'Neither betrayal nor victory': Ukrainian lawmaker on U.S.-Ukraine Reconstruction Fund deal

Espreso correspondent Natalia Starepravo reports. 

About security guarantees

“There are two parts. First is the long-term strategic partnership between the U.S. and Ukraine. How to interpret that? However you like. Second is U.S. support for Ukraine’s security, well-being, recovery, and integration into the global economic structure,” Zhelezniak noted.

According to him, “this is all that relates to the issue of security guarantees.”

“And specifically, the part that says if the U.S., in the future, provides any kind of security assistance - like military aid, for example - then that counts as a contribution to this fund. For instance, if they deliver us 155mm shells, the cost of that is counted as a U.S. contribution to the fund. And those contributions, in the future - say, in 10 years - would theoretically be repaid by us in some form, like royalties from the fund. God willing, we’ll have such long-term strategic planning for 10 years. So far, we haven’t seen it - neither from our government, nor unfortunately from the U.S. government - but that’s what the text outlines,” the MP explained.

On ratifying the document

“This is the first part of three agreements. Accordingly, this first part is general in nature. It forms what is called an intergovernmental document. Intergovernmental agreements go through a special procedure for ratification. Some are submitted by the Cabinet of Ministers, others by the President. They must go through specific translation and approval procedures to ensure the text does not differ between the English and Ukrainian versions,” Yaroslav Zhelezniak noted.

He emphasized that the process takes some time and expressed the opinion that, "in the fastest-case scenario," the document would be submitted for ratification next week.

"Moreover, there’s no rush, because today is the last plenary day when Parliament is voting. On Friday, you’ll again see a half-empty chamber. The next plenary session will be on May 13-15 — that’s the earliest the agreement could be voted on. As for the votes, I believe there are certain challenges. I’m not convinced that many factions, especially those in the opposition, will support it. So, colleagues from the coalition will have to do some work, including with their own members who haven’t even seen the agreement," the MP said.

On the need for changes in legislation

“At a minimum, there will need to be amendments to the Budget Code and the Tax Code. I have a strong feeling that changes will also be required to the Law on Natural Resources, probably the Law on Public-Private Partnerships, and several other laws. Our specific committee - the one I represent, on tax and customs policy - will, at the very least, be amending the Tax Code,” Zhelezniak noted.

He also added that it is likely “targeted amendments” will have to be made to “several financial laws” as well.

About the significance of the agreement

"I wouldn’t say it’s a betrayal, and I wouldn’t say it’s a victory. Will it bring a lot of investment? I don’t think so. Is it a major betrayal? Well, unless you take certain points, I’d say it’s not a global betrayal. The text is definitely better than the one I published on March 23," said MP Yaroslav Zhelezniak.

At the same time, Zhelezniak noted the importance of involving foreign lawyers in drafting the agreement.

"What is definitely good is that foreign lawyers were hired, who explained - clearly, professionally, and in legal terms - to the U.S. Department of the Treasury and other relevant bodies that some things were simply technically impossible. And that really helped improve the text," the MP emphasized.

What raises questions?

Commenting on the signing of the Investment Fund agreement, Yaroslav Zhelezniak outlined several points that, in his opinion, raise questions.

“When, for example, the Deputy Prime Minister says that the fund will receive revenues only from licenses, that’s not accurate. I’ve seen the document, and even the U.S. authorities confirm that it includes both license fees and royalty payments. Royalties are our state budget revenues... Frankly, I don’t fully understand why we should be contributing money to this fund not from the profits of investment projects. Say we implement a project, it makes money - okay, 50% goes to the fund, 50% to the investors. But why should this include royalty payments, which are essentially part of Ukraine’s national wealth?” the MP noted.

He also included the issue of security guarantees in this list.  

“I understand this geopolitical situation perfectly well... But if we forget about the geopolitical component, why does Ukraine need it? What does the US need? What security guarantees without any guarantees of military supplies? It probably requires additional communication and explanation,” Zhelezniak said.

He also drew attention to the issue of the fund's jurisdiction, which, according to the MP, will not be subject to Ukrainian law but will be governed by international law.

“I don't know how detailed the last text is, but in one of the preliminary drafts, what I saw, this fund is registered in Delaware. This is a state in the United States that is known for its very specific legislation, and it is favored by startups. And there are a lot of nuances that need to be looked at one way or another... Licenses, how profits are distributed, what restrictions there are. Because there are, for example, restrictions on countries that do not provide us with assistance. How this applies to countries that have provided little or in some other way... Many things that are there need to be looked at in the detailed text,” Yaroslav Zhelezniak summarized.

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