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What are the risks and outlines of a potential Ukraine peace deal?
What are the possible contours of a peace agreement between Russia and Ukraine? SECURITY GUARANTEE Ukraine, which has been subjected to a full scale invasion in 2022, and witnessed Russia annex Crimea, needs security guarantees from major powers, primarily the United States. The Budapest Memorandum of 1994, in which the U.S., Russia and Britain agreed to refrain from using force against Ukraine and respect Ukrainian sovereignty was not enough for the Ukrainian government. The powers agreed to take the matter to the United Nations Security Council in the event of an attack on Ukraine. Sources involved in the talks say that the problem is that any security agreement that does not have teeth will leave Ukraine vulnerable. Diplomats in draft proposals of a possible settlement for peace, seen by us, spoke about a "robust guarantee" including a possible agreement similar to Article 5. Article 5 of NATO's treaty binds allies together to defend one another in the event of a military attack. Ukraine is not part of NATO. According to a draft of the failed 2022 agreement, Ukraine had agreed to permanent neutrality as part of a deal with the five permanent members on the U.N. Security Council - Britain, China France, Russia, the United States and other nations such as Belarus, Canada Germany Israel, Poland, and Turkey. Officials in Kyiv, however, say that they will not accept neutrality for Ukraine. NATO AND NEUTRALITY Russia has said repeatedly that a possible NATO membership by Kyiv is inacceptable and that Ukraine should be neutral, with no foreign bases. Zelenskiy said that it was not up to Moscow to decide Ukraine’s alliances. NATO leaders in Bucharest agreed to admit Ukraine and Georgia as members one day at the Bucharest Summit of 2008. In 2019, Ukraine amended its constitution to commit to full membership in NATO and the European Union. U.S. ambassador General Keith Kellogg said that NATO membership for Ukraine was "off the table". Donald Trump said that the U.S.'s past support of Ukraine's NATO membership was the cause of war. Ukraine and Russia discussed neutrality in 2022. According to a draft of an agreement, Russia wants limits placed on the Ukrainian military. Ukraine is opposed to any restrictions on the size or capabilities of its military. Russia has stated that it does not object to Ukraine's EU membership bid, although some members of the EU could oppose Kyiv’s bid. Territorial Moscow claims to control about a fifth (or a fifth) of Ukraine, and that the territory now belongs formally to Russia. This is a position that most countries don't accept. In 2014, Russia annexed Crimea. According to Russian estimates, Russian forces control nearly all of Luhansk and more than 70% Donetsk and Zaporizhzhia regions. Russia controls a small part of Kharkiv. Putin's most detailed peace proposals, which he outlined in June of 2024, stated that Ukraine would be required to withdraw from all these regions, including those not currently under Russian rule. According to a draft plan of peace drafted by the Trump Administration, the U.S. will de jure recognize Russian control over Crimea and de facto acknowledge Russian control over Luhansk, Donetsk, Kherson, Zaporizhzhia and other parts. Ukraine would gain territory in Kharkiv Region, and the U.S. will control and administrate Zaporizhzhia Nuclear Power Plant which is currently under Russian control. Kyiv has said that officially recognising Russian sovereignty over occupied territories is not possible and would be a violation of Ukraine's Constitution. However, territorial issues could be discussed in talks after a ceasefire. Steve Witkoff, a Trump envoy, told Breitbart last week that the main issues are the regions and the nuclear plant. It's also about how the Ukrainians can use the Dnieper River to reach the ocean. Sanctions Russia is in favor of Western sanctions being lifted, but it's sceptical they will happen soon. Even if US sanctions were lifted, EU sanctions and other Western sanctions such as those imposed in Australia, Britain and Canada could continue for many years. Ukraine wants sanctions to stay in place. The U.S. government has been reported to be studying ways to ease sanctions against Russia's energy industry as part of a broader plan that would allow Washington to provide swift relief in the event Moscow agreed to end the Ukraine conflict. OIL AND GAS Trump suggested that Putin who is the second largest oil exporter in the world, may be more inclined towards a resolution of the Ukraine War following the recent drop in oil price, although the Kremlin stated that national interests always trump oil pricing. Some diplomats speculate that the U.S. and Russia are looking for lower oil prices in a larger grand bargain that includes issues ranging from the Middle East to Ukraine. In the beginning of this month, it was reported that Washington and Moscow officials had held talks about how Washington could help revive Russian gas exports to Europe. CEASEFIRE Before talks can begin, European powers and Ukraine want Russia to agree to a truce. But Moscow insists that a truce will only be effective once the verification issues have been resolved. Kyiv claims that Moscow is trying to buy time. RECONSTRUCTION UKRAINE European powers are looking to utilize some of the Russian assets that have been frozen in the West, to assist Kyiv. Russia rejects this. Reports from February indicate that Russia may agree to use $300 billion in sovereign assets that are frozen in Europe as part of the reconstruction of Ukraine, but that it will insist on spending a portion of that money in the one-fifth that is controlled by Moscow's forces. Ukraine wants to use all $300 billion in assets seized for post-war reconstruction. (Reporting and editing by Gareth Jones, Guy Faulconbridge)
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MP Materials and Ma'aden will jointly develop rare Earths supply chain in Saudi
MP Materials, a U.S. rare-earths miner, announced on Wednesday that it had signed a Memorandum of Understanding with Saudi Arabia's Ma'aden mining company to jointly develop a supply chain for rare earths in the Middle Eastern nation. Why it's important The agreement was signed at the U.S. - Saudi Investment Forum where President Donald Trump obtained a $600 Billion investment from Saudi Arabia in the sectors of energy, defense, and mining. Saudi Arabia is pushing to be a global hub for critical minerals at a moment when processing minerals has become an essential for tech-focused countries looking to create their own building blocks in AI, electric cars and other sectors. CONTEXT Ma'aden, a Canadian firm, was reported to be considering a partnership in rare earths with one of four foreign companies, including MP Materials or Shenghe Resources from China, Australia's Lynas, or Canada's Neo Performance Materials. MP Materials' partnership with Ma'aden will include the mining, separation and magnet production of rare-earth minerals. KEY QUOTES James Litinsky, CEO of MP Materials, said that today's announcement was an important step in rebalancing global supply chains... particularly in robotics and AI physical - while deepening strategic alliances between the United States ad Saudi Arabia. Ma'aden's Bob Wilt, CEO of Ma'aden, said that the partnership was a vital step in establishing mining as the "third pillar" for the Saudi economy. MARKET REACTION Before the bell, shares of MP Materials rose by nearly 5%. (Reporting and editing by Krishna Chandra Eluri in Bengaluru, Vallari Srivastava from Bengaluru)
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Snakes and ladders in a potential Ukrainian peace deal
What are the possible contours of a peace agreement between Russia and Ukraine? SECURITY GUARANTEE Ukraine, which has been subjected to a full scale invasion in 2022, and witnessed Russia annex Crimea, needs security guarantees from major powers, primarily the United States. The Budapest Memorandum of 1994, in which the U.S., Russia and Britain agreed to refrain from using force against Ukraine and respect Ukrainian sovereignty was not enough for the Ukrainian government. The powers agreed to take the matter to the United Nations Security Council in the event of an attack on Ukraine. Sources involved in the talks say that the problem is that a security guarantee with teeth could lock the West into an eventual future war against Russia, and a security agreement without teeth could leave Ukraine vulnerable. Diplomats, in draft proposals of a possible settlement for peace that we saw, spoke about a "robust guarantee of security", which could include an agreement similar to Article 5. Article 5 of NATO's treaty binds allies together to defend one another in the event of an invasion, even though Ukraine isn't a member. According to a draft of the failed 2022 agreement, Ukraine had agreed to permanent neutrality as part of a deal with the five permanent members on the U.N. Security Council - Britain, China France, Russia, the United States and other nations such as Belarus, Canada Germany Israel, Poland, and Turkey. Officials in Kyiv, however, say that they will not accept neutrality for Ukraine. NATO AND NEUTRALITY Russia has said repeatedly that a possible NATO membership by Kyiv is a war cause and must be rejected. Ukraine should remain neutral, with no foreign bases. Zelenskiy said that it was not up to Moscow to decide Ukraine’s alliances. NATO leaders in Bucharest agreed to admit Ukraine and Georgia as members one day at the Bucharest Summit of 2008. In 2019, Ukraine amended its constitution to commit to full membership in NATO and the European Union. U.S. ambassador General Keith Kellogg said that NATO membership for Ukraine was "off the table". Donald Trump said that the U.S.'s past support of Ukraine's NATO membership was a major cause of war. Ukraine and Russia discussed neutrality in 2022. According to a draft of an agreement, Russia wants limits placed on the Ukrainian military. Ukraine is opposed to any restrictions on the size or capabilities of its military. Russia has stated that it does not object to Ukraine's EU membership bid, although some members of the EU could oppose Kyiv’s bid. Territorial Moscow claims to control about a fifth (or 5%) of Ukraine, and that the territory now belongs to Russia. This is a position that most countries don't accept. In 2014, Russia annexed Crimea. According to Russian estimates, Russian forces control nearly all of Luhansk and more than 70% Donetsk and Zaporizhzhia regions. Russia controls a small part of Kharkiv. Putin's most detailed peace proposals, which he outlined in June of 2024, stated that Ukraine would be required to withdraw from all these regions, including those not currently under Russian rule. According to a draft plan of peace drafted by the Trump Administration, the U.S. will de jure recognize Russian control over Crimea and de facto acknowledge Russian control over Luhansk, Donetsk, Kherson, Zaporizhzhia and other parts. Ukraine would gain territory in Kharkiv Region, and the U.S. will control and administrate Zaporizhzhia Nuclear Power Plant which is currently under Russian control. Kyiv has said that legally recognising Russian sovereignty over occupied territories is out of question, and would be a violation of Ukraine's Constitution. However, territorial issues could be discussed in talks after a ceasefire. Steve Witkoff, a Trump envoy, told Breitbart last week that the main issues are the regions and the nuclear plant. It's also about how the Ukrainians can use the Dnieper River to reach the ocean. Sanctions Russia is in favor of Western sanctions being lifted, but is skeptical that this will happen soon. Even if US sanctions were lifted, EU sanctions and other Western sanctions such as those imposed in Australia, Britain and Canada could continue for many years. Ukraine wants sanctions to stay in place. The U.S. government has been reported to be studying ways to ease sanctions against Russia's energy industry as part of a broader plan that would allow Washington to provide swift relief in the event Moscow agreed to end the Ukraine conflict. OIL AND GAS Trump suggested that Putin, the leader of the second largest oil exporter in the world, may be more inclined towards a resolution to the Ukraine War following the recent drop in oil price, although the Kremlin stated that national interests always trump oil pricing. Some diplomats speculate that the U.S. and Russia are looking for lower oil prices in a larger grand bargain that includes issues ranging from the Middle East to Ukraine. In the beginning of this month, it was reported that Washington and Moscow officials had held talks about how Washington could help revive Russian gas exports to Europe. CEASEFIRE Before talks can begin, European powers and Ukraine want Russia to agree to a truce. But Moscow insists that a ceasefire won't work until verification issues have been resolved. Kyiv claims that Moscow is trying to buy time. RECONSTRUCTION UKRAINE European powers are looking to utilize some of the Russian assets that have been frozen in the West, to assist Kyiv. Russia rejects this. Reports from February indicate that Russia may agree to use $300 billion in sovereign assets that are frozen in Europe as part of the reconstruction of Ukraine, but that it will insist on spending a portion of that money in the one-fifth that is controlled by Moscow's forces. Ukraine wants to use all $300 billion in assets seized for post-war reconstruction. (Reporting and editing by Gareth Jones, Guy Faulconbridge)
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FranceAgriMer increases its 2024/25 Wheat export forecast on the back of late-season demand
The farm office FranceAgriMer increased its outlook on French soft wheat exports for 2024/25 on Wednesday. However, an increase in demand at the end of the season would not be sufficient to prevent full-year exports from falling to their lowest levels this century following a rain-hit crop. FranceAgriMer, based on data from supply and demand, projected French soft-wheat exports outside of the EU to be 3.2 million metric tonnes this season. This is up from 3.1 million tons last month. Meanwhile, 2024/25 EU soft-wheat shipments inside the EU were estimated at 6.55 millions tons. Despite the upward revision to the forecast, both the total exports of soft wheat and the shipments outside the EU remained at the lowest levels in the records of the office since 1996/97. A diplomatic split between France and Algeria and the Black Sea region have both contributed to a decline in French exports. A sharp drop in prices over the past few weeks has led to speculation on the market that France may be able to secure sales for destinations like Egypt in late season. Habasse Diagouraga, FranceAgriMer's grain analyst, told reporters that the market expectations of France loading wheat for Egypt by the end season, on June 30th, as well as recent shipments in Morocco and Britain had encouraged FranceAgriMer. FranceAgriMer's revised outlook for the soft wheat stock levels at the end-of-season on June 30 was influenced by the increased export forecasts. The stocks are forecast to be 2.63 million tonnes, down from 2.81 million last month. This is nearly 18% less than last season. FranceAgriMer has reduced the end-of-season stocks of barley from 1,29 million to 1,16 million tons, reflecting an increase in export forecasts. The French barley exports have been boosted due to a surge of sales in North Africa and the Middle East. Traders cited a lack of barley available in the Black Sea rival export zone. The office has also raised its forecast for 2024/25 Maize stocks to 3,47 million tons, up from the 3.39 million tons projected last month. A second upward revision to harvest supplies offsets an expected increase in exports within EU.
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After price drop, OPEC expects a slower growth in oil supply from competitors by 2025
OPEC cut its forecast on Wednesday for the growth of oil supply this year from the United States, and other producers outside OPEC+. It also said that it expects lower capital expenditures following the decline in oil prices. OPEC reported in a report that the supply from countries outside of the Declaration of Cooperation – the formal name of OPEC+ – will increase by 800,000 barrels a day in 2025. This is down from the forecast of 900,000. Slowing down the growth of supply outside OPEC+ (which includes the Organization of the Petroleum Exporting Countries, Russia, and other allies) would help OPEC+ balance the market. In recent years, the rapid growth of U.S. shale oil and other countries has put pressure on prices. The recent pressure on oil prices has been caused by OPEC+ increasing production in May and early June faster than originally planned and U.S. president Donald Trump's tariffs. In its report, OPEC stated that it expects investment in exploration outside OPEC+ to decrease by around 5% per year in 2025. OPEC reported that in 2024 investment increased by $3 billion on an annual basis to $299 billion. "The decline in upstream E&P investments in oil will pose a challenge to production levels by 2025 and 2026, despite industry efforts to improve efficiency and productivity," OPEC stated in its report. OPEC predicts that the United States will continue to be the main driver of supply growth. However, it expects U.S. oil production to increase by around 300,000 bpd in this year. It forecast a growth of 400,000 barrels per day last month. After a reduction last month, it left unchanged its forecasts of global oil demand growth in 2025-2026. The impact of the first-quarter data on demand and trade tariffs was cited. The group welcomed the trade agreement signed by China and the United States this week. OPEC stated that "the 90-day agreement between the U.S.A. and China indicates the potential for longer-lasting agreements, likely supporting a regularisation of trade flow but at potentially higher tariff levels compared with pre-April escalations." (Reporting by Alex Lawler, Editing by Barbara Lewis.)
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The dollar is softening on the back of tariff truces and muted inflation.
The European stock market was steady on Wednesday, as the markets took a break after a strong rally fueled by easing global tensions. Meanwhile, the dollar continued its losses from the previous day as the Federal Reserve kept the possibility of rate cuts open. Stocks in Asia rose overnight, while U.S. futures stocks were edging higher after the S&P 500 entered positive territory for the entire year on Tuesday. Investors have driven global equity markets higher as a truce appears to be in place in the trade war between China and the United States, even though European shares were on hold on Wednesday. Lars Skovgaard is a senior investment strategist with Danske Bank. He added, "I find it hard to believe that we will return to the extreme political noise." The STOXX 600 index in Europe was little changed yesterday, after a recent rally. It has risen over 17% from its low on April 9th, the day U.S. president Donald Trump announced that he would suspend most reciprocal tariffs against U.S. trading partner. The equity futures market pointed to Wall Street starting the year with a modestly better start. The MSCI broadest Asia-Pacific index outside Japan rose by 1.6%. Japan's Nikkei fell 0.1%. Meanwhile, the Topix, a broader measure, ended a winning streak of 13 days, which was its longest in almost 16 years. Hong Kong's Hang Seng index rose 2.3% after Chinese ecommerce retailer JD.com announced strong results. Tencent, China’s largest tech company, reported a 13% increase in revenue for the first quarter on Wednesday. This week, the focus will be on Alibaba's earnings on Thursday. Investors who were worried about inflationary effects of U.S. Tariff Policies, which severely undermined expectations of Fed rate reductions in the near future, also found some relief from data on Tuesday that showed softer than expected U.S. Consumer inflation. Although traders expect the inflation rate to rise as tariffs increase import costs, there is still uncertainty about the future as Washington continues to negotiate with its trading partners. Wei He is a China economist with Gavekal. He said that the U.S. tariffs against Chinese products are still higher than they used to be a few months ago. There's still a lot of uncertainty in the future. In an interview with CNN on Tuesday, Trump said he would be willing to deal directly with Chinese President Xi Jinping over the details of a new trade agreement. The "potential" deals that Trump has been touting with India, Japan and South Korea have not yet materialized. Assessing Tariff Impact The Fed warned of increasing economic uncertainty and indicated that it was prepared to wait until the U.S. Tariffs are fully assessed before reducing interest rates. Jerome Powell, the Fed chair, is set to make remarks on Thursday. The U.S. Dollar, which has been hammered recently due to economic and political uncertainty, fell 1% against yen, reaching 146.05 and dropped 0.3% against euro. The dollar index fell 0.4%. This follows a previous 0.8% decline. Bank of America’s Global Fund Manager Survey (FMS) revealed on Tuesday that global asset managers had their largest underweight position against the dollar in nearly 19 years as Trump’s trade policy reduced investor appetite for U.S. investments. Retail sales figures for April, due Thursday, will be the next big indicator of the health of the U.S. economy. On the same day, Russia and Ukraine will hold talks in Istanbul in hopes of reaching a ceasefire after three years in Europe's deadliest conflict since World War Two. U.S. crude oil fell 1.3%, to $62.84 per barrel, after hitting a record high of two weeks in the previous session. Gold spot fell 0.3% per ounce to $3,237 as trade tensions eased and its appeal as a safe haven was weakened.
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EU proposals to curb more green rules for farming subsidies
As part of its plans to reduce regulations and paperwork, the European Commission on Wednesday proposed a further easing of environmental conditions that are tied to EU's massive farming subsidy program. Last year, farmers in Europe used their political power to protest against issues such as strict EU regulations and cheap imported goods. The EU responded by reducing some of the green conditions that were attached to farm subsidies. The Commission announced on Wednesday that it would go further in its plans to change the green conditions, other rules, and to limit on-site inspections to just once a year. It said this could save farmers as much as 1.58 billion Euros per annum. Around 387 billion euro is the value of EU Common Agricultural Policy's (CAP) farming subsidies, which makes up around a third (2021-2027) of the total budget of the EU. The EU will also double the maximum annual lump sum payment they can receive, from 2,500 Euros to 2,500 Euros. The EU Agriculture Commissioner Christophe Hansen stated that "the Commission is on the side of farmers and we do our best to reduce bureaucracy, so they can concentrate on what they are best at: producing food for us all while protecting our resources." The EU encouraged farmers to conserve permanent grasslands to store CO2 and other changes allow farms to remove 10% of them, instead of 5%. Farmers will be able receive more subsidies to meet their existing obligations to protect peatlands and wetland. This proposal will also allow countries to respond more quickly to natural disasters such as droughts and heatwaves that many European farmers face more often due climate change. These proposals are part of the "simplification-omnibus" series from the EU, which aims to reduce paperwork and policies for European companies that struggle to compete against China and America, where President Donald Trump has aggressively cut regulations. The EU would be able, as well, to make more significant changes to its national plans to distribute EU-faming subsidies without having to seek EU approval first. Now, the EU and its legislators must negotiate and approve these proposals. (Reporting and editing by Ed Osmond, Kate Abnett)
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The EU must reserve over 10 billion Euros for key minerals, according to the agency's head
The European Union must create funds worth more than 11 billion euros to encourage investment in exploration, mining, and recycling of key raw materials. This is what the head of a EU-funded agency on key minerals told me on Wednesday. The bloc has set 2030 goals for 34 minerals, such as copper and lithium, that are required for its green transformation - to mine 10% and recycle 25% of its needs and process 40% in Europe. The directive also stipulated that no single country could supply more than 65 percent of any given mineral. The EU is more dependent on China than this for many minerals. Bernd Schaefer of EIT RawMaterials said that the bloc should set aside money for mining and recycling in its budget for the next seven years, starting 2028. In an interview, he said that the project should start off with at least 2 or 3 billion euros. It has the potential to grow significantly. Schaefer said that the EU needed a fund for exploration of about 10 billion euro to find out what minerals it could mine. Combining private funds with public investment, the total amount of money invested could reach around 100 billion euro. Schaefer stated that the bloc must assess future demand and supply of each mineral, and translate general alliances with partners internationally into tangible volumes in a time when geopolitical tensions are increasing. Schaefer stated that "the Americans are very hands-on in getting things on the road." It should be a warning to Europe that it must act immediately. He said that the EU's raw material targets were not taken into account when EU countries planned to increase their defence spending. This meant Europe needed more minerals like vanadium and titanium. The volumes aren't huge but the sourcing is more sensitive and there is an increased sense of urgency compared to raw materials for energy or mobility.
Residents of Libya's capital are trapped in the most intense fighting they have seen for years
Witnesses in Tripoli said that the most intense clashes since years continued through Wednesday morning after Monday's death of a key militia leader sparked fighting between rival groups.
The United Nations Libya Mission UNSMIL expressed its "deep alarm" at the violence escalating in Tripoli's densely populated areas and called for an immediate ceasefire.
The latest unrests in Libya's capital follow battles that seemed to consolidate Abdulhamid al-Dbeibah's power as prime minister of the divided government of National Unity (GNU), and an ally of Turkey.
Any prolonged fighting in Tripoli could attract factions outside of the capital. This could lead to an escalation among Libya's numerous armed actors after years relative calm.
The English-language Libyan Observer reports that the main fighting took place on Wednesday between the Dbeibah aligned 444 Brigade, and the Special Deterrence Force(Rada), which is the last major armed Tripoli group not in his camp.
Residents of Tripoli trapped inside their homes due to the fighting expressed horror at the sudden outbreak of violence that followed weeks of increasing tensions between armed groups.
It's terrifying to watch all the intense fighting. "I had my family all in one room so that we could avoid the random shelling," said by phone a father of 3 in Dahra.
Mohanad Juma, a resident of the western suburb Saraj, said that fighting would stop for a few moments before it resumed. "Each time the fighting stops, we feel relieved. "But then we lose our hope again," said he.
ARMED FACTIONS
Libya has seen little stability since an uprising in 2011 backed by NATO ousted Muammar Gadaffi, the longtime autocrat. The country was split in 2014 into rival eastern and Western factions. However, a major outbreak of warfare halted in 2020 with a ceasefire.
Libya, a major energy exporter and a waystation for migrants headed to Europe, has attracted foreign powers, including Turkey, Russia and Egypt, as well as the United Arab Emirates, into its conflict. The main oil facilities of Libya are located in the south and east, away from the current fighting.
While the eastern part of Libya is dominated by Khalifa haftar's Libyan National Army for over a decade, control in Tripoli as well as western Libya is splintered between numerous armed groups.
Dbeibah ordered on Tuesday the dismantling what he called irregular military groups.
This announcement follows the death of Abdulghani Kikli (also known as Ghaniwa), a major militia leader, on Monday, and the unexpected defeat of his Stabilisation Support Apparatus group by factions aligned to Dbeibah.
The 444 Brigade and the 111 Brigade, which are allies of Dbeibah, have taken over SSA territory, indicating a concentration of power within the fragmented capital. Rada is the only major faction that has not been closely linked to the Prime Minister.
(source: Reuters)