Raw Material Colony Instead of Reconstruction: Why Our Mineral Resources Are Given Away for a Pittance, While We Are Left with Poisoned Water

⚡ TL;DR (In Short):

• Community funds go offshore: The government takes the last remaining taxes from cities and villages to give 1.9 billion UAH of “live” money to the authorized capital of a closed American fund in Delaware.
• Subsoil for a pittance: The fund gets a monopoly right to extract our strategic resources (lithium, titanium, etc.) and will take 50% of the rent for life. Given the meager tax rates in Ukraine, resources will essentially be exported for free.
• Loss of sovereignty: The government voluntarily allowed the foreign fund to ignore Ukrainian laws. This creates a “state within a state” that is completely exempt from taxes and uncontrolled by either NABU (National Anti-Corruption Bureau) or state auditors.
• Catastrophic consequences: Instead of investments, Ukraine risks turning into a raw material colony with poisoned water, destroyed ecology, and degraded education and healthcare due to a total lack of funding.
• A way out of the abyss: The state and communities must become full-fledged owners — acting as public corporations (Sole Public Law Legal Entity – Economic Entity, or PLLE-EE), ensuring that resources and power work exclusively to create decent living conditions for Ukrainians, not for transnational capital.

Introduction

When you hear news about “billions for reconstruction from international partners,” it seems like big money is about to enter the country, new high-tech factories will open, hundreds of thousands of jobs will appear, and war-drained territorial communities will get a second wind and unprecedented resources for recovery. Subconsciously, we are all waiting for a modern “Marshall Plan,” imagining construction cranes, new bridges, thriving industrial parks, revived science and modern education, state-of-the-art hospitals, and decent pensions. But if you put aside loud political slogans, turn off the televised PR, and carefully read official government documents with a calculator in hand, the reality turns out to be completely different — and much more alarming.

Recently, the Government adopted Resolution No. 202, which finally launches the American-Ukrainian Reconstruction Investment Fund (AURIF). At first glance, it sounds like a diplomatic victory. However, without complex legal and economic terms, let’s break down how this financial mechanism actually works, where exactly your taxes will go, and who will really control the most valuable Ukrainian resources for decades to come.

The Hook: How this affects your wallet and the rights of the territorial community

Currently, local budgets are going through their hardest times, vividly exposing the true nature of the local self-government reform. What was loudly called “decentralization” for years turned out to be more of an illusion on an institutional level — a beautiful facade behind which the central government retained the right to rewrite the rules of the game at any moment. Instead of guaranteed material and financial foundations for independence, territorial communities got a system where the center can take away resources with a single vote. Clear proof: according to the adopted State Budget Laws and amendments to the Budget Code, 64% of the regular Personal Income Tax (PIT) was taken away from territorial communities with the stroke of a pen, 100% of the “military” PIT was completely seized, and reverse subsidies (the hard-earned funds of financially capable communities) were withdrawn.

City mayors and village heads rack their brains every day over where to get money: many don’t even have funds for critical basic needs. The repair of broken roads has stopped, the replacement of old heating mains is postponed, and it takes years to collect money to equip normal, safe shelters in schools and kindergartens. The state throws up its hands and says: “There is no money, every penny goes to state defense, we’ll have to tighten our belts.”

But at the same time, under the new State Budget, Ukraine takes and gives 1.9 billion hryvnias of “live” money from a special fund… straight into the authorized capital of a new American-Ukrainian fund, legally registered in an offshore zone in the state of Delaware (USA). What is 1.9 billion hryvnias for Ukrainian territorial communities? It means hundreds of new school shelters equipped with the latest technology, dozens of state-of-the-art autonomous boiler houses that will save cities in winter, or fully funded local hospitals with new equipment.

In return, the American side can cover its investment contribution not even with “live” money, but through cunning accounting write-offs for military aid provided in the past. An important detail should be recalled: initially, this aid was publicly declared as non-refundable support, as grants for the defense of democracy, and as a US political investment in the global security of the free world. No one warned then that this was a hidden loan secured by Ukrainian subsoil. And now this “free” weapon or equipment is suddenly monetized, capitalized, and transformed into a corporate share that gives foreigners the right to take half of the profits from our strategic deposits for life. This closely resembles a situation where a neighbor helps put out a fire in your house for free, talking about brotherhood and solidarity, but the next morning brings a contract demanding you sign over half of your land plot to him forever. In institutional economics, such schemes have a very specific name — it’s a modern form of neocolonialism or a debt trap, where military and humanitarian support is exchanged for unhindered and perpetual control over another country’s national wealth. Based on this math, a bitter fact becomes obvious: the American side does not seem to plan to bring any real new investments through this Fund at all. Instead, this structure will operate like a massive vacuum cleaner, sucking money and resources out of an already exhausted, war-impoverished Ukraine. That is, your taxes, which your city or village desperately needs today, are right now legally being withdrawn abroad to finance a new financial structure, incomprehensible to the average Ukrainian, which promises us “reconstruction” exclusively with our own money.

The State and the territorial community as public corporations: What a “single entity” means in simple words

To understand the full absurdity of the situation, imagine that the state of Ukraine (as well as your territorial community) is a large public corporation (a Sole Public Law Legal Entity – Economic Entity).

• Shareholders (owners) — this is us, the citizens of Ukraine. It is to us, according to the Constitution, that all the property of these corporations belongs: land, subsoil, infrastructure.
• Public corporations — The State acts as a nationwide corporation operating the country’s strategic assets, while the territorial community is your basic local public corporation that directly manages resources in your territory. Their main difference from a private business is that these corporations are endowed with power. And this power should be used not for maximizing profit for profit’s sake, but for a specific goal — creating safe, comfortable, and decent living conditions for people (providing quality medicine, modern education, reliable social protection, safe infrastructure, and a clean environment).
• Managers — these are the Cabinet of Ministers, mayors, and officials. We temporarily hired them, pay them a substantial salary from our taxes so they can effectively manage these common assets, bring us profit, and protect our interests, directly providing us with decent living conditions. In business, this is called a “fiduciary duty” — to act exclusively for the benefit of the shareholders.

What did our managers do in the case of this Fund? Instead of managing assets in the interests of the shareholders, they took the most valuable thing our public corporations have — strategic mineral resources (lithium, titanium, uranium, graphite, and over 50 other types of critical minerals) — and voluntarily transferred the right to manage them to an external foreign company. It must be clearly understood: lithium is the oil of the 21st century, the foundation for all modern batteries, smartphones, and electric vehicles. Titanium is the backbone of global aviation and the advanced defense industry. These are not just minerals; this is Ukraine’s ticket to the premier league of the global economy.

The state formally remains the owner of this land (so as not to violate the law directly and cause a scandal), but 50% of the profit (rent) from all new deposits will now be taken for life by this foreign fund. Our “managers” actually sidelined the “shareholders” (you and me) from managing their own property and brazenly deprived us of our lawful dividends. If the CEO of a private company did something like this, he would immediately end up in the dock.

What problems were they trying to solve with this fund?

Let’s be objective and try to look at the situation through the Government’s eyes. Why did they do this at all? What was the logic behind this decision?

Official rhetoric often convinces us that such strict centralization is necessary because foreign investors are allegedly “panicked” by our corruption and poor courts. But this is a naive illusion. Large transnational capital is absolutely not afraid to work in countries with weak institutions — on the contrary, it perfectly knows how to use this weakness to extract super-profits. As we mentioned above regarding neocolonialism, the real goal is much deeper — it’s the actual transformation of the country into a raw material colony. The real reasons for creating such a closed extraterritorial fund are much more cynical. First, it is the desire of global players to establish an absolute monopoly. It is more profitable for them to make a behind-the-scenes deal with a few officials and take all strategic assets “wholesale” than to compete fairly in transparent international auctions. And here we must admit a terrible truth: the officials and deputies who legalize these schemes are absolutely indifferent to the future of Ukraine and ordinary Ukrainians. They are solving exclusively their own problems — providing themselves with a political roof, security guarantees, or banal enrichment, easily trading national wealth for this. Second, it is a way to maximize rent extraction. The goal is not protection from “chaos,” but the withdrawal of massive financial flows from Ukrainian taxation, avoiding environmental liability before local communities, and completely blocking access for NABU or the Accounting Chamber. The Government presents this to society as a forced step and a safe “single window” to allegedly attract money into the country quickly.

But the road to economic monopoly is paved with good intentions. Trying to escape internal bureaucracy, the state voluntarily fell into a grandiose institutional trap, creating a “Leviathan” that answers to no one.

Where the new overconcentration of power and monopoly arises

Officials from TV screens reassuringly say: “Don’t worry, we manage the fund on absolutely equal terms — 50/50. Our representatives are there.” But in reality, this is just a mathematical illusion for gullible viewers.

The Fund is created under American law in the form of a Limited Partnership. The laws of the corporate haven of Delaware clearly state that in such a company there are two absolutely unequal roles that cannot be changed by a supervisory board decision:

1. General Partner (American company) — has absolute, monarchical power. It makes ALL operational decisions every day, signs multibillion-dollar contracts, disposes of all property, and solely decides who to grant a license to extract Ukrainian subsoil, and who to refuse.
2. Limited Partner / Passive Partner (Ukraine) — its role under the law is reduced to the status of a “silent wallet.” It simply provides money (our 1.9 billion UAH budget funds) and, under Delaware law, has absolutely no right to interfere in daily management. If the Ukrainian side tries to interfere, it will lose its legal protection.

What do we get as a result? A massive monopoly uncontrolled by anyone in Ukraine. Under the Agreement, this Delaware fund receives so-called “Investment Opportunity Rights” (Right of First Refusal). How does it work? Imagine that a powerful tech giant from France or Germany spent years finding a lithium deposit in Ukraine and wants to build a plant there. But it is obliged to first bring this project to the Fund. And the Fund can simply take it for itself on the same conditions. Because of this, no other serious investor from Europe, Britain, or large Ukrainian businesses will simply come to the country — no one wants to play a game where the rules are written for a single monopolist.

In addition, this Fund is 100% exempt from paying any taxes in Ukraine. And most importantly — its activities basically cannot be audited by NABU detectives or auditors of our Accounting Chamber. The concentration of power has indeed reduced our usual bureaucratic chaos, but instead created a single, absolutely closed offshore center for collecting our national rent, which simply does not obey Ukrainian society.

Constitutional boundary: Can managers rewrite the rules?

Our Constitution (Article 13) very clearly, in black and white, states: the subsoil belongs to the Ukrainian people. This is the supreme law. But the Agreement on the Fund signed by the Government contains one extremely dangerous legal clause — the so-called “stabilization clause.”

It explicitly says: if any laws of Ukraine contradict this Agreement, the Agreement applies, not the laws. Let’s imagine a situation: tomorrow the Verkhovna Rada sees that the ecology is deteriorating and adopts a new, stricter environmental protection law or increases rent payments for all extractive companies. What will the Fund do? It will simply pull out this Agreement and say: “Your new laws do not apply to us, we work according to the old rules, because you yourselves signed this.”

From a legal and international point of view, this is an actual loss of state sovereignty. After all, a basic feature of an independent state is the exclusive right of its parliament to establish and change laws on its territory to protect the interests of society. When a state voluntarily agrees to “freeze” its legislation for a separate foreign structure, it creates an artificial enclave. The strategic resource physically lies in the Ukrainian earth, but legally, environmentally, and financially it is completely removed from the control of the Ukrainian people.

This means that our hired “managers” (the Government) signed a contract in which they voluntarily allowed an external foreign partner to completely ignore the charter of our public corporation (the Constitution), which was written by the “shareholders” (the people) themselves. From the point of view of legal assessment, this has the signs of violating several basic articles of the Constitution of Ukraine at once: Article 13 (which guarantees that the subsoil belongs exclusively to the people, not to foreign structures), Article 5 (which prohibits the usurpation of power and delegation of sovereignty), and Article 19 (which directly obliges officials to act exclusively within the laws of Ukraine, and not refuse to execute them through private contracts). This is a direct, unprecedented mixing of authoritative and economic functions, when instead of using the power granted to them to ensure the well-being of citizens, officials artificially create a “state within a state” and voluntarily renounce the operation of their own sovereign laws on their own territory.

Long-term economic scenario: What happens next?

If this unbalanced model starts working in its current form and is not strictly revised, the long-term economic and social consequences for our country will be extremely dire. This is a classic scenario of a so-called “extractive” economy:

• Poverty and ecological disaster for territorial communities on the ground. Imagine that a giant titanium or uranium quarry is being dug in your territorial community in the Kirovohrad or Dnipropetrovsk region. The ecology is irreparably ruined, radiation levels may fluctuate, toxic dust flies onto houses and vegetable gardens, and local roads turn into unnavigable dirt tracks due to the constant movement of heavy trucks with ore. But the fair compensation money from the rent does not go to the budget of your territorial community to build a new modern hospital or restore the road. Moreover, one must understand the bitter reality: in Ukraine, the basic royalty rate for extracting most strategic metals (such as titanium, lithium, uranium) according to the Tax Code is only a meager 5–6.25%. And worst of all, this percentage is historically calculated not from the real market value of the resource on global exchanges, but from the artificially underestimated internal cost of its extraction. As a result, for the extraction of these valuable mineral resources, the state receives meager amounts into the budget (only about 1–1.5 billion hryvnias a year for the whole country), which is less than 1% of their real global value. And given the tax privileges of the Fund, this will lead to the most valuable subsoil simply being exported abroad practically for free. And even 50% of those pathetic rent leftovers will automatically be taken by Kyiv and immediately sent to Delaware. After the extraction is completed, the local territorial community will be left with only a dead lunar landscape, destroyed groundwater, and diseases, while all the multi-billion dollar profits will settle forever in accounts across the ocean.
• An avalanche of destructive international courts (The MFN Trap). Since our Government granted the American fund a 100% exemption from all duties and taxes, major investors from the EU, China, or the Middle East will not simply let this go. According to the rules of the World Trade Organization (WTO) and dozens of international treaties on “Most-Favored-Nation” treatment, they will immediately go to international arbitrations in Washington or Stockholm. They will demand the same zero taxes for their business in Ukraine, citing discrimination. And international legal practice shows: Ukraine is guaranteed to lose these courts. We will have to pay billions of dollars in compensation from our already hole-ridden state budget.
• A raw material appendage forever. The Agreement (specifically its 8th article) gives the USA a priority right to buy out our valuable minerals in raw form. The difference between selling raw lithium ore, which has just been pulled out of the ground, and selling a finished modern battery is thousands of percent of added value. That is, instead of forcing investors to build high-tech factories for the production of batteries or complex electronics right here in Ukraine (creating prestigious, high-paying jobs for Ukrainians and stimulating science), we will simply dig up dirty ore and send it abroad for a pittance. In such an economic model, modern education and science become simply unnecessary and will be finally destroyed due to a lack of funding — because engineers or scientists are not needed for rough work in quarries. Along with them, due to a lack of taxes, free healthcare will degrade and disappear, and decent pensions will have to be forgotten forever. Instead, we will get a terrible ecology: for example, the barbaric extraction of the same lithium without modern processing technologies will guaranteed lead to the poisoning and critical depletion of groundwater. With our own hands, we will ensure the development of other economies, forever consolidating Ukraine’s status as a poor, ecologically destroyed raw material colony with a sick population.

Clear conclusion: We don’t need such a “company”. It’s time to become full-fledged owners

This article in no way calls for abandoning the strategic partnership with the USA or other allies. But it must be stated directly: we absolutely do not need such a foreign “company” or fund, whose structure is from the very beginning geared toward the neocolonial pumping out of our resources, the loss of sovereignty, and the destruction of our future. We do not need external “managers” who will export our subsoil for a pittance, leaving us with poisoned water, degraded medicine, and zero funds for education and pensions.

The only real way out of this economic and institutional abyss is the full establishment of the state and each territorial community as a Sole Public Law Legal Entity – Economic Entity (PLLE-EE).

What does this mean in practice for our recovery?

1. Return of economic agency. The state and communities, as PLLE-EEs, do not hand over strategic asset management to Delaware or any other offshore zones. They act as full-fledged, strong partners who dictate the terms: “Do you want our lithium or titanium? Build deep processing plants here in Ukraine, pay real rent and taxes to our budgets.”
2. The goal is living conditions, not someone else’s profit. All money earned by the joint public corporation (PLLE-EE) must be specifically directed toward creating decent living conditions for the “shareholders” (citizens). This means direct funding for modern education, reliable healthcare, payment of decent pensions, and ensuring strict environmental control so that our children drink clean water, not toxic waste from quarries.
3. Strict control over “managers”. Officials, ministers, and deputies are just temporarily hired personnel of our PLLE-EE. They have no right to arbitrarily dispose of or give away our property to solve their personal problems or political interests. Any agreements that limit the operation of Ukrainian laws and give rent abroad must be treated as a direct betrayal of the interests of the corporation and the people.

If the “shareholders” (conscious citizens and territorial communities) do not realize right now that they are full-fledged owners and do not force the PLLE-EE mechanism to work, then this large public corporation called “Ukraine” will simply disappear as an independent player. It will be dismantled for parts by foreign funds with the tacit consent of corrupt “management.” And from this “partnership,” Ukrainians will be left with only massive external debts, destroyed ecology, broken roads, and an exhausted, devastated land with no future.

📚 Sources:

1. Morgun V. V. Privatization of public functions: legal and economic analysis of risks for territorial communities. // European Perspectives. 2026. No. 1. Access mode: https://ep.unesco-socio.in.ua/archive/2026-1/ (Scientific substantiation of the threats of turning public assets into an instrument of private rent, corporate “capture” of communities, and social degradation).
2. Morgun V. V. Three dimensions of law: Substantiation of the three-sector model of legal entities. // BULLETIN OF MARIUPOL STATE UNIVERSITY SERIES: LAW, COLLECTION OF SCIENTIFIC WORKS. ISSUE 30, Kyiv 2025. Access mode: https://visnyk.mu.edu.ua/index.php/pravo/issue/view/154/147 (Conceptual proof of the necessity to implement the doctrine of “Sole Public Law Legal Entity – Economic Entity” (PLLE-EE) to protect the sovereignty of territorial communities and the state).
3. Resolution of the Cabinet of Ministers of Ukraine No. 202 — “On the establishment of the American-Ukrainian Reconstruction Investment Fund” (and accompanying documents regarding the memorandum and charter of the Fund). Access mode: https://zakon.rada.gov.ua/laws/show/202-2024-%D0%BF
4. Constitution of Ukraine — Article 13 (on subsoil as the property of the Ukrainian people), Article 5 (on the people as the sole source of power and sovereignty), and Article 19 (on the obligation of officials to act exclusively within the laws of Ukraine). Access mode: https://zakon.rada.gov.ua/laws/show/254%D0%BA/96-%D0%B2%D1%80
5. Budget Code of Ukraine and Laws of Ukraine “On the State Budget” — regarding the mechanisms for withdrawing “military” and regular PIT, canceling reverse subsidies for financially capable territorial communities, and allocating 1.9 billion UAH of budget funds to create special funds. Access mode: https://zakon.rada.gov.ua/laws/show/2456-17
6. Tax Code of Ukraine (Section IX. Royalty payment) — Articles 252 and related, which regulate the bases and taxation rates (5–6.25%) for the extraction of metal ores (titanium, lithium, uranium, etc.). Access mode: https://zakon.rada.gov.ua/laws/show/2755-17
7. Delaware Revised Uniform Limited Partnership Act — § 17-303 and § 17-403, which define the absolute power of the General Partner and the complete lack of operational authority and voting rights in management for the Limited Partner. Access mode: https://delcode.delaware.gov/title6/c017/