Wednesday

20th Feb 2019

EU and US warn Ukraine it risks going bust

Brussels and Washington have told Kiev it is unlikely to get International Monetary Fund (IMF) aid after it binned plans to sign an EU treaty.

EU foreign relations chief Catherine Ashton said in a statement on Thursday (21 November) the EU pact was a chance for Ukraine to show it "is serious about its modernisation pledge and becoming a predictable and reliable interlocutor for international markets."

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

  • Yanukovych (l) and Putin: Ukraine blamed the move on Russian trade pressure (Photo: president.gov.ua)

She added: "It would have … given momentum to negotiations on a new standby arrangement with the IMF."

US state department spokeswoman Jen Psaki said the EU treaty was "an historic opportunity to … demonstrate to international financial institutions and investors its [Ukraine's] unwavering commitment to democratic reform."

IMF and EU processes are not formally linked, but European and US diplomats have influence in the Washington-based body.

Ukraine's rift with the EU also means that a European loan, worth €610 million, is likely to be put on hold.

The IMF is in any case unhappy with Kiev.

It suspended a credit line worth $15 billion in 2011 because Ukraine reneged on promises to stop subsidising household gas bills.

It is currently in talks with Kiev on a new credit line reportedly worth $10 billion to $15 billion.

Ukraine needs the money to help with $60 billion of looming debt repayments. It has just $22 billion in foreign currency reserves and the same lousy credit rating as EU bailout countries Cyprus and Greece.

The EU and US "disappointment" comes after Ukraine on Thursday issued a decree halting the signature of an EU association and trade pact at a summit in Vilnius next week.

The move follows a series of what one Ukrainian diplomat described as "man-to-man" meetings between Yanukovych and Russian President Vladimir Putin.

It is unclear what Putin offered or threatened in return for the u-turn.

But Swedish foreign minister Carl Bildt on Thursday accused Russia of blackmailing Ukraine with gas prices and trade blockades.

His remarks came in a debate with a counsellor from the Russian embassy to the US, Dmitry Cherkashin, hosted by the Brookings Institution, a think tank, in Washington.

"I can just assure you that Russia does not exert any pressure on its neighbours," Cherkashin said.

"So you are saying that when the Ukrainians are saying that you’ve cut trade and when the Ukrainians are saying that you are forcing them to near bankruptcy, the Ukrainians are lying?" Bildt replied.

The Ashton and Psaki statements added that the West is "keeping the door open" on Ukraine relations for the sake of "Ukrainian people."

Yanukovych himself on Thursday said he remains committed to "Euro-integration" despite the Vilnius fiasco.

It is unclear what this will mean in practice, however.

The Ukrainian decree also called for the creation of a high level EU-Russia-Ukraine trade panel to promote economic ties.

The idea is not new, but EU diplomats do not believe that Putin, who prefers "man-to-man" meetings, would take it seriously.

One option is for the EU and US to keep giving Ukraine assistance in order to stop Yanukovych from joining Putin's Customs Union and Eurasian Union.

But another option is to cut him loose.

"We should make clear that Ukraine is not welcome in Vilnius at the top level. There should be no more phone calls. No more offers. The EU should make a pause in relations, and six months down the line, when he is left alone to deal with Russian pressure, he will come to us on his knees," an EU diplomat said.

The contact noted that Yanukovych, who is expected to stay in power until at least 2019, has broken trust.

"I don't think EU-Ukraine relations will go anywhere until the current administration has left," the EU source said.

Sweden's Bildt added at the Brookings debate that even if Yanukovych stays out of Putin's Customs Union, Ukraine's future looks bleak.

"They are not going West. I don't think they are going East. I feel they are going down. That's roughly where we are because of the economic problems," he said.

News in Brief

  1. Estonia kicks out Danske Bank over money laundering scandal
  2. May and Juncker meet over Brexit on Wednesday
  3. EU promises to open up advisory groups
  4. EU agrees to limit CO2 emissions by trucks
  5. Juncker under attack in Hungary government ad
  6. EU would not oppose extending Brexit talks, Juncker said
  7. Juncker expects Trump not to impose new car tariffs
  8. Former EU official sentenced for office rape

Stakeholders' Highlights

  1. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID
  2. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership
  3. Intercultural Dialogue PlatformRoundtable: Muslim Heresy and the Politics of Human Rights, Dr. Matthew J. Nelson
  4. Platform for Peace and JusticeTurkey suffering from the lack of the rule of law
  5. UNESDASoft Drinks Europe welcomes Tim Brett as its new president
  6. Nordic Council of MinistersNordic ministers take the lead in combatting climate change
  7. Counter BalanceEuropean Parliament takes incoherent steps on climate in future EU investments
  8. International Partnership For Human RightsKyrgyz authorities have to immediately release human rights defender Azimjon Askarov
  9. Nordic Council of MinistersSeminar on disability and user involvement
  10. Nordic Council of MinistersInternational appetite for Nordic food policies
  11. Nordic Council of MinistersNew Nordic Innovation House in Hong Kong
  12. Nordic Council of MinistersNordic Region has chance to become world leader when it comes to start-ups

Latest News

  1. College of Europe alumni ask rector to cut Saudi ties
  2. EU says Hungary's anti-Juncker campaign is fake news
  3. Trump right for once: Europe should take back foreign fighters
  4. EU should clarify rules for plant burgers and lab meat
  5. Italian populists could be second biggest force in EU parliament
  6. Merkel defends Russia ties, ridicules Trump on cars
  7. British MPs condemn Facebook CEO's misrule
  8. EU's chance to step up on Hungary and Poland

Stakeholders' Highlights

  1. Nordic Council of MinistersTheresa May: “We will not be turning our backs on the Nordic region”
  2. International Partnership for Human RightsOpen letter to Emmanuel Macron ahead of Uzbek president's visit
  3. International Partnership for Human RightsRaising key human rights concerns during visit of Turkmenistan's foreign minister
  4. Nordic Council of MinistersState of the Nordic Region presented in Brussels
  5. Nordic Council of MinistersThe vital bioeconomy. New issue of “Sustainable Growth the Nordic Way” out now
  6. Nordic Council of MinistersThe Nordic gender effect goes international
  7. Nordic Council of MinistersPaula Lehtomaki from Finland elected as the Council's first female Secretary General
  8. Nordic Council of MinistersNordic design sets the stage at COP24, running a competition for sustainable chairs
  9. Counter BalanceIn Kenya, a motorway funded by the European Investment Bank runs over roadside dwellers
  10. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  11. International Partnership for Human RightsCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  12. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs

Join EUobserver

Support quality EU news

Join us