US-Ukraine rare-earth deal in jeopardy as Zelenskyy balks at proposal

The fate of a potential U.S.-Ukraine rare-earth deal is becoming increasingly uncertain after Ukrainian President Volodymyr Zelenskyy rejected a draft proposal last weekend. The deal would have involved Ukraine exchanging half of its mineral resources for continued U.S. military support, according to the Foreign Policy. 

However, the deal hit a significant roadblock when Zelenskyy dismissed the proposal during the Munich Security Conference, claiming it lacked security guarantees for Ukraine. While the United States has been pushing to diversify away from China's control of critical minerals, including rare-earth elements, the viability of the proposed deal is in doubt, as Ukraine currently does not produce rare-earth minerals and has not done so for decades.

Rare-earth elements, along with other critical minerals such as titanium and gallium, are essential for advanced weapons systems and clean energy technologies. U.S. policymakers are keen on securing alternative sources of these materials due to China's dominance over global supply chains. Despite Ukraine’s mineral wealth, particularly in rare-earth elements, the country lacks the infrastructure to produce these minerals on a large scale. Ongoing conflict has made many of Ukraine’s mineral-rich regions inaccessible, further complicating efforts to establish new supply chains for these resources.

Initially, there had been hope that the U.S. and Ukraine were moving closer to an agreement. Zelenskyy had expressed optimism that the two sides would reach a deal during the Munich Security Conference. However, that optimism quickly evaporated when Zelenskyy rejected the proposal. He argued that the U.S. had not provided the necessary security guarantees for Ukraine, especially considering the vast scale of military aid Washington has already provided. Zelenskyy pointed out that while the U.S. has given Ukraine $67 billion in weapons and $31.5 billion in direct budget support since Russia's invasion began, the proposed deal would require Ukraine to provide $500 billion worth of minerals in return—a sum he deemed unreasonable.

Zelenskyy’s rejection of the proposal has angered some U.S. officials, including former President Donald Trump, who has echoed Russian talking points in criticizing Ukraine’s refusal to sign the deal. Trump accused Zelenskyy of breaking the rare-earth deal, even though no such agreement has been finalized. U.S. Treasury Secretary Scott Bessent expressed frustration over Zelenskyy's stance, claiming the Ukrainian leader had previously indicated his willingness to sign the deal. Bessent further emphasized that the proposed minerals deal was intended to provide Ukraine with a security guarantee, with the U.S. using its economic interest in Ukraine to help shield the country from external threats.

In light of Zelenskyy’s resistance, U.S. officials are now considering alternative approaches. The Trump administration may push for a simplified minerals pact, with the details to be negotiated later. This approach could pave the way for more U.S. military aid or provide a framework for advancing peace talks. While the specifics of this "improved" draft remain unclear, U.S. National Security Advisor Mike Waltz has urged Zelenskyy to return to the negotiating table.

By Vugar Khalilov