Disaster in the Oval Office

It was the moment Europe had dreaded. On Friday, weeks of tension between Europe and the Trump administration boiled over in spectacular fashion, as what should have been a routine press event between Trump and Ukranian President Volodomyr Zelenskyy descended into a public argument in the Oval Office. The excruciating exchange started with Vice President JD Vance berating Zelenskyy for being insufficiently grateful for US support in its war against Russia, and ended with Trump telling the Ukrainians that they “don’t have the cards” and kicking the delegation out of the White House. The main event of the day, the signing of a deal between the two governments that would tie aid to Ukraine to access to its critical mineral reserves, was cancelled. Zelenskyy left Washington bruised and empty handed.

As Trump inverts decades of American foreign policy and threatens to take a sledgehammer to the Western security alliance, the proposed mineral deal represented a potential lifeline for a battered Kyiv, keeping US support flowing after three years of war. Despite last week’s diplomatic meltdown, salvaging the deal would be in the interests of both parties, and would allow policymakers on both sides to reset the narrative around America’s place in the war. 

What are critical minerals and why are they strategically important?

Critical minerals such as lithium, graphite and rare earths such as cerium and lathanum are used to manufacture a range of high-end technologies, such as computer circuits and batteries. The US is not a major player in the production of minerals such as graphite or lithium, and is heavily dependent on its main geopolitical rival, China, for rare earths. 

Source: US Geological Survey

The US has only 1.9m tons of rare earth reserves, and has no domestic processing capacity to turn them into useful products. China, by contrast, has around 44 million tonnes of rare earth reserves, and almost a monopoly on their processing. It mines nearly 60% of the world’s rare earths but processes nearly 90% of them.

Source: US Geological Survey

This has left the US highly dependent on imports of rare earths from China, from which it sources 70% of its supply. As Beijing moves to cement its stranglehold on the sector through export controls on processing technologies, finding alternative sources of rare earths has become a strategic imperative for Washington. 

What resources does Ukraine have?

Ukraine is not a major holder of critical mineral reserves, accounting for around 6% of graphite and 5% of global rare earth metal reserves, according to the UN. These resources are also a long way off monetisation, due to years to war and underinvestment in extraction and processing capacity. Around 40% of the deposits are in areas currently controlled by Russia in the east of Ukraine. In this sense, Kyiv is actually not giving up much by giving Washington a stake in its rare earth deposits.

Source: Reuters

A good deal?

In essence, the deal would have functioned like a securitisation of Ukraine’s future earnings from its rare earth and other mineral resources. Under the proposed deal, the US and Ukraine were to establish a ‘Reconstruction Investment Fund’ jointly managed by representatives of both governments. The Ukrainian government would contribute 50% of all revenues earned from the future monetisation of government-owned deposits of “minerals, hydrocarbons, oil, natural gas, and other extractable materials”  to the fund, which would be reinvested into natural resources and related infrastructure projects in Ukraine. The deal notably did not include the kind of security guarantees leaders such as France’s Macron and the UK’s Starmer had pushed for, but nonetheless would have given Kyiv more than they are likely to get otherwise. 

The image of a US president dictating terms of a ‘peace for resources’ deal to a foreign leader evokes the kind of conspiratorial depictions of American foreign policy that came after the Iraq War. However, the proposed deal made sense for Ukraine for two reasons. 

The first is this is probably the only decent deal that the Ukranians are going to get. Kyiv has accepted the political reality that - rightly or wrongly - the era of blank cheque US taxpayer support is over. Aid to Ukraine has long had Republican opposition in Congress, both from establishment GOP figures such as Mitch McConnell, who support the cause but tactically used the issue as a bargaining chip in negotiations over funding for other measures such as border security, and from more radical figures on the MAGA right such as Marjorie Taylor Greene who hold openly isolationist views. While Trump’s return to the White House marks a victory for the latter camp, changing the funding model for US military support would allow those who do sympathise with Ukraine to reset the political narrative and keep aid flowing to Kyiv. This reset now looks to be in jeopardy, with even staunch Republican supporters of US assistance to Ukraine such as Senator Lindsey Graham coming out against Zelenskyy.

But the second and more promising feature of the deal is that it gives Washington skin in the game of the future of Ukraine. As noted, the deal does not include US security guarantees to Ukraine. However, giving US access to critical minerals in Ukraine gives them a strong financial and strategic incentive to ensure that any deal with Russia is durable and conducive to Ukraine’s long-term economic development. This is particularly important given that many of Ukraine’s mineral deposits are in the east of the country, meaning that the US would have a strong incentive to keep the most vulnerable part of the country under Kyiv’s control, and not Moscow’s. 

Friday’s car crash meeting is a new nadir for relations between Washington and its European partners. It confirms Kyiv and other European capitals’ worst fears about Trump’s view of the war and his willingness to try to end it on terms that favour Russia. However, the minerals deal remains a viable means of keeping the US engaged in European security in a way that will be acceptable to the isolationist tendencies of the Trump administration. Zelenskyy and sympathetic European leaders should understand that an imperfect deal is likely better than no deal at all.

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