By Ian Proud, Responsible Statecraft, 1/24/25

Russia has spent the past five months swallowing up ever bigger tracts of Ukrainian coal, lithium, and uranium in the Donbass. Yet Western politicians still cling to the belief that they will be able to tap these resources to repay Ukraine’s ever mounting pile of debt. This is economic madness.

In the summer of 2024, most Western politico-military commentators were predicting that Russia was focussed on storming the strategically important military hub of Pokrovsk in Donetsk. Russian troops had advanced slowly, inexorably westward in a straight line following the bloody attritional battle for Avdiivka which was captured in February 2024.

But from August, Russian tactics shifted. First from the south of Donetsk they stormed Vuhledar, literally translated as “Gift of Coal,” a site of significant reserves, capturing it on October 1. That opened the way to swallow up large swaths of land in the south. Following the apparent encirclement of Velyka Novosilka in the past two days, one of Ukraine’s three licensed blocks of extractable lithium is now within short reach in Shevchenko.

Russian armed forces skirted Pokrovsk, instead battling through Selydove and in a straight line for about 20 miles, capturing a Uranium mine in a village called Shevchenko (not the same Shevchenko where the lithium is located). In recent weeks, Russian forces have taken Ukraine’s most important mine for coking coal in Pishchane and two related coking coal shafts in Udachne and Kotlyne. Together, these mines alone had produced the coking coal for 65% of Ukraine’s steel production. There are now fears that Ukrainian steel production could plummet to 10% of its prewar level in 2025.

Since President Trump was elected in November, and the prospect of an enforced ceasefire grew brighter, Russia’s advance has progressively accelerated. Today it is on the verge of completing its capture of the coal-rich bastion of Toretsk, the only town on the line of contact that hadn’t moved since 2014.

That’s bad news for Ukraine, not just because of a potential loss of further territory.

Prior to the crisis in Ukraine starting in late 2013, the extractives sector accounted for over a third of total exports, with agricultural products a third of that value. Today, the situation has been flipped, with agriculture by far the largest export sector.

By capturing every coal, uranium, and lithium mine that they can, Russia is cutting off an important source of Ukrainian wealth. Ukraine faces deeper current account deficits as its agriculture sector is unable to make up the difference for lost exports of minerals, especially with President Zelensky wanting to give away Ukrainian grain to Syria.

Fitch ratings has predicted Ukraine will record current account deficits of 6.5% of and 5.7% of GDP respectively in 2024 and 2025.

As I have pointed out before, with Ukraine still cut off from international lending markets because of its junk sovereign credit rating, that means the only way it can make up the difference is foreign aid or loans from foreign governments. With debt now about 100% of GDP, Ukraine has had to dip into the domestic bond market.

However, as Ukrainian banks are largely state owned, that amounts to borrowing from itself. Ukraine’s central bank governor has denied that the country will need to print money in 2025 to keep the lights on. If it does, hyperinflation and a collapse of the hrynia will beckon, rendering Ukraine’s debt impossible to pay, at which point Western governments will need to bail the country out.

Fear not, though, as Western politicians have a cunning plan to repay Ukrainian debt. Sen. Lindsey Graham (R-S.C.) has been outspoken this year in saying that Ukraine could pay back U.S. loans with its mineral wealth. He first raised this in a CBS interview in February 2024 as Congress worked hard to unlock former President Biden’s $61 billion aid package to Ukraine. He repeated this position one month later in Kyiv. Standing beside President Zelensky, he said, “they’re sitting on trillion dollars of minerals that could be good for our economy.”

A month later, Congress passed the long-delayed $61 billion U.S. aid package to Ukraine. That included just $9 billion in forgivable loans, short of the two-thirds Sen. Graham had hinted at in February.

Nonetheless, it marked another step on the road towards shouldering more debt onto Ukraine in the belief that this might one day be repaid in Ukrainian uranium, lithium, and other bountiful minerals. This was solidified by the G7 Extraordinary Revenue Acceleration loan of $50 billion agreed in June 2024, to which the United States contributed $20 billion at the end of 2024.

During this same period, the shift in focus towards Ukraine giving up its natural resources to secure Western aid gathered steam. In October 2024 when President Zelensky unveiled his so-called victory plan, giving up Ukraine’s natural resources became codified. He claimed that Ukraine would sign an agreement with the U.S., EU and others that would allow for use of Ukraine’s natural resources, which were worth “trillions of dollars.”

Just last week, shortly before President Trump’s inauguration, British Prime Minister Keir Starmer penned a “100-year partnership deal” between the United Kingdom and Ukraine. While the document has yet to be made public, 10 Downing Street said that it would cement the UK as “a preferred partner for Ukraine’s energy sector, critical minerals strategy and green steel production.”

US and UK politicians see great potential profit in accessing Ukraine’s wealth when war finally comes to an end, with Forbes Ukraine valuing minerals at $14.8 trillion.

However, just over half of that is located in the four eastern Ukrainian regions that Russia has occupied and where it gains new ground each day.

Back in August, in a typically foul-mouthed tirade, former Russia President Dmitry Medvedev took to his Telegram channel, among other things, to pillory Sen. Graham, who he called a “fat toilet maggot.” He continued, “To get access to the coveted minerals, the Western parasites shamelessly demand that their wards wage war to the last Ukrainian… ‘You’ll have to pay off your debts very soon. Hurry up, dear friends!’”

Leading European politicians still urge Ukraine to continue its war using credit in the hopes it might be repaid with a stock of natural resources that Russia captures with ever greater speed and covetousness. That is the economic equivalent of Russian roulette with a fully-loaded revolver that President Putin is gladly pointing at us.

President Trump’s efforts to end this madness can’t come soon enough.

By Gordon Hahn, Russian & Eurasian Politics, 1/16/25

Westerners are fond of citing a statement falsely attributed to Russian President Vladimir Putin that “Ukraine is not even a state.” This quote is marshaled in order to support the equally false and truly absurd claim that Putin’s decision to undertake his ‘special military operation’ and invade Ukraine on February 24, 2022 was intended to conquer all of Ukraine in an effort to conquer all of the former Soviet states and Russian Imperial territories before moving into Europe. In actuality, the West has treated Ukraine as a less than sovereign, independent state and as a tool – a sacrificial lamb — for the attainment of maximum U.S./Western hegemony in Eurasia by way of NATO expansion. Now, as the fateful and potentially fatal war for Ukraine – the NATO-Russia Ukrainian War – approaches its end game, the statement attributed to Putin may become a simple, if sad, statement of fact. And the wiping of the Ukrainian state off the map of eastern Europe, western Eurasia, and the world is more likely to come as a result of Western actions as it is of Russian forces’ drive westward.  

It is the U.S. and West that drove NATO expansion despite the Ukrainian constitution’s now former clause stipulating the country’s non-bloc, neutral status but repealed by Volodomyr Zelenskiy’s predecessor in Ukraine’s Office of the President, Petro Poroshenko, and despite the Ukrainian population’s divided, if not majority opposition opinion to Ukraine’s membership in NATO.

It is the U.S. and the West that refused to negotiate NATO expansion and a general European security architecture and instead push Ukraine forward to the frontline in NATO’s confrontation with ‘Putin’s Russia’, despite the West’s own claims that Putin and his Russia were dangerous and expansionist.

It is the U.S. and the West that conned Zelenskiy into continuing the war with Russia that Moscow escalated after losing all hope in January 2022 for any negotiations with the West over these issues. Putin opted to engage in coercive diplomacy by initiating the ‘special military operation’ and invading Ukraine and almost simultaneously offering peace talks to Ukraine in February 2022 in order to achieve with Kiev the kind of security agreement that eluded Moscow in relations with the West. The Minsk, then Istanbul talks that resulted reached a preliminary agreement only to see the West scuttle the agreement by refusing to provide the security guarantees envisaged in it any by dispatching then British Premier Boris Johnson to issue the NATO message that Kiev should fight and Washington and Brussels would provide everything Ukraine needed ‘for as long as it takes.’ The Western-Ukrainian relationship that has developed in the course of the war is reminiscent of that of a vassalage—Ukraine being the vassal with little to no sovereignty.

It is the U.S. and the West that have refused to begin peace talks with Moscow or pressure Kiev to do so and instead continuously escalated a war that is attritting Ukraine both in terms of its population and its territory even as Russian forces’ drive westward accelerates with each passing month (as I predicted in January 2024; see https://youtu.be/P_MJi5H6HKU?si=rxRiaE0EglSgbclw at the 1:00:45 mark), despite Putin’s and other top Russian officials’ repeated statements that they are open to any negotiations.  

Now the Ukrainian state’s control over its territories is being whittled away by Russia’s mounting, if cautious offensive. It has been stated by Zelenskiy and Western leaders that Ukrainian forces’ ill-advised, costly, and failed incursion into Russia’s Kursk region in July 2024 provides Kiev with collateral to trade for its Russian-occupied regions. But Russia has stated that no talks with Kiev are possible so long as Ukrainian troops remain on Russian territory, and Russia’s advancing troops in Ukraine are moving deeper into regions beyond the Crimea, Donetsk, Luhansk, Kherson, and Zaporozhia regions Russia has laid claim to and annexed. Thus, rather than Ukraine being able to trade Kursk for one or more of those regions in any future talks, it will be Russia that will be able to demand concessions for the return of regions or parts thereof such as Kharkiv (Kharkov), Sumy, Dnipro (Dnepropetrovsk), Mikolaev, and even eastern Kiev.

Moreover, the danger of Russian forces crossing the Dnieper River into western Ukraine is just over the horizon. So it now is becoming more in NATO’s perceived self-interest in its pursuit of encroachment on Russia’s borders and encircling her to destroy what is Russia’s Ukrainian buffer than it is to preserve any Ukraine that is a non-bloc, neutral state. Russia has repeatedly declared that it is in its self-interestthat Ukraine be a non-bloc, neutral state and never become a member of NATO. This is because Russia prefers a buffer be situated between it and the Western alliance for all the obvious and not so obvious (to many) reasons. Therefore, the party in the NATO-Russia Ukrainian War that is most interested in destroying Ukraine as a state is not Russia but NATO.

The elimination of Ukraine will achieve the key goal that NATO’s expansion to Ukraine has been intended to achieve: NATO’s acquisition of members along all of Russia’s western and southwestern borders (the Transcaucasus). In comparison with having Ukraine as a member-state, Ukraine’s absorption by Russia has only two downsides for Washington and Brussels. First, they will have to forego the control over the Black Sea they coveted as the second goal of NATO expansion, though perhaps Georgia remains an option, however less liable in the wake of the recent elections and failed attempt to repeat the color of ‘rose’ revolution there. Second, there will be a blow to Western prestige in light of its failure to save Ukraine and deal a strategic defeat to Russia.

There are numerous ways in which the West or elements therein can facilitate or bring about Ukraine’s demise. The most likely is another scuttling of peace talks – this time those being worked on by the Trump Administration – forcing Ukraine to continue fighting a losing war of attrition with Russian advancing forces right up to the Polish, Hungarian, and Rumanian borders. This is precisely what hardline former Russian Security Council Secretary and FSB chief Nikolai Patrushev was warning in his much discussed Moskovskii Komsomolets interview. For Trump this will be a soon forgotten political defeat. But many in DC and Brussels will rejoice at the prospect of a long war for Russia that lasts until Putin’s physical or political health fails, sparking a power struggle that might offer the prospect of a Russian collapse on the Soviet model.

A less likely scenario would be the previous one with annexations of Transcarpathian and western provinces of Ukraine by Hungary, Rumania, and Poland added in. Elements in all three of these countries are pushing for returns of traditional national territories given to the USSR’s Ukraine SSR by Joseph Stalin after World War Two. Midwives of Ukraine’s dissolution could also emerge as a result of NATO’s insertion of troops into Ukraine west of the Dnieper, as was proposed by some earlier in the war. Recent talk of British and French ‘peacekeepers’ in Ukraine could perform the same function. Although this variation is unlikely, such a ‘protectorate Ukraine’ could eventually be dissolved and its parts incorporated by its neighbors as noted above.

With Ukraine’s disappearance, the Beltway and Brussels can and will assuage themselves with the knowledge that NATO has reached Russia’s borders in yet another sector and has the option of fomenting Ukrainian separatists inside Russia.

The one thing that would likely trump or delay the abovementioned scenarios, besides Trump and any innovative schemes his team might conjure up, is some form of direct Western intervention in the war on the ground. In this case, there is still no guarantee of Ukraine’s survival as Western and Russian troops rampage through the country in the long war over NATO expansion.