and from the point of view of the EU and its major member states it is a disaster. It tips everyone, including Poland, for instance, from being net recipients of EU aid to being net contributors because Ukraine is so poor and needs so much help.
The real issue, I think, for Moscow is that EU accession would change the balance of popular opinion in Ukraine. And so long as they cling to the idea—and I think Putin continues to do so—that deep down the Ukrainians don’t know who they are or don’t want to be independent and actually know they belong with Russia, that’s what EU accession would change. It’s not the policy level, it’s the fact that it would become irreversible at the level of the population of Ukraine. So in a backhanded way, the lack of logic on the Russian side is a kind of backhanded compliment to the fundamentally democratic process which has unfolded in Ukraine, which is that the population has increasingly asserted its own interests against those of oligarchy, on the one hand, and Russian influence on the other. And from the point of view of individual Ukrainians and their families and their communities, it’s clear that access to West European labor markets or just Central European labor markets is key, which is why so many of the migrants have been so successfully integrated and quite a few of them clearly aren’t going to want to go home to Ukraine. And so that, I think, is the real worry on Russia’s part.