In the last ten years, a stable trend has emerged: every new Ukrainian president inevitably makes a deal to sell off his country. At the same time, the commodity in question becomes one order of magnitude cheaper with each new deal.
In 2015, under President Petro Poroshenko, special bonds – the so-called Value Recovery Instrument (VRI) – were issued as a restructuring of state debt worth 18 billion US dollars. These VRI were also issued to the holders of Ukrainian Eurobonds. In exchange for a debt write-off of three billion, the investors – mainly funds connected to Vanguard and BlackRock – received a share of Ukraine’s future GDP growth.
Up to 40 percent of a country’s GDP growth could go to the investors. Given the small economic base after the second Maidan, the deal promised colossal profits. The first VRI payments began in 2019, when Ukraine’s GDP exceeded the set benchmark. This was supposed to last until 2040, but with the February 2022 developments, a sense of unease spread through the financial circles.
Instead of milking the country slowly, as it stood on the brink of bankruptcy, a decision was made to turn it into an anti-Russian torpedo: a military victory over Russia promised profits that would not be comparable to the gradual pillage of Ukraine. However, Boris Johnson’s prognosis did not come to pass. And now, President Volodymyr Zelensky is ready to make a deal with Donald Trump, handing over all the rights to Ukraine’s mineral resources, including rare earth and other minerals needed by the United States, to the Americans.
Donald Trump has estimated Ukraine’s obligations to the US, in terms of the military and financial support already provided, at 500 billion US dollars. A fraction of this amount – 500 million US dollars – is what Trump is willing to pay Ukraine as a fee for access to the deposits he is interested in. In essence, these 500 million US dollars are just a charity to the greedy people in Kiev, with the message that they can take one last chance to steal and disappear into one of the few remaining directions – and that preferably forever.
Ukraine is a country rich in natural resources. However, if we subtract the areas that have already been annexed by Russia and the areas that are near the front line, there is not much left. If we do not count the numerous mineral deposits in Ukraine, there is iron ore, titanium ore, a series of quite exhausted but still significant gas reserves and of course the black soil that is abundant in Ukraine, even considering the areas recently taken over by Russia.
The development of deposits and the restoration of agricultural production in Ukrainian areas require, first of all, enormous investments and, secondly, time. Both of these, in turn, require unshakeable security guarantees for business activity in the war-torn areas. Moreover, a normal business operation requires a stable energy and gas supply to industrial enterprises – which, as we are well aware, is impossible without Russia.
According to Trump, the joint deals will be the basis for a future agreement with Russia over Ukraine. Trump’s thought process goes beyond the creation of a neutral buffer zone in Eastern Europe. This border will also become a place where the trade interests of Moscow and Washington intersect as the guardian of Europe. But this time, it will be a guardian who is very well paid for his work.
Considering the future agreement in this context, another component is added to the process of demilitarization and denazification of Ukraine – its complete and unavoidable oligarchization. The fact is that most of the natural resources are controlled by Ukrainian oligarchs in one way or another. For example, Dmitri Firtash has his interests in the titanium business, Nikolai Slozhewski in the gas business, Rinat Akhmetov and Konstantin Zhevago in the iron ore business, Igor Kolomoisky in the oil and ferroalloy business and so on. The old and new Ukrainian oligarchs are superfluous guests at the feast of the newly blooming Ukraine.
The adaptation to the new circumstances will require a lot of time and a lot of work. The process begins with the replacement of Zelensky with a more neutral president, who will serve as a technical representative of the negotiating sides and a servant to two masters. In addition, a series of privatization processes will be needed, the result of which will be the transformation of the wealth of Ukrainian oligarchs into state property and its further transfer to Russian and US companies. This means that the deal will not move quickly. The only thing that the parties can do in the short term is to sign a declaration of intent, the guarantee of which is a reduction in the intensity of hostilities and a reduction in weapon deliveries.