CRITICAL MINERALSWhy a U.S. Minerals Deal with Ukraine Won’t Deter Russian Aggression
Research suggests that investments follow alliances. But markets do not care about agreements alone. They respond to other signals too, like explicit statements of support. These statements of support also help to reassure allies and deter rivals. Unless Trump changes how he operates on the international stage, the economics of the mineral deal will not help Ukraine’s security situation.
The US vice-president, J.D. Vance, recently told Fox News that “the very best security guarantee” to prevent Russia from invading Ukraine again was “to give Americans economic upside in the future of Ukraine”.
The implication is that the much-debated minerals deal, in which an investment fund managed by Kyiv and Washington would receive revenue from Ukraine’s natural resources, would create American economic interests in Ukraine. American security interests, it is suggested, could soon follow.
Vance’s comments came with the deal hanging in the balance. A meeting at the White House on February 28, where the deal was expected to be signed, turned into a shouting match between Vance, the US president, Donald Trump, and his Ukrainian counterpart, Volodymyr Zelensky.
Zelensky has since attempted to patch up relations with the Trump administration, announcing that he is ready to sign the deal at “any time and in any convenient format”. And Vance, when asked whether an agreement was still on the table, said Trump “is still committed” to reaching a deal.
Having access to Ukrainian minerals is an important opportunity for America’s missile system electronics and electric vehicle industries. Ukraine is, for example, home to around one-third of all European lithium deposits, the key component in batteries.
This access is particularly important now that China, which currently accounts for a high proportion of certain US mineral imports, has imposed a ban on exporting rare minerals to the US in retaliation for Trump’s tariff policies.
But, while Ukraine’s minerals are tempting to the US and other world powers, a deal with Trump won’t help Ukraine’s security situation.
Trump’s approach has two main flaws. First, research shows that investment typically follows security commitments, not the other way around. Investors seek markets that are stable and protected, rather than hoping their investments create those conditions.
Previous US presidents have touted similar strategies without success. President William Howard Taft (1857-1930) championed “dollar diplomacy” in the early 20th century, promising that American investments would create stability across Latin America by “substituting dollars for bullets”.
The reality proved quite different. Throughout this period, the US frequently used military force to protect oil interests in Latin America. But, because these interventions focused on extraction sites rather than defending entire countries, instability continued elsewhere in the region.
Trump’s “America first” mantra suggests a similar pattern of defending American assets, and not necessarily the countries in which the assets reside.
