Very briefly, about the draft Agreement establishing the Fund
It is set out on 58 pages and consists of 18 sections. The Fund is to be registered in the State of Delaware, USA, under the laws of that State. Founders: from the US — the International Development Finance Corporation (DFC), from Ukraine — the Government.
The basic US contribution to the Fund is made up of the assistance provided to Ukraine starting from 2022 for defence against aggression. The parties recognize that Ukraine has received a financial advantage from this aid granted to it by the US Congress, and this grant becomes Ukraine's debt. In my opinion, this is the main deficiency of this version of the Agreement. Other disadvantages of the Agreement include:
- US dominance in the Supervisory Board (3 members out of 5)
- Ukrainian contribution to the Fund in the form of royalties received from the extraction of minerals, oil, gas, port infrastructure, petroleum products, LNG re-gasification terminals;
- Indefinite effectiveness of the Agreement. Ukraine may withdraw from it only with the US consent;
- The Fund’s taxation and jurisdiction according to the laws of the State of Delaware;
- Inconsistency of the draft Agreement with the Constitution and laws of Ukraine;
- Absence of any security guarantees from the US in this or other documents.
It is obvious that the above draft Agreement is unequal and now covers not only rare earth metals but the basic sources of the state budget revenues. That is, the already critically deficient state budget will become even smaller, which will make it impossible to meet social obligations and provide even the minimum necessary funding for the Armed Forces of Ukraine. To put it bluntly, the draft Agreement resembles the organization of the colonial British East India Company from 1600 to 1858.
Why did Washington propose such a draft Agreement?
There is every reason to believe that the USA and the Russian Federation are currently engaged in negotiations on reestablishment of a bipolar world (with a certain role allocated to the PRC), as it was during the Cold War, by dividing regions into zones of influence. However, Ukraine hinders the implementation of this plan by its staunch resistance to Russian aggression. Since the Kremlin is unable to conquer Ukraine militarily, it has decided to push for the cessation of arms supplies and financial collapse. In fact, Ukraine is being driven into a Zugzwang, with no good moves for it — they all lead to a defeat. If we sign the Agreement, we will fall into a financial trap; if we do not, they will say that Ukraine has taken an unconstructive position in relations with the United States and does not want peace. This will be a reason to stop arms supplies and facilitate further rapprochement between the US and Russia.
What should we do?
In this situation, Ukraine has only one way out: neither to reject nor to agree, but to offer its own version of the Agreement. That is, like the suggested [Soviet Russia's] response to the Brest Peace Treaty according to Leo Trotsky: "neither peace nor war".
In the conditions of a large-scale war, it is advisable for Ukraine to use a strategy of soft diplomatic power towards the US without going into unnecessary conflicts. It is worth thanking D. Trump for his intention to end the war as soon as possible and his desire to invest in Ukraine.
Instead, we should politely point out that this draft is inconsistent with the Constitution and laws of Ukraine (in a relevant Memo) and offer standard Production Sharing Agreements to US companies for exploration and development of rare earth metals and hydrocarbon deposits not only in the territory controlled by Ukraine, but also in the occupied territories, including Crimea (including the Azov-Black Sea shelf), after their de-occupation. It is also worth engaging the EBRD in the Agreement(s) as a consultant and lender. After all, the shareholders of this bank include not only European countries, but also the US.
It also makes sense to provide additional privileges for US companies in the liberated territories, such as the exemption from income tax for the payback period, from VAT on imported goods, etc. In this case, Ukraine’s contribution to joint investment projects could indeed include proceeds in the form of rental payments and profit from new projects, to pay for future supplies of weapons under Lend-Lease.
P.S. The analysis of the draft Agreement was made based on the text posted on the public legal resource https://www.deadlawyers.org/united-states-ukraine-reconstruction-investment-fund. It corresponds to the key points of the Agreement, voiced by the People’s Deputy of Ukraine Yaroslav Zheleznyak on March 28, 2025, on his YouTube channel Iron MP. https://www.youtube.com/watch?v=1P7LFKwTKLQ
