19 February, 2025
The situation in the Ukraine gets more concerning with each day that passes. I normally try to keep out of commenting on geopolitics but have, in the past, given commentary on the developments in Myanmar and also on the relentless advance of China on its path to Antarctica.
Because of the interconnectivity of various conflicts and pressure points across the world, the Ukraine conflict should be considered as part of a global picture and as such is extremely relevant to New Zealand and Australia.
First of all, a little background about me. I have worked in or visited about 40 countries and, because of my work, have had contact with diplomatic personnel, some at quite high levels. This includes working in Ukraine just after independence in the early 1990s. I still have contacts in Ukraine who keep me appraised of the situation from a Ukrainian point of view.
In a recent speech, the US Secretary of Defence Peter Hegseth referred to the presidents of Russia and Ukraine as Vladimir Putin and Zelensky (by surname only). That one phrase is such a giveaway, in American terms a ‘poker tell’. This gives some idea, without the mask of diplomatic words, what the secretary of defence thinks of President Zelensky.
I have also been talking to acquaintances and Europe, and the UK are in a state of rapid action (panic?) trying to deal with the situation. It is true that most European countries have been underfunding their defence budgets and diverting funds into climate change and social welfare needs. This has been complicated by the drain on the economy and resources of high immigration that has caused huge overexpenditure. As ever, politics is the allocation of scarce resources and this now seems to be out of balance in Europe and the UK.
If we look further into Ukraine’s situation, it is a rich country being a major supplier of wheat and has large reserves of rare metals.
Ukraine is sitting on one of Europe’s largest deposits of critical minerals, including lithium and titanium, much of which is untapped. According to the Institute of Geology, Ukraine possesses rare earth elements such as lanthanum and cerium, used in TVs and lighting; neodymium, used in wind turbines and EV batteries; and erbium and yttrium, whose applications range from nuclear power to lasers. The EU-funded research also indicates that Ukraine has scandium reserves, but detailed data is classified.
Mr Zelensky has been trying to develop these resources, estimated to be worth more than £12 trillion, based on figures provided by Forbes Ukraine, for years.
In 2021, he offered outside investors tax breaks and investment rights to help mine these minerals. These efforts were suspended when the full-scale invasion started a year later.
Anticipating the notoriously transactional Mr Trump might take an interest in this, Mr Zelensky then placed the mining of these minerals into his victory plan, which was drawn up last year.
The minerals are vital for electric vehicles and other clean energy efforts, as well as defence production.
Estimates based on government documents suggest that Ukraine’s resources are also highly varied. Foreign Policy found that Ukraine held “commercially relevant deposits of 117 of the 120 most-used industrial minerals across more than 8,700 surveyed deposits”.
Included in that is half a million tonnes of lithium, none of which has been tapped. This makes Ukraine the largest lithium resource in Europe. (DrLR Cornwall is scheduled to produce 10,000 tonnes a year in the near future).
Ukraine’s reserves of graphite, a key component in electric vehicle batteries and nuclear reactors, represent 20 per cent of global resources. The deposits are in the centre and west.
It is not surprising that Mr Trump appears keen on benefiting from this, especially as China remains a key player in the mining of minerals such as titanium.
But Vladimir Putin’s invasion has not only delayed Ukraine’s plans to mine these minerals, it has also led to much of these resource-rich areas being destroyed and then occupied.
A little over £6 trillion of Ukraine’s mineral resources, which is around 53 per cent of the country’s total, are contained in the four regions Mr Putin illegally annexed in September 2022, and of which his army occupies a considerable swathe.
That includes Luhansk, Donetsk, Zaporizhzhia and Kherson, though Kherson holds little value in terms of minerals.
The Crimean peninsula, illegally annexed and occupied by Mr Putin’s forces in 2014, also holds roughly £165 billion worth of minerals.
The region of Dnipropetrovsk, which borders the largely occupied regions of Donetsk and Zaporizhzhia and sits in the face of an advancing Russian army, contains an additional £2.8 trillion in mineral resources.
Russian difficulties with major military operations seem likely to preclude a serious attempt to take the region but mining operations in the area would be perilous with Moscow’s soldiers so close.
Other ores are well within the sites of Russia’s forces. One lithium ore on the outskirts of a settlement called Shevchenko in Donetsk is less than 10 miles from the town of Velyka Novosilka, recently captured by Mr Putin’s troops.
However, while Ukraine has a highly qualified and relatively inexpensive labour force and developed infrastructure, investors highlight a number of barriers to investment. These include inefficient and complex regulatory processes as well as difficulty accessing geological data and obtaining land plots. Such projects would take years to develop and require considerable up-front investment, they said.
Source the Independent, 19 February 2025.
So Trump is backing both horses. He has probably done a deal with Putin to access the minerals of east Ukraine, or he is threatening and bullying President Zelensky to gain access to the minerals dirt cheap.
This is where the global picture comes into play. Much of the earth’s rare metals are sourced from China and Trump does not want to be dependent on China for access to these and the products in which they are used. If the USA has direct access to the rare metals from a ‘friendly’ source – either Russia or Ukraine – then it can develop its own computer chip industry on a scale to rival Taiwan. Taiwan produces 90 per cent of the world’s chips.
It’s beginning to look like a complex deal for Trump and geopolitics doesn’t cross his mind. It will lessen his desire to protect Taiwan, which is expensive, and increase the propensity for China to invade it. What then happens to the Pacific and China’s relationships with Pacific nations? It will, over the medium term, improve China’s access to Antarctica and its wealth.
By which time Trump will have reduced expenditure and diverted funds into putting the USA into a stronger position to confront China, both militarily and economically.
This ever-strengthening battle for access to resources will expose New Zealand and Australia to the front line of China’s advance. Given the USA’s propensity over the years to dump its allies for short-term gains, what value can be put on alliances with the US in the future? It is too easy to forget that the winner economically from the second world war was the USA whilst the UK and the combatants in Europe were virtually bankrupted. The price of lend lease and USA assistance to the UK was the destruction of the British Empire, removing at one fell swoop the economic power of what had been a major power in the world. The USA had eliminated a potential rival.
These thoughts aren’t just my own but have evolved from discussions with contacts and also academics with whom I have had contact from the peace and conflict studies sector.
Having said that, it is an opportunity for Europe to act as one for a change and use its combined economic and military strengths to forge ahead and reduce its reliance on the USA. It points to greater isolation for the USA. Finally, as an aside, just let Trump go for Greenland and watch Europe’s reactions – it may surprise.
