The latest US proposal to end the Russia-Ukraine war, transforming the Kyiv-held parts of Donbas into a “free economic zone” in exchange for Ukrainian troop withdrawal has opened a new phase of political and strategic upheaval in an already fraught conflict.
Zelenskyy said that Washington was still pushing it to cede land to Russia as part of an agreement to end the war that started with Moscow’s February 2022 invasion.
Washington wants only Ukraine, not Russia, to withdraw its troops from parts of the eastern Donetsk region, where a demilitarised “free economic zone” would be installed as a buffer between the two armies, he said.
Under the latest US plan, Moscow would also stay where it is in the south of the country, but pull some of its troops out of Ukrainian regions that Russian President Vladimir Putin has not claimed to have annexed in the north.
The idea reflects the Trump administration’s increasing impatience to secure a deal by year-end. According to multiple reports, Donald Trump has informally set a “Christmas deadline” for Ukraine to accept the broad contours of a proposal that Kyiv has so far viewed as an effective territorial concession to Russia.
This push comes amid what aides describe as Trump’s growing frustration with the lack of progress. Advisers say he is “sick of meetings just for the sake of meetings”, a sentiment that explains why the administration is pressing Kyiv harder now.
A peace plan built around ceding territory
Zelenskyy has been unusually direct in outlining what he says Washington is demanding. According to him, the US plan would require Ukraine to withdraw forces from the remaining parts of Donetsk and Luhansk that Kyiv still controls, a move that would de facto formalise Russia’s territorial gains and erode Ukraine’s leverage.
In return, the US says it will establish a “free trade” or “free economic zone” in these territories, ostensibly as part of a vision to rebuild eastern Ukraine and stimulate cross-border commercial activity.
Earlier the Washington had floated the idea of Kyiv outright handing over these territories to Russia to unlock negotiations, according to multiple reports. The current proposal attempts a middle ground but one that still centres on Ukrainian withdrawal.
Kyiv, however, views the latest suggestion as merely a reframed version of the same problem: a settlement that forces Ukraine to surrender strategic land while rewarding Moscow’s military advances. Zelenskyy reiterated that any deal must offer credible security guarantees and cannot legitimise Russian occupation.
A free economic zone: Stabiliser or strategic gamble?
Economically, proponents argue that Donbas, historically industrial, resource-rich and home to pre-war manufacturing clusters could benefit from an internationally backed economic corridor. Supporters inside the US administration believe that trade incentives could “cool down” the conflict environment and create conditions under which Moscow might accept a freeze.
However, analysts warn that such zones do not magically neutralise geopolitical conflicts. Similar experiments in contested regions have rarely succeeded without pre-existing security guarantees. In this case, Russian forces remain deeply entrenched, and Moscow has shown little interest in ceding control or allowing Western-administered economic arrangements near its lines.
For Ukraine, the risk is stark: withdrawing troops may effectively open the door for Russian advances into the very areas designated for the proposed economic zone, rendering the entire plan unworkable. The US appears to be assuming that Moscow would refrain from pushing further, though the Kremlin has made no such commitments publicly.
Kyiv’s dilemma: Pressure from Washington, threats from Moscow
Zelenskyy faces immense internal pressure. Any concession involving territorial withdrawal is politically radioactive. National sentiment strongly opposes ceding land and Kyiv’s parliament has repeatedly rejected proposals that legitimise Russian control. Ukrainian officials told CNN and Al Jazeera that Kyiv cannot accept an arrangement in which its military steps back while Russia faces no reciprocal obligations.
Meanwhile, US officials insist they are seeking a “realistic” pathway to ceasefire. Trump’s team argues that the war has reached a stalemate and that Ukraine must make hard choices before the conflict further depletes its economy and manpower.
Yet, critics note that the US proposal appears to treat Donbas as a negotiable economic project rather than a battleground central to Ukrainian sovereignty. The assumption that a “free trade zone” could resolve a war driven by identity, security and power not merely economics has been met with scepticism across European capitals.
Does Washington’s economic gambit have any real chance?
Ultimately, the question is whether an economic incentive can substitute for a military or diplomatic solution. Most analysts say no. Without Russian buy-in, robust security guarantees, and a political framework that respects Ukrainian sovereignty, any free economic zone risks becoming an empty construct.
For now, the proposal reflects Washington’s urgency more than a workable peace plan. Whether Kyiv bends under US pressure or whether Trump adjusts his expectations will shape the next critical weeks of the war.
Trump ‘frustrated’ with Kyiv, Moscow over talks on war
US President Donald Trump is “extremely frustrated” with Russia and Ukraine, his spokeswoman said on Thursday, as Kyiv said Washington was still pushing it to make major territorial concessions as part of its plan to end the nearly four-year war.
“The president is extremely frustrated with both sides of this war,” Karoline Leavitt told reporters. “He doesn’t want any more talk. He wants action. He wants this war to come to an end.”
Earlier Ukrainian President Volodymyr Zelenskyy made remarks that appeared to show little had changed in Washington’s core position on how the conflict should end since it sent a 28-point plan to Kyiv and Moscow last month that heavily favoured Russia.
As Christmas approaches, the key question remains: does Trump truly believe Donbas can be transformed into a free-trade bridge to peace or is this another diplomatic dead end?
With inputs from agencies
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