Putin’s Trolling: A Strategic Minerals Offer For Trump

Just as President Volodymyr Zelensky was preparing to arrive in Washington D.C. on Friday, February 28^th to sign an unprecedented US-Ukraine agreement on strategic minerals, Vladimir Putin came up with a proposal of his own, involving joint development with the U.S. of rare earth metals, aluminum, and hydro power in Russia. It’s trolling of 99^th level.

At face value, this could be seen as a step towards renormalizing U.S.-Russia trade relations. President Trump is entertaining the notion of economic rapprochement but isn’t ready to commit yet. Economic cooperation comes after the cease-fire or peace accord in Ukraine, not before. On February 27^th, only a couple of days after Putin’s proposal, Trump extended wide-ranging sanctions on Russia. Meanwhile, US Russia watchers are telling this author that Putin’s offer is nothing more than a troll to counter the Trump-Zelensky mineral deal.

Putin’s Insincere Strategic Mineral Offer

During an interview on state television with journalist Pavel Zarubin, Putin surprised the audience by talking up potential joint energy and metallurgical megaprojects with the U.S, highlighting an estimated $15 billion hydropower and aluminum production project in the Krasnoyarsk Territory, touting Russia’s ability to resume supplying the U.S. with aluminum – a market where it once had a 15% share of imports.

Despite claiming that a potential U.S.-Ukraine mineral deal is “of no concern” to Russia, Putin’s offer to work with Americans to access mineral reserves in Russian-occupied Ukrainian territories was meant to muddle the discussions leading up to the deal. His comment that Russia has “an order of magnitude more resources of this kind than in Ukraine” is simply an attempt to one-up Zelensky’s mineral deal amidst already tense U.S.-Ukraine negotiations.

This is not the first time that Putin has trolled Trump by making business proposals. After Houthi/Iranian strikes on Saudi oil facilities in 2019, Putin joked that Riyadh should consider purchasing Russian S-300 or S-400 air defense systems instead of depending on American technology for defense. When Europe faced an energy crisis in 2022 after Russia cut its gas flow, he commented that if Europe wanted more gas, it should just lift sanctions and activate Nord Stream 2. The Russian president has a track record of stirring the pot by identifying real needs or issues and offering seemingly plausible but politically unrealistic solutions.

Russia’s Business Environment is Unsuitable for Strategic Mineral Development

Russia’s current business climate starkly contrasts with how it was before the second invasion of Ukraine. Western companies have abandoned Russia after more than 30 years of successful development. Russian banks face severe financial sanctions, and currency transactions are significantly limited. Moreover, launching new investment projects is impossible without the systematic lifting of sanctions. It may take years to alter this new reality, and Putin is aware of it.

The war in Ukraine has amplified the imbalance of Russia’s economy, as high inflation has driven interest rates to a record 21%, and Russia’s workforce has been severely affected by war losses, with many working-age men still on the frontlines, working in military factories, or wounded and dead.

Economic factors aside, the political risks for American businesses in Russia are greater than they were after the fall of the Soviet Union. The dangers of corruption, criminal conviction and imprisonment of business leaders, as happened with Michael Calvey and Eugene Spector, and seizures of Western companies such as French yogurt maker Danone and Danish brewer Carlsberg by state-owned businesses have continued. Russia’s second invasion of Ukraine has turned the clock back 40 years to the pre-Gorbachev era of the Cold War. The Kremlin has taken greater control of the Russian economy, carving up assets across industries, and redistributing them to regime loyalists.

Obstacles in the Russian Mineral Market

The privatization of Russia’s only major rare earth producer, Solikamsk Magnesium Plant, previously owned by billionaire Pyotr Kondrashov, was declared illegal, and all assets were transferred to Russia’s state nuclear monopoly, Rosatom. The nuclear behemoth is closely associated with Mikhail Kovalchuk, President of the famed Kurchatov Institute for nuclear physics, a Putin crony and supporter of the Ukraine war. Kovalchuk is also head of the Scientific Council of the Russian Maritime Board, a hardline group of former security leaders who supported the Ukraine invasion, including Putin’s former National Security Council Secretary Nikolay Patrushev.

Any business or investor seeking to reenter the Russian market will have to ask themselves whether they want their operations to be at the mercy of the Russian siloviki security bosses and the Kremlin-controlled judicial system.

Returning to Russia will also create major compliance issues for American companies, even if Trump opted to lift the sanctions. Washington’s engagement with Moscow has widened the growing rift between the U.S. and its allies. If the U.S. were to unilaterally lift sanctions, it is likely that there would be a major push in some European countries to reinforce their own, while others would also accommodate Moscow to get a leg up for cheap natural resources.

One of the concerns regarding the viability of the Ukraine-US mineral deal is whether American companies are willing to make capital-intensive, long-term investments in a high-risk environment. The Russian offer, even if serious, can pose even greater risks. Russia’s uncertain business environment and the potential for a future US shift in strategy back to confrontation with the Kremlin call into question the viability of any significant investment in Russia at this stage. But Putin is aware of this. Trump’s strategic mineral agreement with Zelensky highlights the president’s intent to claim a win for the U.S. as part of any peace settlement, while Putin’s energy and metals offer is an opportunistic gambit to exploit this desire and deepen divisions in the West.