Economic colony: Trump’s secret plan to put Ukraine in a stranglehold

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He calculated that it would lead to US companies setting operations on the ground, creating a political tripwire that would deter Vladimir Putin from attacking again.

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Some mineral basins are near the front line in eastern Ukraine, or in Russian-occupied areas. He has played up the dangers of letting strategic reserves of titanium, tungsten, uranium, graphite and rare earths fall into Russian hands. “If we are talking about a deal, then let’s do a deal, we are only for it,” he said.

He probably did not expect to be confronted with terms normally imposed on aggressor states defeated in war. They are worse than the financial penalties imposed on Germany and Japan after their defeat in 1945.

Both countries were ultimately net recipients of funds from the victorious allies.

A new Versailles

If this draft were accepted, Trump’s demands would amount to a higher share of Ukrainian gross domestic product (GDP) than reparations imposed on Germany at the Versailles Treaty, later whittled down at the London Conference in 1921, and by the Dawes Plan in 1924. At the same time, he seems willing to let Russia off the hook entirely.

Donald Trump told Fox News that Ukraine had “essentially agreed” to hand over $US500 billion.

“They have tremendously valuable land in terms of rare earths, in terms of oil and gas, in terms of other things,” he said.

He warned that Ukraine would be handed to Putin on a plate if it rejected the terms. “They may make a deal. They may not make a deal. They may be Russian someday, or they may not be Russian someday. But I want this money back,” he said.

Trump said the US had spent $US300 billion on the war so far, adding that it would be “stupid” to hand over any more. In fact, the five packages agreed by Congress total $U175 billion, of which $US70 billion was spent in the US on weapons production. Some of it is in the form of humanitarian grants, but much of it is lend-lease money that must be repaid.

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US Republican senator Lindsey Graham suggested at the Munich Security Conference over the weekend that Trump’s demand was a clever ploy to bolster declining popular support for the Ukrainian cause. “He can go to the American people and say, ‘Ukraine is not a burden, it is a benefit,’” he said.

Graham told the Europeans to root hard for the idea because it locks Washington into defending a future settlement. “If we sign this minerals agreement, Putin is screwed because Trump will defend the deal,” he said.

Ukrainian officials had to tiptoe through this minefield at the Munich forum, trying to smile gamely and talking up hopes of a resource deal while at the same pleading that the current text breaches Ukrainian law and needs redrafting. Well, indeed.

Talk of Ukraine’s resource wealth has become surreal. A figure of $US26 trillion is being cast around for combined mineral reserves and hydrocarbons reserves. The sums are make-believe.

Ukraine probably has the largest lithium basin in Europe. But lithium prices have crashed by 88 per cent since the bubble burst in 2022. Large reserves are being discovered all over the world. The McDermitt Caldera in Nevada is thought to be the biggest lithium deposit on the planet with 40 million metric tonnes, alone enough to catapult the US ahead of China.

‘My style of dealmaking is quite simple and straightforward. I aim very high, and then I just keep pushing and pushing and pushing to get what I’m after.’

Donald Trump

The Thacker Pass project will be operational by next year. The value of lithium is in the processing and the downstream industries. Unprocessed rock deposits sitting in Ukraine are all but useless to the US.

It is a similar story for rare earths. They are not rare. Mining companies in the US abandoned the business in the 1990s because profit margins were then too low.

The US government was asleep at the wheel and let this happen, waking up to discover that China has acquired a strategic stranglehold over supplies of critical elements needed for hi-tech and advanced weapons. That problem is being resolved.

Ukraine has cobalt, but most EV batteries now use lithium ferrous phosphate and no longer need cobalt. Furthermore, sodium-ion and sulphur-based batteries will limit the future demand growth for lithium. So will recycling. One could go on. The mineral scarcity story is wildly exaggerated.

As for Ukraine’s shale gas, a) some of the Yuzivska field lies under Putin control, and b) the western Carpathian reserves are in complex geology with high drilling costs, causing Chevron to pull out, just as it did in Poland.

Ukraine has more potential as an exporter of electricity to Europe from renewables and nuclear expansion, but that is not what is on Donald Trump’s mind.

The second violation of Ukraine

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Ukraine cannot possibly meet his $US500 billion demand in any meaningful timeframe, leaving aside the larger matter of whether it is honourable to treat a victim nation in this fashion after it has held the battle line for the liberal democracies at enormous sacrifice for three years.

Who really has a debt to whom, may one ask?

“My style of dealmaking is quite simple and straightforward,” says Trump in his book The Art of the Deal. “I aim very high, and then I just keep pushing and pushing and pushing to get what I’m after.”

In genuine commerce, the other side can usually walk away. Trump’s demand is iron-fist coercion by a neo-imperial power against a weaker nation with its back to the wall, and all for a commodity bonanza that exists chiefly in Trump’s head.

“Often-times the best deal you make is the deal you don’t make,” said Trump, offering another of his pearls.

Zelensky does not have that luxury. He has to pick between the military violation of Ukraine by Putin, and the economic violation of Ukraine by his own ally.

The Telegraph, London

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