By giving American companies preferential treatment in Ukraine, the proposed minerals deal runs the risk of contradicting the EU’s competition and single market rules, which provide for equal and fair access.
The minerals deal that Kyiv and Washington are currently negotiating will be closely examined in Brussels to determine its compatibility with Ukraine’s membership bid, the European Commission has said, as the latest version of the text revives fears it would derail the country’s ambitions to join the bloc.
The accession process requires candidate nations to gradually align with EU legislation, including fundamental principles of fair competition and non-discrimination.
“The line has been conveyed such an agreement would need to be looked into from the perspective of the relations between Ukraine and the EU and, notably, in terms of the accession negotiations,” Paula Pinho, the Commission’s chief spokesperson, said on Friday during a press conference.
Pinho warned any conclusions drawn currently would be “pure speculation”, as the deal is still under discussion between Ukrainian and American officials. The Commission would offer legal “assistance” to Kyiv if this were requested, she noted.
“We cannot make any assessment unless and until there is such a concrete agreement with (the) letters black on white which allows us to make an assessment of any impact from the different policy angles that might arise,” Pinho said.
The comment comes a day after Bloomberg and the Financial Times revealed new details about the latest version of the agreement that the White House has put forward, which includes sweeping terms that would see America gain unprecedented control over Ukraine’s natural resources through a joint investment fund.
Under the draft, the fund’s board would comprise five members: three appointed by the US and two appointed by Ukraine. In practice, this would give Washington an effective veto power on key decisions regarding new projects of infrastructure and natural resources. Existing projects appear beyond the control.
Roads, railways, ports, mines, oil, gas and the extraction of critical minerals would all fall under the scope of the new structure.
Ukraine would be obliged to present all new projects to the fund for review “as early as practicable”, Bloomberg reported. If the project were turned down, Ukraine would be prevented from offering it to other parties with “materially better” conditions.
Additionally, the US would have the right to reap all the profits from the fund and a 4% annual return until the military and financial aid that has been provided to Ukraine is fully recouped. The Kiel Institute for the World Economy estimates American support to be worth €114 billion since the start of Russia’s full-scale invasion.
The “payback” model has been central to Donald Trump’s motivation to sign the deal, raising accusations of exploitation and neo-colonialism.
‘Conflict of interest’
While Ukrainian officials managed to water down the first proposals that the US made in February until securing a text deemed palatable, the latest version appears to bring back the draconian terms that shocked Ukraine and its allies and stoked fears that it would imperil the country’s aspirations to become an EU member.
By giving American companies a legally-enshrined “right of first offer”, the deal is in direct “contradiction” with the bloc’s competition and single market rules, which provide for fair and equal access for all economic actors, regardless of nationality, says Svitlana Taran, a policy analyst at the European Policy Centre (EPC),
“There should be open competition for all investors in the projects,” Taran told Euronews. “In open tenders, EU companies and American companies should participate and compete on equal terms,” she added. “I can see there’s a conflict of interest.”
Taran believes Ukraine will continue negotiations until the agreement becomes “acceptable” and the concerns around EU membership subside, even if it is unclear how much weight these concerns will have on the White House’s considerations.
“The provisions agreed in the previous versions were balanced with Ukrainian interests,” the analyst said. “Now, it’s again unbalanced in favour of the United States.”
The lack of security guarantees has been another point of contention in the talks. The Trump administration has pitched the minerals deal as a sort of economic deterrence against future Russian aggression. However, President Volodymyr Zelenskyy has warned Vladimir Putin would prioritise his expansionist agenda over American interests.
Speaking on Thursday after a meeting of the coalition of the willing in Paris, Zelenskyy complained that the terms of the agreement were “constantly” changing but promised his team would remain “constructive” in the negotiations to avoid antagonism which could lead to a new suspension of military assistance and intelligence-sharing.
“I thought we already agreed that there would be a framework agreement. But now, as I understand, the Ukrainian and American teams are working on it now because America is changing these rules now and proposes (to sign) the deal immediately, full agreement,” Zelenskyy told reporters.
“But I would not want the United States to have the impression that Ukraine is against it, in general. We have consistently shown positive signals: we support cooperation with the United States. We do not want to send any signals or encourage the United States to halt assistance to Ukraine or to stop sharing intelligence. It is crucial for us.”
