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The US vice-president, J.D. Vance, recently told Fox News that “the very best security guarantee” to prevent Russia from invading Ukraine again was “to give Americans economic upside in the future of Ukraine”.
The implication is that the much-debated minerals deal, in which an investment fund managed by Kyiv and Washington would receive revenue from Ukraine’s natural resources, would create American economic interests in Ukraine. American security interests, it is suggested, could soon follow.
Vance’s comments came with the deal hanging in the balance. A meeting at the White House on February 28, where the deal was expected to be signed, turned into a shouting match between Vance, the US president, Donald Trump, and his Ukrainian counterpart, Volodymyr Zelensky.
Zelensky has since attempted to patch up relations with the Trump administration, announcing that he is ready to sign the deal at “any time and in any convenient format”. And Vance, when asked whether an agreement was still on the table, said Trump “is still committed” to reaching a deal.
Having access to Ukrainian minerals is an important opportunity for America’s missile system electronics and electric vehicle industries. Ukraine is, for example, home to around one-third of all European lithium deposits, the key component in batteries.
This access is particularly important now that China, which currently accounts for a high proportion of certain US mineral imports, has imposed a ban on exporting rare minerals to the US in retaliation for Trump’s tariff policies.
But, while Ukraine’s minerals are tempting to the US and other world powers, a deal with Trump won’t help Ukraine’s security situation.
Trump’s approach has two main flaws. First, research shows that investment typically follows security commitments, not the other way around. Investors seek markets that are stable and protected, rather than hoping their investments create those conditions.
Previous US presidents have touted similar strategies without success. President William Howard Taft (1857-1930) championed “dollar diplomacy” in the early 20th century, promising that American investments would create stability across Latin America by “substituting dollars for bullets”.
The reality proved quite different. Throughout this period, the US frequently used military force to protect oil interests in Latin America. But, because these interventions focused on extraction sites rather than defending entire countries, instability continued elsewhere in the region.
Trump’s “America first” mantra suggests a similar pattern of defending American assets, and not necessarily the countries in which the assets reside.
Second, the overall US commitment to protect American assets abroad is uncertain. The US has, since the end of the cold war, been selective about when and how it uses military force to protect overseas assets.
Since 1991, the US military has intervened to protect American property in only four documented instances: Haiti in 2004, Lebanon in 2006, Egypt in 2011 and Yemen in 2012. These cases involved embassies and other smaller properties during periods of civil unrest, rather than defending economic interests.
Recent presidents, including Trump, have been reluctant to use force to protect threatened American investments. US agribusiness giant Cargill, for example, had to close its operations in Ukraine’s eastern Donetsk region following Russia’s invasion in 2014.
Building state capacity
That said, economic relations with America can indeed bolster a partner state’s security. But my own research shows that this is largely through indirect channels, rather than the threat of military intervention.
For example, US government departments, such as the US patent and trademark office, provide comprehensive training to partner states. Programmes involve training judges, police officers, prosecutors and policymakers to enforce intellectual property protections, administer land registries, combat counterfeiting and develop legal frameworks that protect investments.
This capacity building not only helps American investors in these countries, but also improves the partner state’s overall capacity. More effective and capable bureaucracies are better able to manage and finance their military capabilities.
Following Russia’s 2014 invasion of Ukraine, the US launched the agriculture and rural development support program. The initiative aimed to develop Ukraine’s institutional capacity for managing property rights and attracting diverse investments.
The US Treasury brought in loan advisory firm First Financial Network to help Ukraine navigate its financial crisis after the invasion, while simultaneously building frameworks for foreign investment.
By 2020, this partnership facilitated US investment firm Allrise Capital’s purchase of Odessa’s Chornomorets football stadium. This deal was described by John Morris, the president of First Financial Network, as demonstrating Ukraine’s ability “to sell assets to the international community”.
These efforts did not deter Russia’s full-scale invasion in 2022. But they helped the Ukrainian government implement several administrative reforms in the years leading up to the invasion, including more efficient tax collection and professionalisation of civil servants. The government was better prepared for war than it would otherwise have been.
If the US wants to enhance Ukraine’s security through economic means, the Trump administration would need to make two drastic changes.
First, it would need to reinstate programmes that promote American investment abroad. After assuming office, Trump froze and began dismantling the United States Agency for International Development (USAid). The agency’s capacity-building efforts have security consequences.
Second, for the US to have both an economic and security impact, Trump needs to reassure America’s allies. Assurances are not Trump’s speciality. On February 26, for example, Trump declined to say whether the US would defend Taiwan if it was attacked by China.
Research suggests that investments follow alliances. But markets do not care about agreements alone. They respond to other signals too, like explicit statements of support. These statements of support also help to reassure allies and deter rivals.
Unless Trump changes how he operates on the international stage, the economics of the mineral deal will not help Ukraine’s security situation.
Patrick E. Shea does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
