Trump’s minerals deal remains painful for Kyiv, but it has dashed the Kremlin’s military hopes
Sir Keir Starmer and Emmanuel Macron have pulled off a remarkable feat of statecraft on Ukraine Credit: UKRAINIAN PRESIDENTIAL PRESS SERVICE / AFP
01 May 2025 3:24pm BST
Sir Keir Starmer and Emmanuel Macron have together pulled off a remarkable feat of high statecraft. They may have averted a strategic debacle of the first order in Ukraine, and with it irreparable damage to the credibility of the West.
The long-fraught US-Ukraine minerals deal signed in Washington – actually a shale gas deal – is a radically different document from Donald Trump’s original demand for $350bn (£262bn) of war debt “reparations” and the US colonial takeover of the country’s infrastructure.
The full story behind Trump’s Damascene conversion will emerge over time, but Ukrainian officials say the British and French leaders played a critical role in steering the US president away from his pro-Kremlin infatuation, as did Boris Johnson. It was this patient whispering that paved the way for the Trump-Zelensky tête-à-tête on the marble floors of St Peter’s in Rome.
Jonathan Powell, Downing Street’s unflappable national security adviser, will deserve his knighthood when the time comes, and something more than bachelor grade if this is indeed the turning point after weeks of diplomatic calamities.
The tables have turned: it is suddenly Vladimir Putin who is in trouble, trying to hold together an exhausted war economy as the price of Urals crude crashes to $56 a barrel – from $77 in mid-January – and as the global economic downturn tips the whole commodity complex into a cascading bear market. The spot price of liquefied natural gas (LNG) in Asia has fallen 30pc over two months.
It comes as China tries to charm Europe, urgently seeking to preempt any EU moves to raise its own barriers against a diversionary flood of Chinese exports shut out of America. Xi Jinping may have to dial down his “no-limits friendship” with Putin – and reduce his covert help for Russia’s war – if he wants a serious hearing.
The minerals accord remains a bitter pill for Kyiv to swallow, but at least it is plausibly compatible with the Ukrainian constitution and does not obstruct EU membership. Deputy prime minister Yulia Svyrydenko says Ukraine retains full ownership of “all resources on our territory”.
Ukraine will be able to purchase US weapons on a quasi “lend-lease” basis. The first $50m tranche of military support was approved last night.
The debt clock starts ticking from today, wiping the slate clean on the $120bn in total American aid since the war began, most of which was spent on production within the US or consisted of semi-obsolete inventory due to be scrapped.
Neither side will have a controlling vote over the investment fund. The US pledges to help Ukraine mobilise capital via the Development Finance Corporation, the geopolitical arm of the US treasury and commerce departments.
This opens the way for serious investment in the shale gas resources of the Yuzivska field. As I reported earlier this month, an internal study by Ukrainian experts concluded that the carbon ratio, porosity and thickness match the best US shale basins in the Marcellus and Permian.
“We could replace half the lost Russian gas exports to Europe,” said Andríy Kóbolyev, ex-head of Ukraine’s energy giant Naftogaz. If so, Russia can kiss goodbye to its European gas market forever. Ukrainian pipeline gas and American LNG will suffice.
Ukraine could be sitting on another Permian Basin
Scott Bessent, the US treasury secretary, warned Putin that the deal committed Washington to “a peace process centred on a free, sovereign, and prosperous Ukraine”.
One never knows quite whom to believe when the Trump administration speaks, but the Kremlin has clearly overplayed its hand, miscalculating how far it could push its maximalist demands and how long it could keep stringing along a prickly and impatient US president.
Republican senator and Trump golf partner Lindsey Graham is going for the jugular. He may soon have a veto-proof 67 votes in the Senate for legislation that imposes 500pc punitive tariffs on any country that buys Russian energy or strategic minerals, if the Kremlin “refuses to negotiate a peace agreement, violates a peace agreement or invades Ukraine again in the future”.
Russia’s “hot Keynesian” war machine is now in the same state of exhaustion as the imperial German war machine in 1917. Germany had been able to preserve something close to a normal civilian economy over the early years of the First World War but the Allied blockade, chronic shortages, lack of manpower and money eventually forced the military to take over the whole productive apparatus. That too failed, and ultimately incubated Weimar hyperinflation.
Russia has depleted the liquid and usable reserves of its rainy-day fund. Military spending almost certainly exceeds 10pc of GDP in one way or another and it is being funded off-books by coercing the banks into lending some $250bn to defence contractors, storing up a crisis for the banking system.
Defence makes up a larger share of Moscow’s spending
Is that what Anton Siluanov, Russia’s finance minister, was referring to this week when he advised Russians to read Nikolai Gogol’s Dead Souls and Anton Chekhov’s Cherry Orchard, the first about fraudulent finance, the second about crippling debts? He has already introduced a string of new taxes this year. He is now drawing up fresh emergency measures.
The trade-off between guns and butter can be postponed no longer. Serious austerity is coming for the first time since Putin launched his fateful misadventure.
Russia is no longer the proverbial “petrol station masquerading as a country” but it still relies on raw material exports to fund a quarter of the budget. Oil exports fund the war. Kirill Bakhtin, from BCS, says tighter US and UK sanctions on Russia’s shadow fleet – Biden’s parting shot – have pushed the discount on Urals crude to around $15.
That lowers the de facto market value of Russian crude exports to $45. Another big drop from here, which may well happen as Saudi Arabia keeps adding barrels to an oversupplied market, would make it extremely hard for Russia to keep prosecuting the war beyond the summer.
The latest Russian offensive has largely petered out, at terrible human cost. Russia is not close to conquering the four oblasts so presumptuously annexed. “The movements on the map are tiny, and have nothing of strategic value. Ukraine is big enough to trade space for time,” said a Western military expert on the ground.
“The Ukrainians can’t take back lost territory, but they’re not going to get rolled over either. This has come down to a war of economic attrition. It’s what’s happening in the Russian rear that decides this.”
Trump may change his mind again. The mineral deal does not give Ukraine a bankable security guarantee. Europe is fractious and weary.
But the balance of probability is that Vladimir Putin will now fail to turn Ukraine into a castrated vassal state along the lines of Belarus.
He may keep the land he already holds and win legal recognition of Crimea, at least from Washington. But if the far-Right ultranationalist hawks in Russia compel him to hold out for total victory, he may not even keep that.
Comment from :
Alice Taylor
The more I read about the Ukraine minerals deal the better it appears. It’s nothing at all like what was touted by Trump and much more like what was first proposed by Ukraine when they first proposed it to the US. It’s workable. For pro-Ukraine boosters such as myself, anything that degrades Russia and pushes them back to their side of the border is welcome.
I have absolutely no sympathy for Russia at all. If their economy implodes it’s what they have earned. I have no sympathy for the Russian people who have enabled Putin. They have dug their own hole, let them dig their way out of it.
corrado santini
It sounds a bit overoptimistic.
Alice Taylor
Reply to corrado santini
Russia won’t implode overnight, they’re used to privation and corruption and the Russian soul glories in grievance. But there is a point when the average person turns on the government, it’s just much, much further down the road than any western democracy. Russian history shows this. At the moment the average man on the street is blaming the west for all of their problems and placing blame on outside forces and not on themselves is a powerful thing. Since we won’t see conquering army marching into Moscow like the Allies marching into Berlin, there won’t be a point when the Russian government snaps and collapses.
But there will be a point when Putin and the siloviki need to devote resources inwards or lose their heads and it will be that turning inwards that will stop the war.
Flown The-Nest
The best security deal Ukraine can get is for the US to have economic skin in the game. The shale gas field shown is pretty much the area that Russia has ostensibly annexed. That’s area is now economically in the US sphere of interest, and also Europe desperately looking for gas. Having US companies developing Ukrainian resources is akin to US boots on the ground.
Alice Taylor
Reply to Flown The-Nest
No, it’s not.
American business development in Ukraine will not bring in American troops in and certainly isn’t the same deterrent as a military force. It won’t slow the Russians one little bit. The Ukrainians will still bear the military brunt and they’ll be the ones doing the actual physical labour in the mines, not Americans. I’ll point out that there was plenty of American money and business in Ukraine in 2022 and it didn’t stop the Russians, not at all. There was billions in western business in Russia itself and it’s been entirely confiscated.
What this does is keep American arms, training and treasure flowing to Ukraine and that is a powerful thing, but the US won’t be doing the work and the Russian will do their best to disrupt it.
Simon Blades
Until the ‘West’ revokes every Russians’ visa and sends all Russians back to Moscow (next week) these so called sanctions will just prolong and extend this war. Just do it. I’m not calling for internment, just revocation of visas temporarily whilst Russia continues. And surely it’s not beyond the wit of the US State department to demand similar of countries like UAE and Thailand and Israel. Imagine the fate of Putin if every millionaire Russian (circa 800,000) was forced to turn up in Moscow with only the Bolshoi Ballet and salty caviar to entertain themselves whilst trying to avoid the conscription of little Dmitry. To be cynical I could guess the inventory of scrappable US military equipment is nearing conclusion so maybe this may happen soon. Otherwise the West is just not being serious here.
John Deery
Great article and very informative. My only concern is that the map shows the shale fields are on the eastern side of the Dneiper river. Is that not Russian controlled territory?
Note from Scradje:
It’s unfortunately impossible to download maps from DT articles.
Richard Thomson
Legal recognition of Crimea wouldn’t change much. Russia had held it for more than 10 years already but official recognition would be a useful bargaining chip. As for the 4 regions of eastern Ukraine, if Russia were to keep all of these then they would have succeeded entirely in what they set out to do. Ukrainian lives and indeed the entire war would have been lost for nothing and this must not be allowed to happen. On the other hand Russia will not simply walk away from land they already occupy. So what is the answer? Some deal on the way these eastern provinces are administered perhaps so they’re neither wholly Russian nor wholly Ukrainian. Neither side has even attempted to suggest answers to this question.
James Lepper
I would say the negotiations are going pretty much to plan. They had to get Putin to the table, the USA needed to ensure they seen as unbiased when they are still supplying one side, they need to make there be a direct link between Russian aggression and US assets. what happens next?
There are three probable end games: Blockade; Gunboat; Good shepherd; I did put some thoughts down but then thought broadcasting it might not be so sensible, there is some risk with all three strategies.
M Ski
This is not a fair deal for Ukraine. Ukraine agreed to the minerals deal under significant pressure, trading future resource revenues for U.S. military support essential to its survival. The U.S. has put a gun to their head in these “negotiations”. Forcing such terms on a country at war, even if Ukraine retains ownership and avoids debt, fits definitions of economic coercion and is despicable. Meanwhile, U.S. allies like Israel (and Netanyahu wanted for war crimes and crimes against humanity) receive billions in aid with no strings attached despite the fact Israel was never in danger of being invaded, occupied, and annexed by Hamas or any other group. The minerals deal is not just repayment-it is the U.S. leveraging Ukraine’s desperate situation, which contradicts the UN’s ideals of fair and unconditional assistance.
“The movements on the map are tiny, and have nothing of strategic value. Ukraine is big enough to trade space for time,”
That’s right. Ukraine can easily let go of a field here and a tiny village there if it means letting the roach army bleed to death.
“The Ukrainians can’t take back lost territory, but they’re not going to get rolled over either.”
I don’t know in which sort of crystal ball some people are looking in. Ukraine has already taken back a lot of terrain, and taking back lots more is not impossible. Quite frankly, all of it could’ve been taken back already if Ukraine’s allies weren’t so cowardly and incompetent.
“legislation that imposes 500pc punitive tariffs on any country that buys Russian energy or strategic minerals, if the Kremlin “refuses to negotiate a peace agreement, violates a peace agreement or invades Ukraine again in the future”.
Finally some sanctions using ‘or else” accountability and simple enough even the Moskali can understand.