Ukrainian President Volodymyr Zelenskiy announced that a security guarantee with the US was “100% ready,” a major advance in the ongoing peace talks to bring the four-year old war to an end.

Land and security guarantees have been the two main sticking points in the talks in the last two months, but it appears that a deal was struck with US President Donald Trump last week during a meeting in Davos.

Zelenskiy repeated that control over territory remains main stumbling block and Ukraine will not cede any of its territories, while Russia demands the entire Donbas. But he added in comments to journalists on January 25 that the security guarantees agreement with the US is “fully ready.” He said the parties are now awaiting the appropriate moment for signing, after which the document will need to be ratified by the US Congress and the Ukrainian Parliament.

As bne IntelliNews speculated, following Special Envoy Steve Witkoff’s comment that “only one item is left” to settle in the peace talks during his speech at Davos last week, the US security guarantees were agreed during Zelenskiy impromptu meeting with Trump in Switzerland.

Separately, it appears that a row over who controls the Zaporizhzhia nuclear power plant (ZNPP) has also been settled. Currently under Russian military occupation, the US suggested a joint three-way control of the NPP, the largest in Europe, whereas Bankova suggested two-way control between the US and Ukraine, with the US agreeing to sell power to Russia that intends to build a large datacentre in the region.

A strong security deal will be a cornerstone for a negotiated peace settlement and opens the possibility for Bankova to give up some land. But it remains unclear if the Kremlin will accept the US military backing of Ukraine against further aggression. However, during the failed talks in 2022 the Kremlin indicated that it would accept bilateral deals with Ukraine’s western partners, as its main objection was to any attempt to bring Ukraine specifically into Nato, not provide it with security deals in general.

A less reported aspect to security deals is that Russia is also seeking a security deal for itself, according to bne IntelliNews sources in Moscow. Putin faces a similar problem. Russian President Vladimir Putin is keen to avoid that further down the line a new Ukrainian president ties up with a new US administration that jointly decides to retake the five regions occupied and annexed by Moscow in the current war by military force. As a result, the Kremlin has been demanding not just the de facto recognition of Russia’s sovereignty over the regions, but de jura recognition as well. No details on this point have been released to the public so far.

Security guarantees have been a core demand for Ukraine since the failed 2022 Istanbul peace deal. That agreement, that would have brought the war to an end in the first month of fighting, floundered after former UK Prime Minister Boris Johnson flew to Kyiv a few days later and said the western allies would not provide a security deal for Ukraine and told Zelenskiy to “fight on.”

The Istanbul deal asked for security guarantees from Great Britain, China, Russia, the US, France, Turkey, Germany, Canada, Italy, Poland, Israel. However, the Kremlin also asked to be included, giving it’s a de facto veto over any action.

This time round the White House proposed a cut down decade-long Article 5-like security deal right at the start of the process when the original 28-point peace plan (28PPP) deal was floated last autumn. Those guarantees crucially include a promise to come to Ukraine’s military aid should Russia re-invade.

For Zelenskiy a guarantee is of paramount importance as he needs to secure Ukraine’s post-war borders from future attack. It is also essential as the mooted $800bn so-called Prosperity Package to raise money from the private sector to rebuild Ukraine will not work if a Damoclesian threat of renewed war hangs over Ukraine; investors have told bne IntelliNews that they will not invest until that political threat recedes and that could take years. A strong Article 5-like security deal will go a long way to reducing that political risk.

The EU intends to prime the Prosperity Package some €100bn to get the fund off the ground. US fund Blackrock is acting as advisor and resuscitated its earlier proposed reconstruction fund to raise at least $400bn for Ukrainian investment projects. Zelenskiy met with BlackRock’s boss Larry Fink in Davos to discuss the details. The Trump administration has also suggested taking $100bn from Russia’s frozen assets in Europe and using them to seed a US-Ukraine joint investment fund.

Details of the deal are still emerging. At the Mar-a-Lago meeting on December 28 between Zelenskiy and Trump the Ukrainian president pushed for, and apparently secured, a 15-year duration for the US guarantee.

EU accession acceleration

Europe will not participate in more than “security assurances”, a commitment to continue to provide Ukraine with budget funding and weapons supplies but no military collective security commitment should Russia invade for a second time.

However, the EU founding treaty does contain a collective security clause, Article 42, that requires member states to come to the military aid of the others should they be attacked by a third party, although this article has never been invoked.

In lieu of that, it appears from comments made by Bankova that Ukraine’s EU accession will be accelerated instead. All the EU accession bid chapters will formally be opened for negotiation in the first half of this year and Ukraine could be admitted into the EU as soon as 2027. If that happens then that will also greatly boost the appeal Ukraine’s investment climate. As bne IntelliNews has long argued, by far the most successful reform strategy for any former Warsaw bloc country after 1991 has simply been: “join the EU.”

The accelerated membership of the EU was first suggested by the Trump administration as part of the original 28PPP and initially met with resistance by Brussels as impossibly fast. However, it appears that the White House is trying to force the idea on Brussels, which has yet to comment.

“The second layer of security guarantees for Ukraine consists of European guarantees through the 'coalition of the willing,' along with EU membership as key economic safeguards,” Zelenskiy said. “Technically, Ukraine will be ready to open all negotiation clusters [for EU accession] in the first half of 2026. We believe the country will be fully prepared — technically — by 2027.”

“We want a specific date for the end of the war included in the agreement, so that all parties — including the aggressor, who would sign this 22-point plan if such a moment arrives — are bound to uphold these commitments,” Zelenskiy added, referring to his version of the peace agreement.

Some confusion remains over which version of the peace deal is being discussed at the current peace talks as there are two: the 27-point peace plan (27PPP) agreed between the US envoys and Putin at the Moscow meeting on December 3 and a 20-point peace plan (20PPP) Ukrainian counter offer submitted to the Kremlin on Christmas Eve. However, both sides have said the details of the other points are less important than the key issues of land and security guarantees.

That is a radical acceleration of the process. The negotiations on the 33 chapters were supposed to have been opened last July but were postponed at the last minute when several EU members -- including Hungary, but not only – objected, saying the EU was not ready.

Even then the process will be slowed as the EU itself will have to undergo big reforms to accommodate Ukraine, a large country and an agricultural powerhouse. Last week Brussels admitted that Ukraine will need temporary exceptions in two areas while joining the EU in meeting environment rules and agriculture, according to Ukraine’s Deputy Prime Minister for European and Euro-Atlantic Integration Taras Kachka.

As bne IntelliNews reported, Ukraine cannot join the EU unless Common Agricultural Policy (CAP) is reformed. Under the current EU rules, Ukraine would be entitled to some €186bn in subsidies, eating up a very large share of the EU agricultural budget that accounts for a third of all EU spending each year. Moreover, countries like Poland and Hungary, would go from net beneficiaries of the EU’s budget to net contributors to the budget and so are very likely to veto Ukraine’s accession unless the way the agricultural subsidies are calculated are amended. Both countries have already (illegally) blocked renewing Ukraine’s war-time exemptions to EU import duties last July due to the competitions it posed to their own agricultural sectors. Cheap Ukrainian grain crashed the Polish domestic grain market in 2023 and lead to a unilateral ban on imports by Warsaw. In theory, trade is the one area that EU has supranational authority to set policy, but in practice if the other members refuse to play along there is little Brussels can do to impose its will on member states.

The environmental issue will also be tricky. EU farmers are already complaining that the strict EU regulators on food production impose extra cost on them and make European agricultural products uncompetitive vs their international rivals. These problems have already delayed a mega-trade deal with Mercosur, one of European Commission President Ursula von der Leyen’s flagship projects. Last week, the European Parliament stalled the trade agreement with Mercosur for up to two years by voting to submit the deal to the bloc's highest court for approval. As European economies slide into recession, von der Leyen has been forced to roll back many of her flagship green policies to boost EU economies and help European farmers. Currently Ukraine’s agricultural sector is also free of these EU regulations and so can produce food products much cheaper than any EU agro-business.

Two technical agricultural issues stand out: veterinary regulations and the use of plant protection products, especially pesticides. However, Ukrainian government officials said the country has a clear action plan for all 33 chapters and understands that success depends on the pace and quality of reform implementation.

"Ukraine's integration into the EU will save money and preserve European agriculture," Kachka emphasized.

Territories still a problem

The progress on security guarantees is more than welcome, but the main sticking point of territorial control and recognition remains unresolved. Putin has made it abundantly clear that he is not prepared to offer any concessions on his demand that the Armed Forces of Ukraine (AFU) hand over control of the remaining 15% of the Donetsk region the Russian forces still do not occupy - including control of the heavily defended “Fortress Line.”

Moreover, it has recently reported that not only does the Kremlin want the AFU to withdraw, but it intends to station its para-military Rosgvardiya police force in that territory, which is under Putin’s direct control.

Previously, Zelenskiy said Ukraine was operating under the “we stand where we stand” principle and wanted the region divided along the current line of contract. Later, as a compromise, he suggested that if the AFU withdrew from Donetsk then the Armed Forces of Russia (AFR) withdraw by an equal distance creating a Korean DMZ-model solution. The Trump administration has also suggested that this territory be turned into some sort of Free Economic Zone, but so far, no acceptable formula has been found.

The first three-way talks between Russia, Ukraine and the US got underway at the Abu Dhabi meeting on January 24 to discuss this issue and are currently slated to resume next week.