This will be a short article. In it, I will show how a single clause in the US-Ukraine minerals agreement could lose the US taxpayer billions of dollars. The loss will occur in a manner that does not become evident for many years. This is annoying because one does not need a PhD in mathematical finance to see it. And yet… no one has pointed it out.
Remember, Zelensky first proposed this deal early in 2024, well before the election. Ukraine was losing and US support was waning. The idea was to justify US transfer of weapons to Ukraine by giving the US a “sweetener.” Following the election, the deal went through several evolutions. President Trump claimed it was a way for Ukraine to pay back the billions the Biden administration had poured into the country. The US would profit from Ukraine’s rich bounty of minerals and rare earths – even though no rare earths have yet been extracted.
This deal is about weapons. Remember that. Weapons transfers motivate this deal. It’ll take ten years to get a mine going. By that time, billions of dollars in the hole, the deal will have been forgotten. Let’s look at Clause VI.
Clause VI: How could this have been signed?
Clause VI (Point 5)
If, after the Effective Date, the Government of the United States of America delivers new military assistance to the Government of Ukraine in any form (including the donation of weapons systems, ammunition, technology or training), the capital contribution of the U.S. Partner will be deemed to be increased by the assessed value of such military assistance in accordance with the LP Agreement.
Let’s reduce this to a simple example we can draw on a napkin. Suppose the Fund wants to build a rare earths mine for $100. According to the 50:50 terms of the deal, Ukraine puts up $50 and the US puts up $50. Ignore for the moment the small matter of where exactly Ukraine gets $50 (please, anywhere but the US). The two partners put up $50 each, build a mine, and 10 years later, the mine starts extracting rare earths and generates revenue to cover its expenses and return the original $100 invested.
Clause VI says that US contributions of weapons are capitalized and counted as contributions – investments – in the fund. Let’s say the US ships over a Patriot launcher that the Pentagon accounting office has valued at $50. Here’s what the fund looks like:
Ukraine Funding $50 cash Mine Project needs $100 cash
This will be a short article. In it, I will show how a single clause in the US-Ukraine minerals agreement could lose the US taxpayer billions of dollars. The loss will occur in a manner that does not become evident for many years. This is annoying because one does not need a PhD in mathematical finance to see it. And yet… no one has pointed it out.
Remember, Zelensky first proposed this deal early in 2024, well before the election. Ukraine was losing and US support was waning. The idea was to justify US transfer of weapons to Ukraine by giving the US a “sweetener.” Following the election, the deal went through several evolutions. President Trump claimed it was a way for Ukraine to pay back the billions the Biden administration had poured into the country. The US would profit from Ukraine’s rich bounty of minerals and rare earths – even though no rare earths have yet been extracted.
This deal is about weapons. Remember that. Weapons transfers motivate this deal. It’ll take ten years to get a mine going. By that time, billions of dollars in the hole, the deal will have been forgotten. Let’s look at Clause VI.
Clause VI: How could this have been signed?
Clause VI (Point 5)
If, after the Effective Date, the Government of the United States of America delivers new military assistance to the Government of Ukraine in any form (including the donation of weapons systems, ammunition, technology or training), the capital contribution of the U.S. Partner will be deemed to be increased by the assessed value of such military assistance in accordance with the LP Agreement.
Let’s reduce this to a simple example we can draw on a napkin. Suppose the Fund wants to build a rare earths mine for $100. According to the 50:50 terms of the deal, Ukraine puts up $50 and the US puts up $50. Ignore for the moment the small matter of where exactly Ukraine gets $50 (please, anywhere but the US). The two partners put up $50 each, build a mine, and 10 years later, the mine starts extracting rare earths and generates revenue to cover its expenses and return the original $100 invested.
Clause VI says that US contributions of weapons are capitalized and counted as contributions – investments – in the fund. Let’s say the US ships over a Patriot launcher that the Pentagon accounting office has valued at $50. Here’s what the fund looks like:
Ukraine Funding $50 cash Mine Project needs $100 cash
US Funding $50 Patriot launcher
That presents a problem that any business person should see (President Trump? Secretary Bessent? Hello!) The problem is that the $50 Patriot launcher does not provide CASH. Zelensky is going to send it to the front where it will meet Mr. Iskander and get blown into a smoking, twisted heap of scrap. So here is what your project looks like on a cash basis:
Ukraine Funding $50 cash Mine Project needs $100 cash
US Funding $0 cash
A blind man can see there isn’t enough cash to develop the mine. There will be no mine, there will be no rare earths harvested ten years from now, there will be no revenues, and no repayment for the Patriot launcher. The taxpayers will never see a dime.
In finance, we say the Fund is insolvent. It’s bankrupt. We call that blown-up launcher a $50 hole in the fund’s balance sheet. You won’t notice the problem for a long, long time. There’s enough cash to get started, but nowhere near enough to finish. This simple fact is lost in the waves of nonsense washing back and forth across the media.
Scale it up to $50 billion or $100 billion and you get an idea of the enormity of the loss.
Zelensky relaxes at his desk.
Conclusion
Deals like this take years to negotiate, with endless assays, feasibility studies, projections, and scenario analyses. They slapped this Frankenstein together in under three months, held together with Kleenex and spit. As I followed the evolution of the deal, I was unimpressed. When I heard about the weapons angle and then read Clause VI, I was horrified.
Clause VI, Point 5 is hideous. I cannot believe Bessent didn’t see the problem. I don’t expect incompetent media scribes to see it, nor do I expect the vast population to see it, but competent professionals should see it immediately. The owner of your local butcher shop should see it. Part of the problem is the opacity of the transaction and the marketing of the deal. President Trump is marketing it as a win for his first 100 days. Most of the people talking about it say the US is ripping off Ukraine. Not so! The problem is – no one’s bothered to read the darn thing, much less think about it. Two of the three documents (the Limited Partnership Agreement and Charter) have not even been made public. Zelensky is laughing all the way to the bank.
Bessent and Trump probably think it’s okay because they can decide how many weapons to give. Taxpayers trust their elected officials to look out for their interests. In my opinion, that is no excuse for putting together a flawed transaction. Trump won’t be in office after 2028. This deal is justification for anyone in the White House to funnel weapons transfers to Ukraine with almost no chance of ever being paid back.
That roaring in your ears is the sound of billions of taxpayer dollars being poured into the black hole like water pouring over Niagara Falls.
Cameron Curtis
You may reach Cameron at: [email protected]
Cameron Curtis has spent thirty years in the financial markets as a trader and risk manager. He was on the trade floor when Saddam’s tanks rolled into Kuwait, when the air wars opened over Baghdad and Belgrade, and when the financial crisis swallowed the world. He’s studied military affairs and warfare all his adult life. His popular Breed series of military adventure thrillers are admired for combining deep expertise with propulsive action. The premises are realistic, the stories adrenaline-fueled and emotionally engaging.
Check out the books here: Cameron Curtis’s Amazon Page
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