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US offers 'free economic zone' in east if Ukraine cedes Donbas, Zelenskiy says
Published by Global Banking & Finance Review®
Posted on December 11, 2025
3 min readLast updated: January 20, 2026
Global Banking & Finance Review®
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Published by Global Banking & Finance Review®
Posted on December 11, 2025
3 min readLast updated: January 20, 2026
The US proposes a free economic zone in Donbas to Ukraine, with territorial concessions a major sticking point in peace talks with Russia.
By Yuliia Dysa
KYIV, Dec 11 (Reuters) - Ukraine has presented the U.S. with a revised 20-point framework to end its war with Russia, President Volodymyr Zelenskiy said on Thursday, adding that the issue of ceding territory remains a major sticking point in negotiations.
Speaking to reporters in Kyiv, Zelenskiy said the U.S. is offering as a compromise to create a "free economic zone" in the Ukraine-controlled parts of the eastern Donbas which Russia has demanded that Ukraine cede.
"They see it as Ukrainian troops withdrawing from the Donetsk region, and the compromise is supposedly that Russian troops will not enter this part of Donetsk region. They do not know who will govern this territory," he said, adding that Russia is referring to it as a "demilitarized zone".
However, Zelenskiy said there was still no common understanding on the land issue and that Ukrainians should vote on any territorial concessions in a referendum.
Kyiv, in the latest round of frantic shuttle diplomacy, is seeking to balance out a 28-point U.S.-backed plan whose original version was seen as too favourable to Moscow.
Zelenskiy added that Russia's withdrawal from slivers of land in the northeastern Kharkiv and Sumy regions, as well as the southeastern Dnipropetrovsk region, was part of the discussion.
The contact lines in the partially occupied southern regions of Zaporizhzhia and Kherson would be frozen where they are, he added.
The U.S. also offered potential joint governance of the Zaporizhzhia Nuclear Power Plant, the largest such facility in Europe and currently occupied by Russia, which wants to keep the station under its own control.
PRESSURE TO SECURE PEACE
Ukraine is under mounting U.S. pressure to quickly secure a deal with Russia, which has stepped up advances on the frontline in recent months and renewed massive attacks on Ukrainian energy infrastructure.
Zelenskiy, following reports that President Donald Trump had set a Christmas deadline for Ukraine to accept the peace proposal, said Washington had not given Kyiv a strict timeline.
"I think they really wanted, or perhaps still want, to have a complete understanding of where we stand with this agreement by Christmas," he said.
Apart from a 20-point framework, the general peace plan will include separate documents on security guarantees, to prevent Russia from attacking again, and on rebuilding Ukraine's war-hit cities.
Ukraine, which says it has been let down by previous security assurances from allies, insists that guarantees are ratified in parliament.
Zelenskiy said on Thursday he had an "in-depth" discussion on the matter with Secretary of State Marco Rubio, Secretary of Defense Pete Hegseth and White House special envoy Steve Witkoff.
Kyiv also wants to maintain a strong army after fighting ends, and Zelenskiy said the latest draft proposal puts it at 800,000 - higher than in an initial framework, according to reports.
(Reporting by Yuliia Dysa; Writing by Dan Peleschuk; Editing by Andrew Heavens and Philippa Fletcher)
A free economic zone is a designated area within a country where businesses can operate with fewer regulations and lower taxes, aimed at attracting foreign investment and boosting economic activity.
A peace proposal is a formal suggestion put forward to resolve a conflict or dispute, often involving terms and conditions for ending hostilities and establishing a framework for future relations.
Troop withdrawal refers to the process of removing military forces from a specific area or country, often as part of a peace agreement or ceasefire.
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