The EU does not forget Ukraine. In the same time as Russian President Medvedev was on an official visit to Kiev the European Parliament has approved a EUR 500 million loan to Ukraine to help it overcome the financial crisis.

 The European Parliament speaker Jerzy Buzek welcomed the decision of the European Parliament to support Ukraine through a loan facility and declare Ukraine a close strategic partner of the European Union.
 “The assistance is provided at a time when the EU is helping to mobilize financing to support the reform of the Ukrainian energy sector, including developing a sustainable solution to Ukraine’s medium-term gas transit and gas payment obligations,” Buzek said.
 “Nevertheless, EU macro-financial assistance can only contribute to economic stabilization if the main political forces in Ukraine ensure political stability and establish broad consensus on the rigorous implementation of the necessary structural reforms,” he added.

 At the end of April the European Commission gave to Kiev a list of 18 reforms, implementation of which will provide an opportunity to attract additional financial assistance to Ukraine from the EU. The document contains specific activities and possible EU assistance in response to their implementation. The list includes political reforms to ensure macro-financial stability, business climate, energy sector reform, civil aviation and the environment.

 Ukrainian President Yanukovich is also hoping to secure a new $19bn credit programme from the International Monetary Fund (IMF) for its struggling economy after ramming through Rada a 2010 budget with a relatively tight deficit target of 5.3 per cent of GDP.

“Russia, as a participant in the G20 and the G8, is ready, as a partner, to advance all issues relating to Ukraine, including International Monetary Fund and World Bank support,” president Medvedev said during his visit.

 Russia has stepped pressure on Kiev. The Kremlin is ready to fund a complete overhaul of Ukraine’s gas network if it agreed to the merger between Ukraine’s energy holding Naftogas and Russia’s state gas giant Gazprom. “If the two companies merge, Gazprom can rely on its financial resources to fully modernise Ukraine’s gas transportation system,” said Alexei Miller, the head of Gazprom.

Yanukovich has suggested the European Union should be involved in any talk of a merger. The Ukrainian leader is for the creation of a consortium involving the EU as well as Russia to modernise the ageing pipelines. Energy minister Yuri Boiko said that gas transportation system needs $ 600 million in 2010. The complete modernisation will cost about $ 3bn.

Statement – EU Parliament May 18th, 2010.