Implications of Trump's Unilateral and unprompted concessions to Russia. Part II: Impact on and response from Ukraine and China enters the fray.

Impact on and likely response from Ukraine.

• Trump’s Concessions: Domestic Implications for Ukraine.

• Yesterday, we analyzed how Trump’s unilateral concessions to Russia have shaped Putin’s incentives, potentially leading to further war delays and encouraging maximalist demands from the Kremlin.

• Today, we shift our focus to two other key stakeholders - Europe and Ukraine, starting with Ukraine’s domestic situation and how Trump’s approach is impacting Kyiv.

• 1. Ukrainian Disillusionment with Trump’s Strategy.

• Many Ukrainians initially believed that Trump’s self-proclaimed negotiating skills would mean he would extract a higher price from Russia in exchange for ending the war.

• Instead, what they are witnessing is unexpected unilateral concessions—not only weakening Ukraine’s leverage but also signaling that Washington is not prioritizing Ukraine’s interests in the negotiation process.

• This disillusionment is growing, as Ukrainians recognize that Trump’s approach is not necessarily about forcing Russia to pay a cost but rather about pressuring Ukraine itself to make sacrifices (at least thus far).

• 2. Trump’s Shift: Extracting Maximum Wealth from Ukraine.

• While Trump has been slow to demand anything from Putin, he has been aggressive in his demands on Ukraine—seeking to justify continued U.S. support by forcing Kyiv into economically painful concessions.

• The most blatant example of this was Scott Bessent’s visit to Ukraine, during which he reportedly demanded that Zelensky sign over revenues from half of Ukraine’s mineral reserves (worth approximately around $500bn), particularly rare earth minerals, to the U.S. in exchange for continued support.

• Zelensky, naturally refused to sign this one-sided agreement.

• (side note: not only full-on Mafia style, but legally clueless too. How could they expect that Ukraine’s President would even have legal authority to commit this enormous natural wealth to a foreign state without proper legislative authorization? This is not a car sale contract..)

• There were other onerous requirements too, and the total package proposed by the Trump admin was quite extractive and colonial in its nature.

• Here is how UK’s The Telegraph put it:

  ‘‘If this draft were accepted, Trump’s demands would amount to a higher share of Ukrainian GDP than reparations imposed on Germany at the Versailles Treaty"

• This represents a fundamental shift: rather than securing a strong deal with Russia, Trump is squeezing Ukraine for economic benefits while giving Moscow strategic leeway.

• 3. Zelensky’s Pragmatism: Navigating Trump’s Demands.

• Previously, we discussed how Zelensky’s pragmatism—his willingness to frame U.S. aid as a mutually beneficial deal—gave him an advantage in communicating with Trump.

• This remains true, as Zelensky understands Trump’s transactional mindset and has worked to present Ukrainian cooperation as a net positive for the U.S.

• Recall how Zelensky’s initial response to minerals/rare earths proposal was ‘‘let’s do a deal’’.

• However, this strategy is being tested, as Trump appears far more willing to extract economic concessions from a war-ravaged Ukraine than to demand major compromises from Putin.

• Trump is giving unilateral concessions and allowing Putin to dictate the pace of negotiations.

• Meanwhile with Ukraine, Trump is demanding high-value economic concessions, particularly in the form of resource transfers, as a precondition for continued U.S. support.

• This imbalance in Trump’s approach is not lost on Kyiv, and it raises critical questions about Ukraine’s ability to secure a sustainable post-war future under Trump’s negotiation framework.

• Indeed, the sheer mafia-style attitude was on full display when National Security Advisor Michael Waltz warned Ukraine and suggested (in an advice-giving manner) that Ukrainians would be very “wise” to agree to this deal.

• This is something straight out of a Godfather movie, a deal that they can’t refuse.

• Yes, you heard that right: the U.S. administration is treating Ukraine, a war-torn country, weak on its knees, bleeding after three years of war, as a target for a hostile takeover of its resources.

Likely outcomes in the short-to-medium term.

• Obviously, implications for Ukraine will be immense, but three likely short-to-medium term outcomes are in play.

• 1) Seeking to overcompensate, Ukraine may push back even harder.

• First, this will incentivize Zelensky to push back hard and assert Ukraine’s dominance that nothing can be negotiated without Ukraine.

• Indeed, Zelensky has so far responded correctly to U.S. statements by giving a speech calling that Europe needs to stand up and create its own army and that the U.S. is no longer reliable in the long-term against Russia.

• He has also rejected the validity/applicability of any negotiated agreements arising from the U.S. - Russia meeting in Saudi Arabia tomorrow.

• Now, perversely for Trump, Ukraine may push back so hard that they may additionally create new conditions, new maximalist objectives as a negotiation plot, just to rebalance the past week’s efforts to sideline it.

• Indeed, to assert its dominance and Ukraine remaining in control, Kyiv may add a few new maximalist objectives to show that nothing can be done without it and that the rest of the Ukraine-supporting forces should be happy that Ukraine would even consider negotiations in these terms, let alone the weak terms proposed by the Trump administration.

• So, perversely for Trump, this could actually incentivize Ukraine to push back too hard and further delay a potential deal with Russia.

• 2. Mixed reactions from Domestic political stakeholders in Ukraine.

• Secondly, the impact on Ukraine’s domestic politics is so far unclear.

• On the one hand, there will be forces rallying around the government in Kyiv due to the perception that Ukrainians are being left alone to fend for themselves.

• And Zelensky’s vigorous response and assertion that nothing can be done without Ukraine will definitely boost his domestic prestige and bring people closer around his leadership.

• On the other hand, this could cause—at least in the medium term—some undesirable narratives and political developments in the country.

• Where the voices of appeasement-seeking politicians could grow louder - since they will now find support in the objective facts that no one is willing to stand up for Ukraine anyway, so the “best we can do now is to cut our losses”.

• Needless to say, if this happens, it will impose political limits on Zelensky’s strategic and political maneuverability and his ability to negotiate an actually good deal for Ukraine.

• 3. Impact on Ukrainian public and military: morale loss.

• Thirdly, there could be a significant impact on morale, both on the tactical and operational levels.

• It is yet unclear if this will happen, but it would be very plausible if it did, since a lot of Ukrainian soldiers were already on their back foot (and recruitment of new soldiers was becoming ever-harder), and now they’re hearing that the U.S. is going to abandon them…

• This is surely really bad for morale at the operational level: why should soldiers keep dying and trying to reclaim the lands, which they may be forced to give up or not even be able to hold for too long because either 1) the U.S. support will not come, or 2) negotiated settlement terms may cause issues for Ukraine, where not much gain can be solidified on the battlefield in a short period of time?

• 4. Incentive to regain and demonstrate will and initiative on the battlefield.

• But on the other hand, Ukraine may want to dash for further pushes or operational breakthroughs, akin to the incursion in Kursk.

• Something drastic, something vigorous to demonstrate and signal to all key stakeholders: Russia, the U.S. and to the EU, that Ukraine is not losing morale, and that it is in fact ready to up the ante and increase the intensity of operations.

• And in a way, this could actually make it even harder to negotiate a political settlement, because if Ukraine was to actually succeed in such an operational move—whether that could be more brazen assassination campaigns, more brazen deep strikes against oil refineries, or the newly relocated Russian fleet in the Black Sea, or some other ground operation—this will make it harder for Putin to agree to less-maximalist aims, and so the deal could fall through.

Ukraine retains key political and strategic levers it can still utilize to its advantage.

• With all that said, let’s remember that Ukraine has leverage.

• It is disheartening that the U.S. is trying to brazenly extract material wealth from Ukraine, almost as a threat or blackmail that otherwise Ukraine will not get support.

• But with all that said, let’s remember at least three factors going in Ukraine’s favor, which mean that Kyiv has more leverage than it may first seem:

• 1. Europeans will not allow for a total Ukrainian collapse.

• In fact, today they are scrambling in Paris to respond to this threat against Ukraine.

• And UK's Prime Minister Keir Starmer has already declared that as part of the peacekeeping force and providing security for Ukraine post-war, he is ready to send British troops to Ukraine.

• This is very significant, and this is a good reminder that Europe has a very deep interest in making sure that Ukraine doesn’t collapse under the weight of Russia, and so the worst-case outcome for Ukraine is not as likely as it may seem without U.S. support.

• The EU has plenty of resources to help Ukraine.

• Indeed, on Monday, European major defense stocks rallied in anticipation that there will be a massive increase in defense spending across the continent to help Ukraine and to prepare for Russia.

• 2) Trump himself is not likely to abandon Ukraine.

• We’ve discussed this numerous times before.

• He wants a legacy.

• And he certainly doesn’t want this legacy to be that he led to the collapse of Ukraine—something similar to what happened in Afghanistan in 2021, for which he frequently ridiculed Biden.

• He wants a legacy of being a peacemaker.

• He wants that Nobel Peace Prize.

• But if he pushes Ukraine too hard or abandons it to the point where Russia rolls in, that will be a stain on his presidency and his legacy.

• So then, purely leaving aside any ethical concerns, moral concerns, or values. Just from a pragmatic, self-interest perspective, Trump doesn’t have an interest in fully abandoning Ukraine.

• 3. Ukraine can pull in a third key stakeholder.

• And finally, Ukraine has leverage in getting other players involved.

• Key Chinese diplomatic actors are already using this opening to test the waters and to potentially insert Beijing into the negotiation process: offering potential peace proposals, security guarantees, or even reconstruction efforts post-war.

• This is monumental.

• China actually holds huge leverage here.

• Russia is, in effect, dependent on it, and it is in Beijing’s interest to insert itself into the process and push Russia toward a deal—one that is likely more favorable to Europe than anything Trump could negotiate.

• This would then make Europeans more reliant on Beijing to keep Russia in check.

• And the same logic applies to Ukraine.

• For Ukraine specifically, developing a relationship with China and getting it involved to rein in Russia serves as an alternative leverage point—a counterbalance to the U.S.’s current approach of demanding vast Ukrainian mineral wealth in what amounts to blackmail.

• Consequently, while what happened last week was really bad, Ukraine has options and actual levers to pull.

• With strategic diplomacy, it can still emerge in a much stronger position.