“The signed agreement on the establishment of an investment fund of restoration between the US and Ukraine has caused rapid discussions, but its terms are undoubtedly profitable for Ukraine. From political support to real investments in the mining industry – the agreement is becoming an important step to the restoration of the economy and development of infrastructure of Ukraine, says the founder of the TAS group Sergey Tigipko. Draw up a subscription to 6 forbes numbers […]”, – WRITE: Businessua.com.ua
The signed agreement on the establishment of an investment fund of restoration between the US and Ukraine has caused rapid discussions, but its terms are undoubtedly profitable for Ukraine. From Political support for real investments in the extractive industry – the agreement is an important step towards restoration of the economy and development of infrastructure of Ukraine, says the founder of the TAS group Sergey Tigipko.
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There were many discussions and talk about the “betrayal” of state interests around the signed agreement on the establishment of an investment fund between the United States and Ukraine. Is this document beneficial to Ukraine? Certainly. And that’s why.
Comparing the terms of the Agreement and those that are voiced as the final version, this is a real breakthrough of the negotiation delegation and personally President Vladimir Zelensky.
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Political support. This agreement is a vivid marker not intentions, but the actions of the new US administration against Ukraine. Now support for America of Ukraine in the form of renewal of military and financial assistance has been found and is waiting for ratification of parliaments.
The assistance from the United States agreed and received by Ukraine is no longer transferred to debt status. Prior to that, US President Donald Trump estimated $ 350 billion assistance, while Zelensky voiced $ 100 billion. This is a major victory in the negotiation process.
The US contribution to the new enterprise will be considered only the amounts that will be provided to Ukraine since the signing of the agreement – May 1. In particular, the defense.
These amounts are not grants (as it used to be), but do not have standard loans. Because in the old version of the agreement and in the new basic framework of the document format is the creation of a joint limited liability company.
Therefore, the amounts of future American assistance will have the status, in essence, contributions to the authorized capital of the enterprise. It is very important that such contributions do not lead to an increase in Ukraine’s foreign government debt, but is an investment of the US government in a joint venture with Ukraine.
Deregulation of the industry. Many people do not like the list of measures that are completely or partially exempt from taxation by the Joint Ukrainian-American Fund for the extraction of subsoil.
Ukraine’s extractive industry has long needs deregulation, reduction of tax pressure and simplification of permits. Let this fund and its successful example be the first pilot model, how the extractive industry works, provided that liberal economic reforms.
50% of income is not enough. Many people express the warning today whether it is not enough – 50% of the state budget revenue for the sale of new licenses and new rent for minerals.
For understanding, it is necessary to analyze what the state receives today. The license fee (special permission for subsoil production) is best 20% of rent and 16.7% of VAT. I think that if you look at the business plans of most working mining and processing facilities, in none of them the state has no guaranteed 50% of the revenue. The same agreement will have, and is guaranteed.
It is also a warning that Ukraine will pay 50% of the current rent payments and the cost of licenses to the Fund. Let’s look at the numbers. In the 2024 budget, according to the results of the year, these amounts amount to UAH 70 billion. So, 50% of them are less than $ 1 billion.
What is it compared to the tens of billions of dollars that this fund will receive in the first year from the American partner? Incomparable amounts. And also profitable for us.
The scheme of financing, distribution and reinvestment of profit provided by the agreement is extremely clear and transparent. This does not leave any opportunities for corruption abuse. The state receives its foreign investor – its own.
Reparations of the Russian Federation. I will also answer the warning that this fund can somehow receive income, in particular from the reparations of the Russian Federation.
The agreement clearly states: “In no circumstances, the income agreed with Ukraine will not include: (x) any income received from partnerships in the form of payments or otherwise, and (Y) received from Russia or its authorized persons as a repair for Russia’s invasion of Ukraine.”
Mineral extraction requires large capital investments. Ukraine 33 years of independence has been looking for foreign investors in this sector. Found very little. At the same time, oil and gas production, for example in the last 20 years, has only been reduced (with state -owned companies), despite all our efforts.
Reason? We could not invest enough in this sector, although the share of this activity for investors de facto has always exceeded 50%. And finally, Ukraine has found an “investor” in the face of the US government, who is ready to invest in the intensive development of this sphere, investing tens, and in the future, possibly hundreds of billions of dollars.
This agreement is not just beneficial for Ukraine. This is a great success of Ukrainian diplomacy. I hope it will be ratified by parliaments of both countries as soon as possible.
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