The government has published the text of the agreement on subsoil, that is, on the creation of the Reconstruction Investment Fund between the United States and Ukraine — the countries signed it on April 30.
The Fund is a key instrument of cooperation between the United States and Ukraine for the countryʼs post-war reconstruction and its integration into the global economy. The United States will be represented by the Development Finance Corporation (DFC). Ukraine will be represented by the state organization "Agency for the Support of Public-Private Partnerships".
Financing
Ukraine will direct 50% of revenues from new natural resource licenses to a special fund, from which the funds will go to the investment fund. For this purpose, a separate fund is being created in the state budget of Ukraine, from which the funds will be transferred to the investment fund.
The US will contribute funds to the Fund, in particular, new military assistance may be included. If, after the agreement enters into force, the US government provides Ukraine with new military assistance (such as weapons, ammunition, technology, or training), the US contribution to the investment fund will be increased by the corresponding amount.
The main areas of investment are natural resources, including mining and energy, as well as infrastructure.
All financial transactions of the fund, profits, payments and contributions of both parties are not taxed in Ukraine. The United States also exempts from taxes the income of the Ukrainian partner of the fund if this income is received from projects implemented in Ukraine.
In return, Ukraine guarantees the free exchange of hryvnia for dollars and the transfer of money abroad without delays or additional fees. In the event of a serious economic crisis, Ukraine may temporarily restrict such operations, but must agree on this with the United States. Kyiv must compensate for all losses of the fund due to such restrictions.
Obligation
The agreement specifies a list of minerals whose extraction it applies to. This concerns Ukrainian production of aluminum, antimony, arsenic, barite, beryllium, bismuth, cerium, cesium, chromium, cobalt, copper, dysprosium, erbium, europium, fluorine, fluorspar, gadolinium, gallium, germanium, gold, graphite, hafnium, holmium, indium, iridium, lanthanum, lithium, lutetium, magnesium, manganese, neodymium, nickel, niobium, palladium, platinum, potassium, praseodymium, rhodium, rubidium, ruthenium, samarium, scandium, tantalum, tellurium, terbium, thulium, tin, titanium, tungsten, uranium, vanadium, ytterbium, yttrium, zinc, zirconium, oil, natural gas, and these are only new deposits for which Ukraine will issue licenses after entry into force of the agreement. This list may be expanded only by agreement of the parties.
The agreement has superior force to Ukrainian legislation, and Ukraine cannot change the conditions for the fund through new laws.
Ukrainian government agencies should include a requirement in new mining permits and contracts for large infrastructure projects: investors must notify the fund of the opportunity to invest money and discuss it with it.
The US Fund has a first-mover advantage to purchase Ukrainian resources, and Ukraine guarantees that others will not receive better terms. All details of how this right to purchase resources will work should be described in a separate Limited Partnership Agreement, which should also comply with Ukrainian law and obligations to the EU.
If the Agreement conflicts with Ukraineʼs future obligations to the EU, the parties will review it.
The document states that the countries agree to resolve all issues regarding the content or implementation of the agreement jointly — through discussion and cooperation. If a dispute arises, it must be resolved through negotiations.
The document will enter into force after ratification by the Verkhovna Rada of Ukraine and will be valid without a time limit until both parties agree on its termination.
What is known about the deal?
The Minister of Economy of Ukraine Yulia Svyrydenko explained that Ukraine retains full control over natural resources on its territory and in its waters. The fund is being created on equal terms 50:50, where Ukraine will manage it together with the United States, without the advantage of one of the parties — this is a truly equal partnership. The United States will facilitate the attraction of investments and technologies through the DFC, which will help attract funds and innovations not only from the United States, but also from the EU and other partner countries.
The privatization processes and management of state-owned companies remain unchanged, and they will continue to belong to Ukraine. The agreement also does not provide for any financial obligations of Ukraine to the United States, and does not contradict the Constitution or the course of European integration. Everything complies with Ukrainian legislation and international obligations, which is a positive signal to partners.
The fund will be filled exclusively from revenues from new licenses for the extraction of minerals, oil and gas. Profits from existing projects or those planned in the budget will not go to this fund. This requires only a slight update of the Budget Code.
The fund will invest in Ukrainian projects — mining, oil and gas, as well as in related infrastructure or processing. All investments will be jointly approved by Ukraine and the United States. The fund is focused exclusively on Ukraine.
In the first 10 years, it is expected that profits will not be distributed, but will be reinvested in new projects and reconstruction. This point will be discussed further.
The information is updating...
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