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Reprinted with permission from Germinal G. Van…
Scott Bessent, the incumbent US Secretary of the Treasury, recently “bought” Ukraine through the Reconstruction Investment Fund by applying a leverage buyout, also known as an LBO in the investment world. What is an LBO, and why does it matter in the case of Ukraine?
A leverage buyout is a type of acquisition where a company is bought primarily using borrowed money. It means that the buyer provides a relatively small amount of their own capital (equity) and finances the rest of the purchase price with debt, such as loans and bonds.
And the assets of the acquired company are often used as collateral to secure these loans. Scott Bessent, who is a professional trader by training, has applied this strategy numerous times when he ran his hedge fund Key Square Group, and is now applying this very same strategy to a sovereign country, Ukraine.
The reason it matters in the case of Ukraine is that Ukraine looks like a company in distress. Ukraine has been involved in a war since 2022. It has a debt-to-GDP ratio above 80%, which means that Ukraine is heavily in debt. Moreover, the country has experienced political unrest, and heavily depends on foreign aid, especially on US assistance for military and economic purposes. Thus, Ukraine is the perfect country to which a leverage buyout could be applied, and it is applied through the Reconstruction Investment Fund.
The fund is structured as a 50/50 partnership, with equal representation ensuring collaborative decision-making. On paper, Ukraine maintains ownership of its resources, and the fund is managed jointly. Here is how the funding mechanism works. On Ukraine’s part: 50% of revenues from new government-owned natural resource projects, including minerals, gas, oil, and related infrastructure. On the US part: direct financial investment will be made through military aid.
The official purpose of the Reconstruction Investment Fund is to accelerate Ukraine’s economic recovery by reinvesting fund profits into projects like mineral extraction, energy infrastructure, ports, and transportation networks; to attract private-sector investment; and to provide economic returns for both nations, with the United States gaining preferential access to purchase resources or designate buyers.
The Marshall Floorplan
What is important to understand here is that the contribution the US brings into this “partnership” is strategic and carefully crafted. The Pentagon, which finances these investments on behalf of the US government, injects minimal capital into the fund while Ukraine’s natural resources are used as collateral to back the rest of these investments.
Ukraine has nearly no real leverage in this partnership in the sense that it can “walk away” from the negotiation table if it doesn’t like the terms of the deal. The whole country is on economic life support, and no other Western nation is powerful enough to offer Ukraine an alternative to the United States since Western nations themselves crucially depend on American assistance.
The Reconstruction Investment Fund is nothing more than a replica of the Marshall Plan—an economic program designed to rebuild distressed nations the same way investment funds buy up distressed companies and distressed assets. After World War II, the United States implemented the Marshall Plan to kick off the economic recovery of Western Europe. The main result of the Marshall Plan was the American domination of European democracies.
As Western Europe became dependent on American aid, America began to dictate to Europe what policy to follow. The same principle applies to the case of Ukraine. By unilaterally assisting Ukraine militarily and economically through this program, the United States gets to position itself as the main player in the conflict against Russia without direct confrontation, and more importantly, it gets to turn Ukraine into an American colony. Ukraine will be indefinitely tied and indebted to the United States, which means it would be stripped of its economic independence and political sovereignty.
The US has no intention of saving Ukraine and bringing its sovereignty back. Doing so would mean that Ukraine could stand against American interests. The goal of the US government is to make Ukraine a territory that would give the United States full control over Eastern Europe and consolidate its position against Russia. WaL
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PICTURED ABOVE: Ukraine’s Economy Minister Yuliia Svyrydenko (R) meets with Julie S Davis, the US Chargé d’Affaires to Ukraine (L), to receive notice of the Reconstruction Investment Fund’s entry into force on May 23rd, 2025. PC: Yuliia Svyrydenko via Facebook.
