Tuesday

18th Jun 2019

Interview

Ukraine eyes €500m EU aid, while fighting corruption

  • Danyliuk: 'Whenever you try to change something you get a pushback' (Photo: ec.europa.eu)

Kiev is hoping to secure more than €500m in EU aid by July, amid its never-ending fight against corruption.

"Hopefully, it will be in June. I really hope so," Oleksandr Danyliuk, the Ukrainian finance minister, told EUobserver in an interview.

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The tranche would be part of a €1bn EU programme designed to give the Ukrainian state more liquidity.

It is not a done deal, and will require MEPs approval, amid EU concerns that the Ukrainian state is not a safe pair of hands.

The EU withheld the last tranche of its 2017 Ukraine programme because of delays on a new IT system to check civil servants' asset declarations. That system is still not in place. "It's in the process", Danyliuk said.

The country has made progress in fighting graft, he noted.

Privatisation = 'skin in the game'

The privatisation process of the 3,500 or so companies still owned by the state has been made more transparent to attract international investors, he said.

"Whoever wants to come to Ukraine, the opportunity is there," Danyliuk said.

"If we bring in foreign investors, it also helps us politically. If we have a lot of Belgian, or French, or Dutch, or US companies, then those countries have some skin in the game", he added.

Russia's invasion of Ukraine had depreciated assets, but the minister said privatisation should go ahead anyway.

"We might have to live with this war for a long time and Ukraine is a huge country. We need to live even if the war will stay," he said.

Danyliuk said Ukraine had also boosted tax income by 27 percent over the past year by measures designed to curb its shadow economy, which is estimated to account for over 30 percent of GDP.

But with the EU preparing to pour another €1bn into the Ukrainian treasury, Danyliuk said much remained to be done to fight corruption.

Ukrainian tycoons, such as Igor Kolomoisky, Viktor Pinchuk, Rinat Akhmetov, and Dmitry Firtash still had undue media and political party influence, the finance minister indicated.

But Danyliuk focused his attention on corrupt civil servants in the tax, state security, and general prosecutors services instead, who, he said, were doing more to hold back the country than the oligarch class.

"This is huge. It's not small level. We're talking about billions", he said, referring, for instance, to the cost to Ukrainian businesses that had to pay kickbacks to get VAT returns or to quash bogus criminal investigations.

The civil service needed a purge of staff, the minister said.

"Some people, who are corrupt, you need to replace them, because they won't be able to work under the new rules," he said.

Prosecutor general should go

He also repeated his previous call for Ukraine's prosecutor general, Igor Lutsenko, to step down.

He said it was not normal that Lutsenko had held secret meetings with the subjects of a criminal investigation at a flower market in The Netherlands.

He also said Lutsenko had failed to stop prosecutors from extorting money from the business sector.

Lutsenko is a close friend of Ukrainian president Petro Poroshenko.

When asked by EUobserver if Danyliuk risked his own position by going after the chief prosecutor in public, Danyliuk said: "If you don't take a risk, you don't achieve anything".

"I've had some investigations opened against me," he added.

"Whenever you try to change something you get a pushback, sometimes a very nasty pushback", he said.

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