This is, excuse me, a complete disaster.
I’ve actually gotten my hands on the full text of the agreement between the USA and Ukraine.
It’s a 55-page document prepared by the USA and sent to Ukraine.
To describe it in simple terms:
- despite its name, it is more of an instrument for neo-colonial enrichment of the USA at the expense of Ukraine, which is destroyed but rich in resources
- the open part of the agreement does not mention any plans for the USA to invest its money in Ukraine
- The fund is “filled” with Ukraine’s unjustified debt, which the USA has presented for repayment (details are provided in the annexes to the agreement)
- Further filling of the fund is done at the expense of revenues from all resource and infrastructure projects that would have previously been directed to the budget. According to the agreement, if we sign it, 50% of such revenues will go to the fund
- Only after the fund receives cash from the Ukrainian side, it can invest in selected projects
- Based on the text, I didn’t see that these might be technological projects or projects with high added value. So far, I see that it’s aimed at stimulating the purely raw material model of Ukraine’s economic development. And this means further impoverishment of the people.
It is important to note that signing this agreement contradicts the Constitution of Ukraine and it cannot even be ratified by Parliament.
But if it happens – there will be a rebellion. Not the Russian “senseless and ruthless,” but the Ukrainian one (I won’t detail the differences, you know them yourselves).
Also, it is important that there has been no official reaction from the Ukrainian side yet, and our counter-proposal may differ significantly.
Below is a brief analysis:
The agreement on the Investment Fund for the Reconstruction of the USA and Ukraine (hereinafter referred to as the Fund) is a partnership (!) agreement with limited liability, concluded between the General Partner (a limited liability company in Delaware), the U.S. International Development Finance Corporation (DFC), and the Government of Ukraine, among other limited partners listed in Annex I (I don’t yet have the text of the annex).
The purpose of the Fund is to support (!) the reconstruction of Ukraine after the full-scale Russian invasion in February 2022, focusing on investments in projects related to natural resources and infrastructure, such as minerals, oil, gas, ports, and more.
Key objectives of the Fund
The Fund aims to support the reconstruction of Ukraine after the full-scale Russian invasion in February 2022, focusing on creating conditions for a free, sovereign, and secure Ukraine.
The main objectives include:
- Promoting economic development through investments in projects related to natural resources (minerals, oil, gas) and infrastructure (ports, transport networks).
- Ensuring that states or individuals who acted against Ukraine during the conflict do not benefit from its reconstruction, highlighting the principle of fairness.
- Recognizing Ukraine’s historical (!) contribution to international security, particularly its voluntary renunciation of the third-largest nuclear arsenal in the world, as a basis for further support.
- Creating a sustainable investment instrument that would manage operations, distribute profits and losses, and define the rights and obligations of partners.
- Reinvesting (!) 100% of the profits from the Fund’s projects and royalties into new “Acceptable Projects” to ensure long-term sustainability.
(At first glance, these objectives) reflect a strategic approach to Ukraine’s reconstruction, with an emphasis on economic stability and international cooperation.
Key provisions and terms
The Fund is structured as a limited partnership under Delaware state law, USA, with the following key provisions:
Partnership structure
- General Partner: A limited liability company registered in Delaware, responsible for managing operations.
- Limited Partners: Include DFC, the Government of Ukraine, and others listed in Annex I. Each partner holds units, which are divided into three classes:
Class A Units: Preferred units held by DFC, with the right to first priority in the distribution of profits.
Class B Units: Common units held by Ukraine and potentially DFC, with the right to distribution after Class A units have been satisfied.
Class C Units: “Golden shares” held by DFC, with no economic rights but with management and control rights.
Partner contributions
DFC contribution:
- Financial and material support provided by the USA to Ukraine after the invasion, assessed in Annex I. This contribution is considered a capital contribution, and DFC receives Class A and Class C units.
(They monetize all aid to Ukraine, including loans and grants, and consider this as a contribution to the fund as an unconditional debt of Ukraine (!))
Ukraine’s contribution:
- Royalties that grant the Fund the right to 50% of the income from licenses and investments in natural resources and infrastructure, defined as “Agreed Ukraine Income.” This right is perpetual, and Ukraine receives Class B units.
Investment strategy
The Fund invests in “Acceptable Projects” as defined in Annex II (which I don’t have yet), including:
- Projects in the sectors of minerals, oil, gas, ports, and other infrastructure.
- Ukraine has a right of first offer for all natural resource and infrastructure projects (except those specified in Annex III), meaning it must offer them to the Fund before other alternatives.
- The process includes screening, negotiations, due diligence, approval by the Investment Committee, execution, and monitoring, with a focus on risk assessment and compliance with standards.
- 100% of the profits from Fund projects and royalties are reinvested into new projects, reducing immediate distribution to partners.
Profit distribution
Profits are defined as taxable income, adjusted for tax and economic realities, with the following distribution:
- First, Class A units (DFC) receive the return of their contribution plus 4% annual interest, ensuring priority access to funds.
- Then, Class B units (Ukraine) receive the remaining profits, if any, after reinvestment.
- Class C units (DFC) have no economic rights, only management rights. The reinvestment of 100% of the profits from Fund projects and royalties means that immediate distribution to partners is limited, and Ukraine’s return may be delayed.
Management and control
- The Fund is managed by the General Partner, under the supervision of a Board of Directors, to which Ukraine has the right to appoint two representatives.
- DFC has significant influence through Class C units, which grant management rights, but Ukraine has some influence through its representatives on the Board.
That’s the gist of it.
But the document also contains many legal nuances.
Now about the risks for Ukraine:
- Financial losses: The loss of 50% of revenue (!) from licenses and investments in the long term could limit Ukraine’s financial resources, especially if these revenues are substantial.
“Agreed Ukraine’s revenue” is defined as 50% of revenue from mining licenses, operations, or the use of relevant natural resources and infrastructure, as well as from distributions related to investments after the agreement’s effective date. - Also, on the amount of “assets” of the US, which are unfounded debt obligations of Ukraine, 4% per year is charged in favor of the US. Conditionally, this is +$6 billion per year with an outstanding debt of $150 billion.
- Dependence (!) on the Fund: If the investments do not meet expectations, it could result in lower returns or losses, which would impact economic recovery.
- DFC Control: Significant influence from DFC through preferential rights and management could lead to conflicts of interest, especially if the Fund’s decisions do not align with Ukraine’s priorities.
- Legal risks: The agreement is governed by the laws of the state of New York, and disputes are resolved in New York courts, which could complicate Ukraine’s defense of its interests in the international context.
- Business risks: The Fund’s focus on certain sectors (minerals, infrastructure) may not cover all of Ukraine’s needs, leaving other industries unsupported (hello to the new African country without advanced technologies, space, or aircraft manufacturing…).
Opportunities for Ukraine may also include:
- Access to funding: The Fund provides significant (details are not available yet) investments for the restoration of critical infrastructure, which is vital after the war, especially in sectors that contribute to economic growth.
- International cooperation: Partnership with DFC brings expertise, technical assistance, and support, which can improve project management and attract additional resources.
- If the projects are successful, Ukraine could receive profits through its Class B units, though this depends on reinvestment and the overall performance of the Fund.
Now, the most interesting part.
Some have started comparing this agreement to the Marshall Plan. They are very different:
- The Marshall Plan (1948–1952) was a program of direct financial assistance from the US to rebuild Europe after World War II, with a budget of about $13.3 billion (equivalent to approximately $150 billion in 2025, accounting for inflation).
- Its goals included economic recovery, preventing the spread of communism, and promoting cooperation among European countries.
The structural difference is significant:
- The Marshall Plan was a grant-based program, while the Fund is an investment instrument (which is based on unfounded debt and the extraction of resources from Ukraine), where both parties share the risks and profits. This creates not opportunities for Ukraine, but risks (loss of income due to royalties).
This is the analysis that has been made.
What’s next?
Next, the Ukrainian side must prepare and present its own version of the agreement with benefits for the Ukrainian people.
And Ukrainians must not remain silent (!) and should express their stance on the disposal of their assets, as minerals and infrastructure are the common property of the citizens of Ukraine, which are being taken from us.
More precisely, the income from their use is being taken without any investment guarantees or safety for us.
Read, draw conclusions, and share!
Anatoliy Amelin
Ukraine Front Lines
Tags:
security guarantees Ukraine USA