Ukraine matters enormously to the EU. It is important not only for reasons of geography, demography and geo-politics. Ukraine has an enormous industrial, economic and agricultural potential. It also has a deepening democratic tradition. It is a leader in the region and consequently its development in the coming years will have a major impact on the countries in its neighbourhood.
Today Ukraine stands at a critical juncture in its development. It faces enormous political and economic challenges. Reform steps are urgently needed if it is to ensure future stability and prosperity for its citizens. While the onus for implementing reform measures lies with the new president and the new administration, the European Union has a part to play too.
In recent months confidence in Ukraine’s democratic development has been boosted by the fact that the Presidential elections were conducted in accordance with international standards. This is a very considerable achievement which confirms Ukraine’s democratic trajectory.
The challenges Ukraine faces are very substantial. Bringing the Standby Arrangement with the IMF back on track must be a first priority. This is no easy task as it involves addressing a range of related reform issues in the fiscal area including agreeing a budget for 2010 which brings expenditure under control without depressing the economy further.
At the same time there is an urgent need for further steps in critical areas such as the gas sector or through further action on the recapitalizing of the banking sector. Decisive action to combat corruption, including through judicial reform is also needed, as are greater efforts to improve the domestic business and investment climate – currently deeply unfavourable to the kind of outside investment so much needed in Ukraine.
As you will be aware, underlying these priorities is the need to increase political stability through constitutional reform. On this issue it is vital that reform is carried out in an inclusive manner and that it achieves a lasting constitutional settlement – one which will stand the test of time.
The EU is ready to engage with Ukraine in practical and tangible ways. Firstly, as Ukraine moves forward in implementing reforms, the EU stands ready to provide additional macro-financial assistance to a total of €610 million, upon the resumption of the IMF Standby Arrangement.
Similarly if Ukraine makes progress on gas sector reform, the Commission will work to make further progress on the gas support package.
In the same vein, if Ukraine makes progress in carrying out sectoral reforms, the EU will be ready to respond through our substantial technical and financial support. The EU is the largest donor to Ukraine, having contributed €2.5 billion since 1991.
At the same time we are committed to deepening relations between us still further. The centre-piece for this is the Association Agreement including its deep and comprehensive free trade area. This ambitious and forward-looking Agreement has enormous potential both to deepen our cooperation at a political level and to transform our economic relations.
The deep and comprehensive free trade area will in due course provide Ukraine with full access to the EU’s market of 500 million consumers. It promises to double Ukraine’s exports to the EU. It will also help anchor the domestic reform process so as to create a dynamic economy which can compete in both EU and global markets.
We also have an ongoing Visa Dialogue with Ukraine, whose ultimate goal is visa free regime between the EU and Ukraine, which would allow in the long term Ukrainian citizens to travel freely to the EU. This is a highly technical, but also political process. It will not happen over night as there are important reform steps that need undertaking in Ukraine before this happens. But there is definitely good faith and determination on our side to move forward in this process.
Both the EU and Ukraine stand to benefit enormously from our cooperation. Whether we speak about increased trade relations, direct investments or visa facilitation and visa free travel, all these areas have direct and concrete implications on the wellbeing of people living in Ukraine. It is a long and difficult journey, but one that promises benefits at the end of the process. I look forward to accompany Ukraine in this journey.
