Monday

2nd Oct 2023

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

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe 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.

Opinion

Punish Belarus too for aiding Putin's Ukraine war

While Belarus has not sent its own troops to fight Russia's war in Ukraine, the Minsk dictatorship has been heavily involved. As a result, Belarus must be punished for its involvement — what can the world do to sanction Belarus?

Latest News

  1. EU ministers go to Kyiv to downplay fears on US, Slovak aid
  2. Hoekstra faces tough questioning to be EU Green chief
  3. Frontex shared personal data of NGO staff with Europol six times
  4. Why EU Commission dumped Google's favourite consultant
  5. Slovak's 'illiberal' Fico victory boosts Orbán, but faces checks
  6. European Political Community and key media vote This WEEK
  7. Is the ECB sabotaging Europe's Green Deal?
  8. The realists vs idealists Brussels battle on Ukraine's EU accession

Stakeholders' Highlights

  1. Nordic Council of MinistersThe Nordic Region is stepping up its efforts to reduce food waste
  2. International Medical Devices Regulators Forum (IMDRF)Join regulators, industry & healthcare experts at the 24th IMDRF session, September 25-26, Berlin. Register by 20 Sept to join in person or online.
  3. UNOPSUNOPS begins works under EU-funded project to repair schools in Ukraine
  4. Georgia Ministry of Foreign AffairsGeorgia effectively prevents sanctions evasion against Russia – confirm EU, UK, USA
  5. International Medical Devices Regulators Forum (IMDRF)Join regulators & industry experts at the 24th IMDRF session- Berlin September 25-26. Register early for discounted hotel rates
  6. Nordic Council of MinistersGlobal interest in the new Nordic Nutrition Recommendations – here are the speakers for the launch

Stakeholders' Highlights

  1. Nordic Council of Ministers20 June: Launch of the new Nordic Nutrition Recommendations
  2. International Sustainable Finance CentreJoin CEE Sustainable Finance Summit, 15 – 19 May 2023, high-level event for finance & business
  3. ICLEISeven actionable measures to make food procurement in Europe more sustainable
  4. World BankWorld Bank Report Highlights Role of Human Development for a Successful Green Transition in Europe
  5. Nordic Council of MinistersNordic summit to step up the fight against food loss and waste
  6. Nordic Council of MinistersThink-tank: Strengthen co-operation around tech giants’ influence in the Nordics

Join EUobserver

Support quality EU news

Join us