Ukraine has signed a preliminary memorandum of understanding with the US on the controversial minerals deal after months of wrangling, but many important details of the deal still need to be agreed, Ukrainian officials said on April 18.

“We are happy to announce the signing, with our American partners, of a memorandum of intent, which paves the way for an Economic Partnership Agreement and the establishment of the Investment Fund for the Reconstruction of Ukraine,” Yulia Svyrydenko, the first deputy prime minister and minister of economy of Ukraine, said in a post on social media.

“We hope that the fund will become an effective tool for attracting investments in the reconstruction of our country, modernisation of infrastructure, support for business, and the creation of new economic opportunities.”

The memorandum was very brief and general, containing only one page that said little more than it is the intention of both parties to finalise the agreement on economic partnership and the creation of an investment fund. The White House sent Bankova (Ukraine’s equivalent of the Kremlin) a fourth, and extremely harsh, version of the minerals deal on March 28, which Ukrainian President Volodymyr Zelenskiy rejected, saying that it undermines Ukraine’s sovereignty and would threaten Ukraine’s EU accession aspirations.

The Financial Times reports that the parties still have fundamental disagreements on the changes that the agreement has undergone in a month. Bessent says that essentially it has not changed, Ukrainian sources claim that there is a positive for Ukraine. Presumably, the most controversial points that could hinder ratification by the Verkhovna Rada have been removed, but there are no details yet.

The initial version of the deal was focused on getting rights over Ukraine’s rare earth metals (REMs) resources, which US Senator Lindsey Graham claimed are worth trillions of dollars. But as bne IntelliNews reported, Ukraine has no rare earth metal deposits of note, although it does have significant deposits of critical minerals that are worth an estimated $800bn, including copper, graphite, lithium and some other minerals important to modern technology. Ukraine reports deposits of 22 of the 34 minerals identified by the European Union as critical, according to Ukrainian data, but the US Geological Survey confirms it has insignificant amounts of the 17 REMs.

Svyrydenko was upbeat on the latest memo, saying the deal “notes the desire of the American people to invest together with the Ukrainian people in a free, sovereign, and secure Ukraine.”

However, she made it clear that it was only a preliminary agreement and work on a final version continues.

“There is a lot to do, but the current pace and significant progress give reason to expect that the document will be very beneficial for both countries,” she added.

Security deal missing

Bankova has been reluctant to sign off on the agreement that would give away the rights to revenues earned from much of its natural resources – money it is going to need to cover the cost of reconstruction. The World Bank recently estimated the total cost of the damage at $585bn and while Ukraine’s Western partners have been generous in providing Ukraine with money to fund the budget and buy weapons, so far the only commitment to funding the cost of reconstruction is commitments from the International Financial Institutions (IFIs) to the order of $75bn, according to estimates from Peterson Institute for International Economics (PIIE).

In addition, Zelenskiy has been holding out to link the deal to concrete security guarantees from Western partners, especially the US or Nato, to ensure Russia cannot invade Ukraine a second time post-war. While the details of the current fifth version of the deal were not released no mention of security guarantees was made in the new memo and they have been missing from all previous versions.

US President Donald Trump has made it clear that the US is not prepared to offer Ukraine a security deal and has also said that early or accelerated Nato membership is definitely also off the table.

More work to do

Bessent later clarified that a final version of the deal will be signed on April 26. He added that the deal was substantially the same as the previous, fourth version that was not signed during Zelenskiy's meeting with Trump in the White House that descended into a shouting match between two presidents on February 28. However, the FT reported that Ukraine officials say they have brought the latest version a bit closer in line with their own demands.

“This is a memorandum of intent – not the agreement itself – but it reflects our constructive and positional intentions,” US Treasury Secretary Scott Bessent said.

One point of progress in the talks is that Trump has backed off his earlier demands for $350bn worth of compensation, the money he claims the US has provided Ukraine with over the last three years of conflict. However, as observers were quick to point out, Congress has signed off on a total of $188bn in aid, and Zelenskiy claims that of this pledge a bit more than $90bn was actually delivered.

In the most recent version of the deal, revealed to the public, the amount of compensation Trump is now claiming was $120bn, although no concrete figure has been mentioned in connection with the latest version of the agreement.

Zelenskiy has also rejected the idea that the US is entitled to any compensation, saying the money Kyiv has received from the US under the Biden administration was “not debt” but largely in the form of grants which do not have to be repaid. The EU, which has provided Ukraine with slightly more money than the US, has extended far more of its aid in the form of loans, which do have to be repaid, albeit under extremely lenient terms.

Tensions remain

Tensions remain between the White House and Bankova despite the apparent progress, but the White House made it clear that its patience with the progress on striking a deal is wearing thin.

US Secretary of State Marco Rubio said on April 18 that Washington could soon exit efforts to reach a Ukraine ceasefire if it decided peace was not "doable", after meeting European and Ukrainian officials in Paris.

"We need to figure out here now, within a matter of days, whether this is doable in the short term, because if it's not, then I think we're just going to move on," he told reporters at the Le Bourget airport outside Paris. "We have other priorities to focus on as well."

And there are major discrepancies between what the White House seems to be offering Russian President Vladimir Putin in negotiations and what Bankova will accept.

After a five-hour meeting last week between Putin and special envoy to the Middle East Steve Witkoff, the US envoy suggested that Ukraine give up on its claims to the “five regions” Russia wants sovereignty over without naming them.

(Earlier this month in an interview on US TV, Witkoff appeared to be unable to name the four regions that Russia annexed in 2023 and by mentioning “five” he appears to be alluding to the Crimea as well, which Russia annexed in 2014.)

Following Witkoff’s comments Zelenskiy repeated earlier statements saying that Ukraine would never agree to giving up sovereignty over any of its territory.

“These are red lines for us — recognising any temporarily occupied territories as Russian. Trump’s representative, Witkoff, is discussing matters beyond his competence,” Zelenskiy said in his daily video address on April 15.

Ukraine said on April 18 that Prime Minister Denis Shmygal would visit Washington next week for talks with US officials aimed at clinching a long-fraught minerals and resources deal.

Getting Europe to play ball

Rubio also said in Paris after his meeting with EU leaders that he hoped European nations would consider lifting sanctions against Russia over the war.

"Many of them are European sanctions that we can't lift, if that were ever to be part of a deal," he said.

The Trump team have apparently agreed to some of Putin’s demands of sanctions relief, however, the White House is not in a position to unilaterally lift sanctions and would have to work in combination with the EU, which has so far refused to cooperate. The European position is that sanctions relief can only be discussed after a ceasefire is in place and the Armed Forces of Russia (AFR) have withdrawn from all of Ukraine’s territory.

Celia Belin, of the European Council on Foreign Relations, told AFP Rubio's latest comments were "not surprising" and that, "Trump wants to get rid of the Ukraine issue.”

"He wants to renew a strategic partnership with Moscow and he doesn't want a 'little problem' like Ukraine getting in the way,” she said.

Main points of agreement

Bankova published a full text of the understanding on April 18, which remains brief and general and goes into no details on how a proposed investment fund will work – the key element of the deal. They main points include:

• The US has provided significant financial and material support to Ukraine since Russia's full-scale invasion in February 2022.
• The American and Ukrainian people aim to invest together in a free, sovereign, and secure Ukraine.
• Both countries seek a lasting peace in Ukraine and a durable bilateral partnership.
• Ukraine’s decision to relinquish its nuclear arsenal is recognised as a contribution to international peace and security.
• The US and Ukraine intend to establish a reconstruction investment fund as part of an economic partnership.
• Technical discussions to finalise the fund agreement took place in Washington, D.C., on April 11-12.
• The US respects Ukraine's effort to ensure the agreement aligns with its EU accession and other international obligations.
• Ukrainian Prime Minister Denys Shmyhal is scheduled to visit Washington during the week of April 21, to support the finalisation of the agreement.
• Negotiators aim to report progress by April 26, with the goal of completing discussions and signing the agreement shortly thereafter.
• The memorandum of intent reflects the commitment of both governments to expedite the finalisation of the agreement and may be signed in multiple original counterparts.