Reconstruction Investment Fund deal with U.S. is “mutually beneficial” — Ukraine’s PM

Espreso correspondent Nataliia Starepravo reported the information.

Denys Shmyhal emphasized that the agreement between Ukraine and the U.S. is "fair, equal, and effective."

"President of Ukraine Volodymyr Zelenskyy clearly defined the priorities of this agreement and the red lines, and this was duly taken into account during the negotiations," the Prime Minister added.

Key provisions:

1) An investment fund for reconstruction is being created, which will be managed equally by Ukraine and the United States of America. "Neither side will have an advantage in it; all decisions are made jointly," the Prime Minister noted.

2) The fund is an instrument for investing in Ukraine, not a mechanism for transferring assets. "That is, all Ukrainian natural resources remain with Ukraine. Also, the scope of the agreement does not cover state enterprises or privatization," Shmyhal added.

3) The fund will be filled by the United States and Ukraine in a 50/50 proportion. "From the U.S. side, these will be monetary contributions or new military aid, for example, air defense systems. Ukraine's contribution is 50% of the rent from new—emphasize, new—licenses for the extraction of oil, gas, and critical minerals. I stress that revenues from already started projects are not included in the fund, which is important for budget revenues," Denys Shmyhal emphasized.

4) According to the Prime Minister, in the first 10 years, the fund's profits will not be withdrawn from Ukraine but will be reinvested, including in the extraction of natural resources, infrastructure, or processing.

5) The fund will guarantee commercial purchases of products on a "take or pay" basis. "That is, there will be guaranteed demand for the products. At the same time, the agreement does not contain any discriminatory conditions regarding other partners or provisions for selling goods and resources to American companies at prices unfavorable to Ukraine," the Prime Minister noted.

6) Through the American DFC agency, the fund will attract American and European advanced technologies to accelerate Ukraine's recovery and modernization.

7) The agreement does not mention any debt obligations of Ukraine. "We do not recognize as debts what was previously provided by the U.S. under Congressional decisions in the form of grant aid," Denys Shmyhal emphasized.

8) The fund's revenues are not taxed by the United States or Ukraine. "Critical minerals exported to the U.S. are not subject to duties, which under current conditions provides unique opportunities for trade development," the head of government noted.

9) The agreement does not contradict other international obligations of Ukraine. "It will not be an obstacle to further European integration and EU membership. We will invite European companies and investors to cooperate. The agreement essentially corresponds to our formula: united in defense, united in recovery," the Prime Minister explained.

10) According to Denys Shmyhal, "given the scale of the agreement, additional technical steps are needed." "These are not intergovernmental documents, but institutional ones, which are fundamentally agreed upon on critical issues and do not go beyond the agreement but develop it. The fund will be created for decades, so the process of its creation is not a one-day matter. And not a single decision. The negotiation team, upon returning from Washington, will be available 24/7 for members of parliament and will answer all additional questions about the agreement," Denys Shmyhal summarized.

On compliance with the Ukrainian Constitution

The head of the Ukrainian government emphasized that the agreement on the creation of the Investment Fund for Reconstruction complies with the Constitution of Ukraine and does not contradict national legislation. "These are mutually beneficial agreements that create a positive dynamic for our reconstruction and development for decades. There are many examples in the world of countries that, having the U.S. as a strategic economic partner, have achieved a real economic miracle. For them, a strong economy and prosperity became the best guarantee of security," added Denys Shmyhal.

Where will minerals be extracted?

As the Prime Minister noted, the agreement provides for the extraction of minerals throughout the entire territory of Ukraine, as defined by the 1991 borders. "The agreement covers the entire sovereign territory of Ukraine, this is unconditional... It covers all regions, the entire territory defined by the 1991 borders," Shmyhal emphasized.

He also stressed that the agreement does not violate Ukraine's European integration obligations or "environmental obligations to communities or to Ukrainian society." "The agreement in no way violates environmental standards and requirements of Ukrainian legislation, especially those that comply with European directives. Therefore, there is no reason to worry about compliance with environmental standards in our legislation," Shmyhal summarized.

On investment opportunities

The Ukrainian Prime Minister expressed the opinion that "this agreement is an absolute achievement for our state." "I am confident that this will be one of the largest, most effective, and most important investment instruments for Ukraine. A fund will be created. Importantly, this is a partnership fund, 50/50. We are working with the United States, and the fund's management will also be on an equal basis, 50/50. That is, an appropriate board will be created—three representatives from Ukraine, three from the United States. The fund will invest in mineral extraction, processing, production development, and may also invest in infrastructure. Importantly, all ownership of minerals and all infrastructure remains with Ukraine; this is our sovereign right. And this fund will be exclusively an investment fund, or, as such entities are called, a direct investment fund," Shmyhal explained.

He noted that it is too early to assess the size of the Investment Fund, but expressed confidence that it will be "tens, and possibly hundreds of billions of dollars." "This is our goal for such investments, and we are discussing this with our partner, the United States of America. We are looking at how similar funds created by the United States in other countries of the world in the 21st century have worked. Indeed, such funds have become breakthrough instruments for investment and economic development for each of the countries where they were created. Accordingly, for Ukraine, this is an absolutely correct and good prospect," the Prime Minister summarized.

• On April 30, Ukraine and the United States signed an agreement to create an Investment Fund for the Reconstruction of Ukraine.