Minority Reports: How Endowment Effect Would Make Ukraine Mineral Deal as a Tar Baby; Brian Berletic on US Preserving USAID Regime Change Capabilities; John Helmer on Shambolic US Conduct of Ukraine Negotiations

We thought it was important to highlight some minority reports on the Trump Administration’s foreign policy posture, above all with respect to the Ukraine conflict, because many commentators seem to have been swept along by Trump messaging, particularly about the hope of a negotiated settlement. Trump’s fondness for bluster, his deliberately overwhelming “flood the zone” approach, pugnaciously breaking with norms, and his reflex to try to take ground tactically, even when it may be disadvantageous strategically have muddied both the Trump strategic continuity with the US desire to dominate geopolitically and his confused approach to the negotiations over the Ukraine war.

Because the Trump Administration has no clear idea of what it wants in terms of a Ukraine end game, save being able to claim that Trump ended the war and is therefore a great deal-maker, it is at serious risk of falling into the behavior Sun Tsu warned about: “All tactics and no strategy is the noise before the defeat.” Specifically, we’ll discuss how oddly under-amplified assessments by Brian Berletic and John Helmer, show that the idea, popular in the independent media, that Trump represents a great foreign policy break from the past is exaggerated. His difference in methods are being unduly confused with differences in aims. But we’ll first address the way a new Administration pet fixation, that of wresting a minerals/other economic rights deal from Ukraine, is contrary to the aim of reaching an agreement with Russia.

Ukraine Minerals/Rights Deal as a Tar Baby

Your humble blogger had warned that what then seemed like an outlandishly improbable idea, that of the US obtaining some sort of legal rights to or other economic claims on Ukraine mineral deposits (and potentially related production facilities) looked as if the US was not just receptive, but working to make it happen. Remember, Trump sent Scott Bessant, his Treasury Secretary, with a document for Zelensky to sign the rights over. There were plenty of US officials attending the Munich Security Conference who could have been dispatched with a document if the point simply was to rattle Zelensky and remind him the US called the shots.

And indeed, the flurry of reports in the mainstream US press (including the Wall Street Journal, the New York Times) and the Ukraine media show that the US is now browbeating Zelensky,¹ hard, over his refusal to agree to a deal, with admittedly some marked differences in the accounts as to what the pact might amount to. Since this is an overly dynamic situation, forgive us for not trying to reconcile the various reports. However, the New York Times claims to have sighted draft terms from the US:

The terms of the new proposal, which is dated Feb. 21 and was reviewed by The New York Times, call for Ukraine to relinquish to the United States half of its revenues from natural resources, including minerals, gas and oil, as well as earnings from ports and other infrastructure. A similar demand was made in a previous version of the deal, dated Feb. 14 and reviewed by The Times.

Admittedly, Zelensky is fighting mighty hard not to sign anything along these lines. His latest gambit is a fake resignation offer (a trade for membership in NATO). But him putting that idea in play signals that he suspects or knows that agreeing to give rights to Ukraine property that almost certainly has Ukraine oligarch claimants would put his survival at risk.

As much as it is entertaining to watch Zelensky struggle, the far more important matter is that any such deal is contrary to what many had assumed the Trump aim to be, of freeing itself from Project Ukraine. Note the tidbits from the same New York Times story:

On Saturday evening, Mr. Trump ramped up pressure on Ukraine to sign the minerals deal, which has now been under negotiation for more than 10 days. Several draft agreements have already been rejected by the Ukrainian side because they did not contain specific U.S. security guarantees that would protect Kyiv against further Russian aggression…

On Friday, the United States proposed a new draft agreement, obtained by The New York Times, which still lacked security guarantees for Ukraine and included even tougher financial terms. The new draft reiterated a U.S. demand that Ukraine relinquish half of its revenues from natural resource extraction, including minerals, gas and oil, as well as earnings from ports and other infrastructure.

The fact that uber-Russia hawk Boris Johnson supports this deal should tell you everything you need to know. From the Kyiv Independent:

“The deal should be signed,” Johnson said, speaking at the YES conference event held in Kyiv by the Victor Pinchuk Foundation on Feb. 24, the third anniversary of the Russian full-scale invasion. “It commits the U.S. to a free and sovereign Ukraine. A continued American support is well worth the price for Ukraine.”

And from a new story at Time:

Treasury Secretary Scott Bessent said the administration’s minerals plan was to create a U.S.-Ukraine partnership, calling it a “win-win.”

“We make money if the Ukrainian people make money,” Bessent told Fox News Channel’s Sunday Morning Futures program.

Keep in mind what this implies:

The US will have incentives to keep funding Ukraine, not just economic but also Trump regime prestige

The US will not want to concede that the four oblasts that Russia now deems to be part of Russia, namely Donetsk, Lugansk, Kherson, and Zaporzhizhia, are indeed Russian. Remember, having them recognized or at least not actively contested as being Russia would be highly problematic. Many of the prized mineral deposits, such as two of Ukraine’s four biggest lithium deposits, are in those oblasts. Alternatively, the US will insist on a financial settlement or exclusive/preferential mineral rights. If it is Zelensky who signs this deal, recall that Russia does not recognize him as able to make binding commitments on behalf of Ukraine. Mind you, this is a secondary leg of the argument but will further poison any talks.

The US wants rights to earnings from ports. That includes Odessa. Even though taking Odessa would be some ways away and Putin has not put it on the menu,² many Russians are attached to the idea of Russia again controlling this historically Russian city, particularly after the Maidan coup massacre at its Trade Union. Other commentators had thought it would be strategically important for Russia to take the entire Ukraine Black Sea coast to guarantee that rump Ukraine would become landlocked and dependent on the kindness of Russia.

In other words, a mineral pact will create a US investment in Ukraine, whether realizable or not, beyond the considerable Biden Administration sunk cost. And it will be subject to the cognitive bias called endowment effect. From Wikipedia:

In psychology and behavioral economics, the endowment effect, also known as divestiture aversion, is the finding that people are more likely to retain an object they own than acquire that same object when they do not own it…

One of the most famous examples of the endowment effect in the literature is from a study by Daniel Kahneman, Jack Knetsch & Richard Thaler, in which Cornell University undergraduates were given a mug and then offered the chance to sell it or trade it for an equally valued alternative (pens). They found that the amount participants required as compensation for the mug once their ownership of the mug had been established (“willingness to accept”) was approximately twice as high as the amount they were willing to pay to acquire the mug (“willingness to pay”).

Other examples of the endowment effect include work by Ziv Carmon and Dan Ariely,[9] who found that participants’ hypothetical selling price (willingness to accept or WTA) for NCAA final four tournament tickets were 14 times higher than their hypothetical buying price (willingness to pay or WTP).

We warned from the outset that this scheme would mire the Trump Administration in Ukraine. From a February 15 post:

Most commentators took the Trump talk of owning or getting rights to Ukraine’s minerals to be bluster. Yours truly remarked otherwise, that this looked like a way for Trump to justify and get funding for a continued US participation, even if at a lower level than under Biden, by presenting it as a loan. This would make it the bastard cousin of the Ursuala von der Leyen plan to issue bonds against Russian frozen assets to which it does not have good title.

But this approach would appeal to Trump by virtue of first, creating an option (options have financial value) and second, making possible Trump posturing about continuing the war seem dimly credible by providing a way to get funding through Congress. Even if the US and its Western allies can only dribble arms to Ukraine out of current production, more money would allow it to continue to prop up the regime in Kiev.

Now of course there is the wee problem that the UK and EU states are pretty much out of weapons and the US is almost entirely supplying Ukraine out of new production rather than stocks. Plus the Trump Administration certainly acted as if it wanted to settle or exit Project Ukraine because China.

Now this Ukraine minerals deal may be an example of Trump habits operating to his detriment. Consider how the Trump approach of maximizing his possible negotiating space by advancing all sorts of frame-breaking ideas is not such a hot idea when done reflexively, as seems to be the case in Trump 2.0, as opposed to deliberately. Trump himself regularly threatens radically extreme actions, like ethnic cleansing in Gaza, and browbeats heads of state to try to get his way. Not only is Trump not getting his Riviera development there, but his bullying makes him look like a petulant jerkface. Why should anyone want to get in any relationship with a partner who relishes not just crass dominance displays but even humiliating heads of state (witness King Abdullah of Jordan) and is indifferent to destabilizing the entire region? These actions are inimical to building trust and dealing with anything other than subservient parties.¹ Mind you, Kissinger warned long ago that being a friend of the US is fatal but Team Trump is putting that front and center.

Or perhaps Trump and his operatives still believe that Russia is having trouble sustaining its war effort, and so shoring up US credibility and commitment will lead Russia to make concessions. Or perhaps, as some hard core pro-Russia hawks believe, Putin has not been as aggressive as he should have been in prosecuting the war because he is in the pocket of the oligarchs, and they don’t like it much.³ So according to them Putin would back down in the face of a US show of resolve, or alternatively, won’t press his considerable advantage.

Is Trump’s America First Really About Giving Up US Aspirations to Dominance?

Many commentators correctly made much of Marco Rubio’s extended remark that the unipolar moment was an unnatural episode in history, and the US recognized that it was operating in a multipolar world. But has this new perception been matched by a big shift in behavior? Has Team Trump changed its mind but not changed its heart?

One can look at Trump’s extreme shows on belligerence on the international stage and argue that the US is as committed to being a dominant power as before, but is having to adapt its playbook considerably in light of its military over-extension and the continued rise of China. A Trump that had reconciled himself to multipolarity would not have said:

Donald Trump threatened 100% tariffs on BRICS and countries that challenge US dollar dominance.

Trump falsely claimed, "BRICS is dead". (On the contrary, the Global South-led group is constantly expanding, and now represents 55% of the world population and 42% of global GDP.) pic.twitter.com/Fj6zOnlJA6

— Ben Norton (@BenjaminNorton) February 15, 2025

Similarly, would a US not bent on more than regional dominance be engaged in a tariffs and trade war with China, or threatening to impose tariffs on European countries, or bizarrely bullying South Africa over supposedly being mean to whites?

And let’s not forget that the US still fantasizes about military action against China despite our inability to win (as war games have repeatedly shown) and quickly escalated after the Trump defense and security teams were in place?

🇺🇸🇨🇳Trump admin continues US tip-toe to war with China…

US State Dept. has JUST removed explicit rejection of Taiwan independence from its "US Relations with Taiwan" page.

The US "One China" policy recognizes Taiwan as part of China in principle, but in practice the US has… pic.twitter.com/qP9mbdDesG

— Brian Berletic (@BrianJBerletic) February 15, 2025

And what is Trump trying to achieve? Brian Berletic contends that most independent commentators have fallen for the MAGA/America First hype when Trump represents strategic continuity for the US by trying to maintain dominance, particularly vis-a-vis China. In particular, Berletic described, based on watching the full confirmation hearings for Trump defense and intelligence picks, that the US was not getting rid of the USAID regime change/messaging apparatus, merely shuttering its DEI and other MAGA-disapproved elements.

See this interview with Glenn Diesen starting at 6:07:

Just to address this situation with Ukraine, with these groups losing their funding. It didn’t work, they lost the war and so they’re just pulling the plug on it. I’m in a country where the the US is still very much so promoting political interference here. All of the so-called independent media are completely dependent on Washington and Western private foundations. They’re still very much in business, they still continue to pursue regime change, US-backed regime change, here in Southeast Asia.

And at 11:35:

The 4 to 5 hour, I know it’s a long hearing, but there was a US Senate hearing for this USAID so-called defunding. All throughout the hearing, and it was chaired by a Republican who supported the Trump Administration’s supposed defunding of the organization, and all throughout the hearing, they reiterated that they have not defunded all of these programs. They only defunded the programs dealing with DEI, transgender issues, other types of issues, the political wedge issues the left and right use to distract at home. And also try to create the same dynamic in targeted countries. They’re only defunding that. Everything else is still going to be funded, all of the evasive, manipulative, interfering programs the US has been funding all along continue, unabated, around the world. I can’t even remember how many times the chair of the hearing said, “We need USAID to be countering China and its Belt & Road Initiative and not talking about DEI or funding transgender operas around the world.” So if people really listened to what they are saying, this isn’t about defunding or stopping US interference abroad. It’s making it more efficient, getting rid of the political bloat that became attached during the Biden Administration it, streamlining it, sharpening it if you will so it can do a more efficient job of cutting down a targeted a nation’s sovereignity.

Needless to say, this assessment, based on what the Trump Administration has said it intends to do with USAID operations, is very much at odds with the conventional, complacent view that Trump has gotten the US out of the regime change business. Why pray tell, would it have been in the US’ strategic interest to do so? It’s not as if we could win any concessions for eliminating that apparatus.

John Helmer on the Shambolic US Negotiations with Russia

Due to this post having become a bit long, we’ll cover John Helmer’s careful reading of what happened at the US-initiated talks with Russia in Riyadh last week. Helmer based on his own experience in the Carter Administration as well as input from Russian sources confirming what could be inferred from the remarks of various participants afterwards was that the session, from the Russian vantage, was a train wreck. Even if you didn’t have the benefit of the reports afterwards, the way the US went about it was nuts. The US side demanded an immediate high level session, when those typically do not happen before adequate ground work has been undertaken. On top of that, the key members of the Trump foreign policy team had only just been installed. And with DOGE running a bulldozer through State, it’s not as if Rubio and his colleagues had any expertise (such as from career staffers who’d been there before Team Biden came in) to draw on.

Helmer provided a fine write-up, with an explanation of his sources and methods, at Dances with Bears in
TRUMP TRIES GRANDSTANDING IN RIYADH – RUBIO STEPS DOWN. He reprised some of its findings, and added new observations, in a talk with Nima of Dialogue Works.

From the very top:

Helmer: The Russian perception is that the American side is a kasha, is a porridge, is a mess. But it’s necessary not to be impolite and say so…..First, what should the Russian side do next?

This problem is actually serious. The US called for a high-level meeting and had no idea what to do then, no agenda, no asks, no proposals. The point seemed to be to create a perception of momentum and pretend that Trump was making serious progress on ending the war. Helmers points to the almost desperation of the US side in saying the fact of this meeting proved that Trump was the only man who could end the war…in lieu of having anything else to say.

I have occasionally dealt with negotiators who were seriously over their heads (as in they might have had expertise in other area but were total newbies to the matter at hand). It’s difficult to move things forward without winding up insulting them by having to ‘splain things they ought to know. But even then, they had clear objectives, namely wanting to complete a transaction while making sure they had adequately protecting their client, even if they didn’t have the foggiest as to what the latter might require on a “fine points of contract” basis. This is much worse due to the lack of a notion of what success would look like to them. The Russians might have inferred prior to the minerals deal fixation, that the Trump goal was “Get me out of Ukraine in a way that allows me to pretend I got a win.” It’s become even harder to fathom what the US wants.

Confirming this general take, from Helmer at 29:50:

Rubio looked as nervous and inexperienced as I’ve ever seen a Secretary of State in such a meeting

Helmer also argued that the Russia side missed a chance to test the US on the military side, as in suggest what amounted to trades to build trust (“If we do this, will you do that?”). While that may be true, the flip side is that hindsight is always 20/20 and the Russian side may not have been imaginative enough to anticipate that the Americans would show up having no idea what they intended to accomplish. Nevertheless, Helmer also contends that Russia had already been making concessions to the US when the US had made no commitments at all, via slowing its prosecution of the war (measured in a marked drop in casualties on the Ukraine side). I’m not sure about this metric. More Ukrainians may be running away or surrendering. And some experts say the weather has also slowed Russia of late. Nevertheless, from Helmer at 26:30:

Why is Pakrovsk not Russian yet? For six months, the advance has been slow, along the line but Pavrosk was to have been Russianized, an recaptured, and recivilized months ago. It’s still about six kilometers away from the advance line of Russian forces? Why is there any significant Ukrainian resistance, as there is, in Kursk? Why are they continually able to be resupplied?….What are the political constraints on Russian tactics and strategy at this point?

Mind you, Helmer is close to the General Staff, and they, like our correspondent quoted in footnote 3 below, are not happy at the refusal to prostrate Ukraine via sustained power system attacks. I can see the cynical logic in not clearing Ukraine forces out of Kursk. Zelensky has been so desperate to keep the Kursk incursion alive that he’s been pouring too much of his remaining men and materiel into that effort. Even if it looks bad to the Russian public, from a military perspective, this is close to a turkey shoot. What’s not to like?

Helmer also said that Lavrov admitted that Russia had cut back the power system attacks by responding to a Rubio request to stop them by saying that Russia was not attacking civilian infrastructure. He then chided the Russians for not getting anything in return for that act of restraint. I read Lavrov’s answer as a dodge. Russia’s position has been that it has only hit military-related targets….which can and does include dual use infrastructure. But even assuming Helmer is right here, what about the US stopping deep missile strikes into Russia? Was Russia attempting a qui pro quo here? Mind you, I don’t pretend to have answers, but want to point out that there are a lot of unknowns here.

If anyone other than Trump were president, we might be on more certain informational ground after the next set of US-Russia talks, apparently on for Tuesday. But being sure of anything with Trump is a gamble.

_____

¹ Looking at the timeline, the recent verbal abuse of Zelensky by Trump, such calling him a dictator and blaming him for the lack of peace in Ukraine (whether by being responsible for the war, as some have read Trump’s remarks, or by refusing to negotiate with Russia) is reminiscent of how Trump upbraided Netanyahu by putting a blistering take by Jeffrey Sachs in his Truth Social. The verbal brutalizing, in the case of Netanyahu, was to bully him into accepting the Gaza ceasefire. Notice here that despite calling Zelensky a dictator, the US is pushing very hard for the minerals deal, while not demanding that Zelensky hold elections or revoke the decree that prevents the Ukraine government (and arguably him too) from negotiating with Ukraine.

Some of the media accounts:

Wall Street Journal U.S. Doubles Down on Demand That Ukraine Sign Minerals Deal February 20 and White House, Ukraine Close In on Deal Related to Mineral Rights February 21

New York Times U.S. Pressing Tough Demands in Revised Deal for Ukraine’s Minerals February 22 and Zelensky Pushes Back Against U.S. Mineral Deal and Announces European Summit February 23

² IIRC, it was in an interview that Putin described Odessa as a possible “apple of discord”. That seemed to signal that he regarded Russia taking it as having the potential to create ongoing friction.

³ It is true Russia could have forced Ukraine to its knees some time ago by ramping up its electrical war. But here I don’t think the impediment was the oligarchs. First, too many forget that Russia is fighting a coalition war. It needs the support of China and India in particular to continue to circumvent Collective West sanctions. Neither is comfortable with Russia gobbling up Ukraine even if they accept intellectually that that became Russia’s least bad option. So Russia also needs to have facts or developments that justify to them why Russia needs to occupy more rather than less of Ukraine. Another issue may be divisions in Russian leadership over what the ideal end state would be in terms of Russia’s long-term security and ability to administer any occupied territory beyond the four oblasts.

Some of the argument made by one of the Russia hawks, hoisted from e-mail (mind you, there is a lot more where this came from):

Vladimir Putin’s June 2024 terms [for a ceasefire and starting talks: Ukraine commits to never enter NATO, Ukraine withdraws all its forces from the four oblasts Russia considers to be Russian]:

That was Putin begging to be allowed to surrender, not expressing a position of strength.

Again, the minimal winning condition for Russia is that Ukrainian statehood ends. Maybe you hand Galicia over to Poland, but that’s a difficult proposition now given that there are barely any Poles left there after the mutually agreed ethnic cleansing on both sides of the border precisely in order to make it permanent and irreversible. But there is no such thing as an independent Ukraine with a capital in Kiev that will be friendly to Russia and not immediately rearmed and prepared for another war. The only way to prevent that is if Russian troops are controlling the borders, and the presence of the Russian army in Kiev is dictating what laws are written, what the schoolbooks teach children, and what is on TV. In which case you might just as well annex the whole thing, it is core historic Russian territory to begin with anyway.

Where do Putin’s June 2024 terms stand with respect to that minimal winning condition? They are very far from it, thus the war would be a catastrophic loss if it ends now…

More generally, even if Russia somehow took over the whole of Ukraine (which, again, Putin’s words do not suggest and actions clearly show is not going to happen), there is the question of loss of deterrence.

Extremely unfavorable for Russia precedents have been established — first it was artillery shelling across the border, then small kamikaze drones started being launched, then long-range drones, then GMLRS missiles, then heavy cruise and ballistic missiles, and not just from Ukraine either (we are basically 100% certain about drones launched from Finland towards Murmansk, and only slightly less certain about drones from the Baltics). Plus an outright NATO invasion…

So we have:

1) the gigantic geostrategic defeat that is not taking over all of Ukraine
2) the geostrategic defeat that is Sweden and Finland joining NATO and the US right now being in the process of situating missiles there
3) the loss of deterrence.

Maybe the Kremlin can recover some ground on #2, but the rest it appears to have conceded defeat on before the “negotiations” have even started. By the mere fact of agreeing to negotiations, because there are no conceivable negotiations that will resolve issues #1 and #3…

If you are not from the region and have not witnessed events since 1989 first-hand and if you are not reading primary Russian sources (and not even the more popular ones, you have to dig a bit deeper), you have no idea about reality.