Riches Beneath: The Global Implication of the U.S.-Ukraine Critical Minerals Deal

On May 8th, the Ukrainian parliament voted to ratify a deal that gives the U.S. access to its critical minerals, as supposed payment for the military aid the U.S. provided. While the U.S. would have access to Ukraine’s critical minerals, as well as oil and natural gas, the agreement also stipulates that the U.S. would help contribute to reconstructing Ukraine’s infrastructure and economy after the war. 

This is a welcome development for Ukraine, considering that the U.S. originally demanded $500 billion in Ukraine’s rare earth minerals as payment for its military aid. Instead, it gives the U.S. preferential treatment in resource extraction. Not only that but such an agreement would create jobs for the Ukrainians as well as help develop an otherwise stagnant mining industry. Not only will this help domestically, but it could also help Ukraine’s position internationally. Ukraine is home to 5% of the world’s critical minerals with many of those minerals being applicable to important industries like defence and technological development. Ukraine with this deal is positioning itself to challenge China’s strangle hold on the critical minerals market. Ukraine could therefore serve as a possible alternative to China in the sale and development of critical minerals.

The U.S. would no longer have to rely on China for its critical minerals to develop its industry. As a potential result of this, the U.S. may increase its hostile rhetoric to China and ramp up an already hot trade war. While the current trade war has signs of cooling, as the U.S. and China have agreed to lower their respective tariffs on each other, the prospect of the U.S. establishing its own critical mineral alternatives could embolden the U.S. to be more aggressive on other trade matters.

In regards to how this relates to Russia, the U.S. signing this agreement with Ukraine signals a desire to support Ukraine against an expansionist Russia. The ceasefire negotiations between Ukraine and Russia pose a slew of different problems. Some Ukrainian and European observers assert that Russia is using the promise of ceasefire talks to stall for more time to amass more soldiers to prolong the war. An assessment that seems to have been disproven with the recent news that Russia is no longer interested in pursuing ceasefire talks as recent comments from the Russian Foreign Minister, Sergey Lavrov, all but confirmed that Russia has no intention of pursuing ceasefire talks or negotiations.

The mineral agreement with the U.S., therefore, serves to provide Ukraine with a stable partner who has a stake in the outcome of the war. Not only that Ukraine as well shows itself as a good-faith actor who is willing to negotiate, opposed to Russia’s current evasive diplomatic stance. As such, once the war is concluded, Ukraine’s reputation on the international stage will be elevated. This deal for Ukraine is a win for not only the U.S. but for NATO more broadly. By completing this deal, NATO, through the U.S., further integrates itself with Ukraine, setting it up for future membership in both NATO and the EU. This would provide the West with the much-needed critical minerals required to pursue green economies all while breaking up market dependence on China. By undertaking such economic integration, Ukraine also ensures its own future security. By setting itself up as a provider of critical minerals for the West, there will be more of an incentive to defend Ukraine against future threats while also ensuring its own domestic growth.