The Law of Treaties and Ukraine’s Resource Curse

The spectacle around their White House meeting on Friday, 28 February, between Donald Trump and Volodymyr Zelenskyy was and is widely reported. The meeting was supposed to peak in the signature of the resources deal between the two countries. Even after the public fallout, this deal is not off the table and the Ukrainian president is still ready to sign the deal. There are many things to be said about the fateful relationship between the new US President and his Ukrainian counterpart. The first impeachment of Donald Trump was based on a “perfect call” between these two heads of state. On 19 February 2025, not a month into his second term, Trump called Zelenskyy a “dictator”, allegedly in response to an American request: The US demanded a $500 billion share as a quasi-payment for past aid in Ukraine’s war efforts. Just eight days later the American President couldn’t believe to have insulted his Ukrainian counterpart. And now we saw the attempt to publicly humiliate the Ukrainian president.

The borderline schizophrenic behavior by the American president may be attributed to diplomatic developments: On February 25, 2025, the US and Ukrainian governments drafted a deal that was essentially demanded by the US from the war-torn country. President Trump wanted US taxpayers to “get their money back“ for the support that Ukraine had received in the past. In return, Ukraine would engage with the US in a shared fund administering the profits from extracted natural resources in Ukraine.

This blogpost serves as an initial guide to the short treaty-to-be, titled “The Bilateral Agreement Establishing Terms and Conditions for a Reconstruction Investment Fund,” or for the sake of this blog post, BARIF. It will explain its contents and contextualize it within the international legal framework. The text of the deal has been reported, but not officially confirmed. Even if the actual wording differs from what is referred to here, two major themes of contention will remain unchanged. Namely, Ukraine’s sovereignty over its resources and the law of treaties. In addition, the instance may serve as an example to illustrate the current development towards a more authoritarian international law (here and here).

BARIF: Agreement to Agree?

The treaty consists of a handful of preambular paragraphs and eleven substantive points. These focus primarily on establishing a fund, which is to be under joint ownership and management by the signatories (Point 1). Its mandate is to “collect and reinvest revenues contributed to the Fund” (Point 2). These contributions will come from “the future monetization of all relevant Ukrainian government-owned natural resource assets,” meaning that 50 percent of all respective revenues collected by Ukraine will be transferred to the fund (Points 2 & 3). Specifically, the parties define “natural resource assets” as “deposits of minerals, hydrocarbons, oil, natural gas, and other extractable materials, as well as other infrastructure relevant to natural resource assets (such as liquefied natural gas terminals and port infrastructure)” (Point 3). The treaty will apply only to future projects (Point 3).

The fund itself will not collect these resources, which is a little surprising. Reportedly, the USA administration has an interest in Ukrainian „deposits of critical elements and minerals, including lithium and titanium, as well as sizeable coal, gas, oil and uranium deposits (…) worth billions of dollars.” More details are to be fleshed-out in a subsequent “Fund Agreement” – critically also regarding how revenues collected by the Fund will be distributed. The BARIF only stipulates that contributions will be reinvested “to promote the safety, security, and prosperity of Ukraine” (Point 3). Given that, the Fund Agreement will most likely contain this core and most challenging provision.

In short, the Fund will collect profits from the extractive industries sector and distribute them among the signatories. It stands to reason that funds distributed directly to Ukraine will be used to pay for American military aid – ultimately benefiting American interests.

The agreement also contains multiple vague and legally ambiguous provisions. Determining what “revenues” or “infrastructure relevant to natural resources” means will be a task for legal experts. The significance of the “commercial nature” of the Fund Agreement and its activities (Point 7) also raises questions. Similarly, the reservation regarding “extent permissible under applicable US law” is rather vague. There are other intriguing aspects of the agreement, such as dispute settlement (Point 7), that warrant further examination.

Perhaps the most glaring omission from the BARIF is the lack of any security guarantees for Ukraine: neither additional weapons or military aid, nor transfers of more funds or assurances that the US stands by Ukraine, can be found within the treaty. The only sentence hinting at Ukraine’s vital interests appears almost at the very end of the text: “The Government of the United States of America supports Ukraine’s efforts to obtain security guarantees needed to establish lasting peace.” This statement is so weak that it could have been excluded without losing anything significant. However, there is a promise by the US to “maintain a long-term financial commitment to developing a stable and economically prosperous Ukraine” (Point 4). Nonetheless, the most recent behavior by the US leadership leaves doubts about their eagerness to fulfill this treaty provision.

In other words, the BARIF is little more than an „agreement to agree“ riddled with ambiguity. While Ukraine is explicitly obligated to contribute to the fund, the United States’ commitments remain ambiguous. We need to pay close attention to the terms of the subsequent Fund Agreement, as that is where the power imbalance will fully manifest. How Washington will profit from Ukraine’s difficult situation will be outlined there. And will the US provide anything in return for Ukraine?

National Sovereignty over Natural Resources

A state is essentially free to engage in trade with other states, given the absence of treaty obligations, as stated by the ICJ. This holds especially true for natural resources: Ukraine may freely dispose of its natural wealth and resources, including trade with the USA and sharing revenues earned. After all, Article 1(1) ICCPR/ICESR complements the right to self-determination with a second paragraph stating: “All peoples may freely dispose of their natural wealth and resources without prejudice to any obligations arising out of international economic cooperation based on mutual benefit principles and international law. (…)” A few years ahead of the ICCPR/ICESR, UNGA Resolution 1803 (XVII) emphasized permanent sovereignty over natural resources. Both stipulations must be viewed within a decolonization context alongside concerns about what is known as the resource curse.

The resource curse generally describes the dilemma faced by states rich in natural resources that do not benefit from their wealth. Particularly, populations often see no advantages from extractive industries: poverty persists; stable democratic institutions fail to emerge; often only a small domestic elite profits from transferring raw materials abroad while failing to develop secondary sectors related to extraction, which is historically observed mostly in African and Asian states.

The example behind those rules is a newly independent nation that remains contractually obligated or factually pressured into trading with a Western company extracting resources for exportation. International law was intended to shield young states and their populations from such inclinations while helping them benefit from their natural wealth.

Ukraine’s situation differs from this scenario; however – as will be shown in the next part of this blog post – the country’s natural wealth seems more like a curse than a blessing.

The Law of Treaties

The BARIF constitutes an international treaty; this much is clear since its final point explicitly states its binding nature while establishing an obligation for ratification according to domestic procedures. This means that treaty law applies to BARIF; namely, the Vienna Convention on Law of Treaties (VCLT) binds Ukraine as a successor state of the Soviet Union. The US has signed but not ratified this treaty.

In reality, we see both signatories within broader diplomatic and political contexts. More importantly: Ukraine is defending itself against an unlawful attack by Russia. Regardless of how much help or share thereof the American government provides – US military aid remains vital for the Ukrainian government’s survival. In other words, without goodwill or equipment from the United States, Ukraine’s existence as an independent sovereign state faces serious threats – a claim even made by the new US administration (State and Defense Departments). The US President himself stated: “They’re very brave…[but] without the United States and its money and its military equipment, this war would have been over in a very short period of time”.

Treaties Signed under Coercion

Article 52 VCLT seems applicable here: “A treaty is void if its conclusion has been procured by the threat or use of force in violation of the principles of international law embodied in the Charter of the United Nations.” In 1966, the ILC noted that it considered recent “developments [to] justify the conclusion that the invalidity of a treaty procured by the illegal threat or use of force is a principle which is lex lata in the international law of today”, in essence confirming the customary character of the rule.

One could argue that Ukraine faces unlawful aggression from Russia which gets exploited by the American government, which is fully aware of the relevance the aid has on Ukrainian self-defense. Meaning, while the US does not itself unlawfully use force against Ukraine, it benefits from unlawful Russian aggression by utilizing pressure upon Kyiv to profit itself. After all, President Trump demanded taxpayers get their money back with an unspecified “plus”. This clearly indicates the treaty is not merely a repayment situation, but an opportunity to profit from a violation of the prohibition of the use of force. International law typically demands no state benefits from such scenarios.

That is not to imply that uneven treaties are regularly against international law. Sometimes one state gains more from a treaty than its partners. In the present case, it seems as if the Ukrainian government planted the idea of a resource deal in Trump’s head. However, where the use of force by another actor is utilized for another state’s advantage, serious doubts arise about the lawfulness.

Rumors about the “close relationship” between the US President and the Russian government are well known, though there is no definitive proof to support them. Meanwhile, proven links between Trump campaign officials and Russia in the Mueller-Report have only fueled further uncertainty. Not only conspiracy theorists may use those rumors to strengthen the point that the US government is in league with Russia and exercising pressure against Ukraine to come to terms with the present deal.

The humiliating state visit on February 28th, has not led Ukraine to back down from the deal. To the contrary, the state is still willing to sign the deal. It speaks volumes that the orchestrated escalation still does not make Kyiv question the treaty-to-be.

This aspect of the treaty needs a more elaborated analysis than this blogpost can give. It shows, however, that the geopolitical situation in which Ukraine finds itself is like the traditional understanding of the resource curse. A state with vast natural resources and in a dire situation faces a partner that has economic interests and is ready to use the vulnerabilities. The power imbalance that Article 52 VCLT envisages is present with our example. Consequently, “Der Spiegel” characterizes the treaty as blackmail. The BARIF as reported last week raises serious questions of general international law – questions of Economic Law and European Law, in particular, the “Memorandum of Understanding between the European Union and Ukraine on a Strategic Partnership on Raw Materials“, would exacerbate the challenges. It will be shown whether the BARIF is a quid pro quo or the newest manifestation of the resource curse.

More generally, this case may illustrate how the new US administration approaches international law: cloaking attempts to advance their own interests without regard for legal norms in the language and forms of international law. Hopefully, the BARIF model will not shape international resource law in the future.