The EU has allocated €3,3 billion of non-reimbursable aid to Ukraine since 1991, and will commit €186 million of grant assistance through the national programme this year. Key focus of the EU aid in the coming years will be to help Ukraine implement the upcoming Association Agreement.
These were the key messages made by Andrew Rasbash, Head of Cooperation at the EU Delegation to Ukraine at a press briefing in Kyiv on October 17th. Read below the summary of Mr Rasbash’s remarks..
On EU assistance to Ukraine. Since 1991, the EU has committed €3,3 billion of non-reimbursable assistance to Ukraine. In addition to this grant support, EU is also providing loans, including €1,2 billion of macro-financial assistance. On top of this, additional aid comes from other EU institutions: European Investment Bank and Euratom.
The National envelope for Ukraine between 2007 and 2013 is €1 billion.
On EU assistance decisions this year. There is EU’s national programme of support for Ukraine which we will hope will be decided by the European Commission in a few weeks time. The expected amount of the EU assistance is €186 million. These funds will be used for programmes that will be implemented in the coming five years. In other words, we are planning to commit these funds by the end of 2013, but the disbursement of these funds will take place in the coming five years or so.
The main instrument is budget support. Key focus of this year is on three sectors: a) environment, b) removing technical barriers to trade, and c) regional development. Of the total amount of €186 million, about €165 million will be used in these three sectors.
The other €21 million will be used for technical assistance. When we talk about technical assistance we mean primarily experts.
In addition, we may use some grants to NGOs, municipalities and so on.
On budget support. What we do in those three priority sectors is that we look at national strategy in these sectors. We look at where Ukraine is now, where it wants to get to in five years time, what actions it must take to get there, how those actions will be assessed (indicators of achievement), what the risks are that might lead the actions to fail, what mitigating measures are planned to limit the risks. Then we say to Ukraine: if you hit those indicators, we will allocate money to your budget. So our assistance supports results. This is not the traditional way of doing the assistance, where the focus was on input (i.e. paying for experts, for equipment, works to be done and so on). [With this budget support approach] we say to Ukraine: hit your targets, do what you’re planning to do, and you will receive support for these sectors.
With these budget support programmes so far we get approximately 60-70% of success in achieving indicators. The glass is two-thirds full, one third empty. So I am not fully convinced that we should make this our main focus in the future. Maybe we should keep in mind other possibility. We intend to have independent evaluation of the budget support instrument next year to help us decide what to do in future.
On the Association Agreement. The Association Agreement says that Ukraine is going to reform in the EU way. That means that Ukraine will take on a large part of the EU acquis, i.e. the European Union’s regulations and norms. Our fundamental hope is that EU values will increasingly come into play in Ukraine.
On plans for the future. The coming four year period will be the key years for the implementation of the Association Agreement. It will be a very important period.
Our assistance in this period will focus on implementation [of the Agreement], and on the institution building.
The first priority is the justice sector, the rule of law. In terms of actually implementing the Association Agreement, this is the key. A well functioning justice sector when you can ensure enforcement of your rights, as a business person or as a private person, is the absolute pre-condition for the effective implementation of the Agreement. Indeed, this agreement is a rules-based and law-based document.
The second priority for assistance is the deep and comprehensive free trade area (DCFTA). And here we are looking not only at the administrative side. Companies will also need to comply with the new rules. And our concern is particular for smaller companies, to make sure they know what changes they will have to make, and to help them prepare for these changes. The DCFTA will bring a major change in the business environment here.
The third priority is linked to energy. We will continue to focus on energy efficiency and energy saving.
On macro-financial assistance. We co-operate closely with all international financial institutions, including the International Monetary Fund. In additional to the grant funds to Ukraine the EU provides additional €610 million of macro-financial assistance. Disbursement of these funds is very much linked to the successful implementation of the IMF programme.
But this macro-financial assistance is different from our grant programme (€186 million which we committed this year). The macro-financial assistance (€610 million) is directly linked to cooperation with the IMF. The grant programme (€186 million) will be carried out anyway.