EU MP proposes financial aid measures for Ukraine Association reforms

The EU should change its strategy in negotiating the Ukraine-EU Association Agreement and offer financial aid, European Parliament MP Pawel Zalewski wrote in an article published on the Ukrayinska Pravda news site on November 19. The Ukrainian budget currently needs USD 12-15 bln, he said, just a fraction of the hundreds of billions in bailout funds offered in 2010. In light of his financial trouble, Ukrainian President Viktor Yanukovych gains little from signing the Association Agreement. Moreover, Ukrainian enterprises will suffer in the short term from the free trade competition created by the agreement and Russian sanctions, Zalewski wrote. These enterprises also need time to adapt to European requirements. “If Yanukovych signs the Association Agreement without guarantees of financing from the IMF or EU, he gets his country in trouble for enormous losses that no reasonable politician can allow,” he wrote.

If the European Parliament wants to make a constructive contribution to signing the agreement, then the mandate of the diplomatic mission led by former Polish President Aleksander Kwasniewski and former European Parliament President pat Cox needs to be changed to hold negotiations to create mechanisms of economic support for Ukrainian reforms, Zalewski wrote. “A plan needs to be put together in which periodic payments correlate with reforms,” he wrote. “In this context, the issue of freeing (Yulia) Tymoshenko can be raised as one of the package’s conditions. (Viktor) Yanukovych’s interests don’t contradict the EU’s interests. If we unite our strategic efforts, then we’ll achieve success. Unfortunately, today both sides don’t understand each other and present their priorities in such a way that they appear divergent.”

The EU can offer financial aid to support reforms but not to pay off debt, EU Representative to Ukraine Jan Tombinski said in an interview published by the BBC on November 16. The EU has already been financing the implementation of reforms in various sectors, Tombinski said, but more financial aid will come when the economy undergoes developments to make it more resilient to crises. “The meaning of the Association isn’t to ‘buy’ Ukraine, but to help it become a better country, to sooner invest in and be its partner, and not to ‘buy’ it,” he said.

Zenon Zawada: Given that the EU-Ukraine talks have reached a dead end, with a rejection of the Association Agreement more likely than not, Zalewski’s proposal is a noteworthy attempt to help both sides achieve their mutual goals and set aside perceived differences. Rather than permanently closing the door to Ukraine at the Eastern Partnership summit in Vilnius on November 28-29, we believe one of the more likely outcomes is the EU will extend its cooperation with Ukraine as part of a longer plan similar to what Zalewski has proposed.

In this sense, the EU could save its face and succeed in diminishing the failure to sign the Association Agreement with the launch of a new program of cooperation that will exchange financing for reforms, as suggested by Zalewski. That would include the goal of achieving the eventual release of imprisoned former Ukrainian Prime Minister, Yulia Tymoshenko, which we believe won’t be arranged for in time for the summit.