On Wednesday, the weeks-long will they or won’t they saga around Ukraine’s rare earth metal deal with the US concluded. Ukraine’s Deputy Prime Minister Yulia Svyrydenko travelled to Washington and signed a reconstruction investment agreement with America. Svyrydenko and US Secretary of the Treasury Scott Bessent hailed this deal as a potential catalyst for investment in Ukraine and driver of post-war economic growth.
The rare earth metal deal is a short-term victory for both Washington and Kyiv. As Russia has relentlessly continued its offensive actions in eastern Ukraine and the prospects of a durable ceasefire are remote, President Donald Trump can now claim a much-needed diplomatic triumph. The agreement’s explicit recognition of American military assistance to Ukraine provides Trump with the gratitude that he felt was lacking during President Volodymyr Zelensky’s contentious Oval Office meeting in February.
In stark contrast to Trump’s typical both sides are at fault approach to the Ukraine War, the agreement unambiguously decried Russia’s full-scale invasion of Ukraine. This semantical difference is a major victory for Ukrainian officials. More practically, Ukraine can leverage this agreement to secure a new round of US military assistance and lobby Bessent to impose more stringent sanctions on Russia’s energy sector.
Despite these major positives for Washington and Kyiv, the longer-term picture surrounding the agreement is murkier. Ukrainian Prime Minister Denys Smyhal confidently stated that the deal will lead to new US military assistance and that this aid would be a contribution to the reconstruction fund. While Trump recently greenlit a $50 million arms transfer to Ukraine in exchange for hard currency, the White House remains sceptical of open-ended military assistance to Kyiv. Providing a financial compensation channel will not assuage the ideological opposition to aiding Ukraine that is embraced by much of Trump’s MAGA base.
It is equally unclear whether the US will be able to swiftly profit from Ukraine’s rare earth metal reserves. In February, S&P Global warned that measurements of Ukraine’s rare earth deposits were derived from potentially unreliable Soviet-era geological surveys. Industry veterans have described Trump’s plans to extract rare earths from Ukraine as “fiction” and “absurd.” While the regulation against war financiers profiting from reconstruction could restrict Chinese rare earth access, most of the processing facilities for these metals are based in China.
Zelensky will also have to deal with domestic backlash against the rare earth deal. Zelensky defused the potential for a Ukrainian Parliament Verkhovna Rada rejection of the deal by ensuring that the 50-50 agreement would not take rare earths out of Ukraine’s custody. Nevertheless, the handover of rare earths and energy assets like Zaporizhzhia nuclear power plant to the US is fuelling nationalist backlash in Ukraine. This could empower Zelensky’s chief rival Ukrainian Ambassador to Britain Valery Zaluzhny or a populist nationalist challenger when Ukraine eventually holds presidential elections.
The US’s rare earth metal agreement and its extension to the energy sector is major milestone for Ukraine’s reconstruction process. The big question is whether there will be a stable sovereign Ukraine to invest in once the war ends.
On Wednesday, the weeks-long will they or won’t they saga around Ukraine’s rare earth metal deal with the US concluded. Ukraine’s Deputy Prime Minister Yulia Svyrydenko travelled to Washington and signed a reconstruction investment agreement with America. Svyrydenko and US Secretary of the Treasury Scott Bessent hailed this deal as a potential catalyst for investment in Ukraine and driver of post-war economic growth.
The rare earth metal deal is a short-term victory for both Washington and Kyiv. As Russia has relentlessly continued its offensive actions in eastern Ukraine and the prospects of a durable ceasefire are remote, President Donald Trump can now claim a much-needed diplomatic triumph. The agreement’s explicit recognition of American military assistance to Ukraine provides Trump with the gratitude that he felt was lacking during President Volodymyr Zelensky’s contentious Oval Office meeting in February.
In stark contrast to Trump’s typical both sides are at fault approach to the Ukraine War, the agreement unambiguously decried Russia’s full-scale invasion of Ukraine. This semantical difference is a major victory for Ukrainian officials. More practically, Ukraine can leverage this agreement to secure a new round of US military assistance and lobby Bessent to impose more stringent sanctions on Russia’s energy sector.
Despite these major positives for Washington and Kyiv, the longer-term picture surrounding the agreement is murkier. Ukrainian Prime Minister Denys Smyhal confidently stated that the deal will lead to new US military assistance and that this aid would be a contribution to the reconstruction fund. While Trump recently greenlit a $50 million arms transfer to Ukraine in exchange for hard currency, the White House remains sceptical of open-ended military assistance to Kyiv. Providing a financial compensation channel will not assuage the ideological opposition to aiding Ukraine that is embraced by much of Trump’s MAGA base.
It is equally unclear whether the US will be able to swiftly profit from Ukraine’s rare earth metal reserves. In February, S&P Global warned that measurements of Ukraine’s rare earth deposits were derived from potentially unreliable Soviet-era geological surveys. Industry veterans have described Trump’s plans to extract rare earths from Ukraine as “fiction” and “absurd.” While the regulation against war financiers profiting from reconstruction could restrict Chinese rare earth access, most of the processing facilities for these metals are based in China.
Zelensky will also have to deal with domestic backlash against the rare earth deal. Zelensky defused the potential for a Ukrainian Parliament Verkhovna Rada rejection of the deal by ensuring that the 50-50 agreement would not take rare earths out of Ukraine’s custody. Nevertheless, the handover of rare earths and energy assets like Zaporizhzhia nuclear power plant to the US is fuelling nationalist backlash in Ukraine. This could empower Zelensky’s chief rival Ukrainian Ambassador to Britain Valery Zaluzhny or a populist nationalist challenger when Ukraine eventually holds presidential elections.
The US’s rare earth metal agreement and its extension to the energy sector is major milestone for Ukraine’s reconstruction process. The big question is whether there will be a stable sovereign Ukraine to invest in once the war ends.