EU Ministers Warn Crisis-Hit Ukraine

KIEV, Ukraine -- The foreign ministers of Germany and Poland warned Ukraine Wednesday to end its chronic political feuding in order to receive more international assistance for its crisis-battered economy.

Ukraine's Prime Minister Yulia Tymoshenko (R) and German Foreign Minister Frank-Walter Steinmeier (L) meet in Kiev. The foreign ministers of Germany and Poland warned Ukraine Wednesday to end its chronic political feuding in order to receive more international assistance for its crisis-battered economy.

The unusual joint visit by Frank-Walter Steinmeier of Germany and Poland's Radoslaw Sikorski came as the European Union and Russia compete for influence in Ukraine, which saw its old pro-Moscow elite swept from power in 2004.

Steinmeier said Berlin and Warsaw were "particularly concerned" about Ukraine -- which has borders with four EU states as well as Russia -- as it faces a double-barrelled political and economic crisis.

"A political crisis clearly because the blockade in parliament and between the president and the government has dragged on so long, and of course an economic crisis that has hit Ukraine particularly hard," he told reporters.

The ministers, who arrived aboard a German air force plane, held talks with President Viktor Yushchenko, Prime Minister Yulia Tymoshenko and opposition leader Viktor Yanukovich, who are locked in a bitter power struggle.

Steinmeier and Sikorski said they hoped to persuade Ukraine's leaders to try to break their impasse to ensure the flow of international economic assistance needed for basic services including Russian gas.

The global economic crisis has delivered a body blow to Ukraine, with the World Bank forecasting a nine-percent contraction this year and production of its export-orientated industry in freefall.

It is depending on a 16.4-billion-dollar loan from the International Monetary Fund to keep its economy afloat.

But the IMF has set conditions for Ukraine to qualify for the next, 2.8-billion-dollar tranche of the loan including instituting a measure of stability in its struggling bank sector.

"Everything is linked to everything else," Steinmeier said.

"We respect the political rivalry that every democracy needs," said Steinmeier, who is challenging Chancellor Angela Merkel in September general elections.

But he said "destructive" jockeying for power would block an IMF deal.

Diplomatic sources said Yushchenko regretted the current political stalemate was hindering a deal with the IMF, while Yanukovich said any lasting resolution of the gas dispute would require dialogue with Russia.

The EU -- which receives a quarter one-quarter of its gas from Russia, most of it piped across Ukraine -- is also deeply concerned about repeated disruptions of its supply.

Ukraine was forced to tap into its reserves this month to pay a Russian gas bill, with a summer of supply interruptions to Europe from a new Kiev-Moscow gas crisis still a real threat.

Tymoshenko said Tuesday that Ukraine wanted to borrow four billion dollars (2.9 billion euros) from European banks to pay for Russian gas to refill its storage facilities.

Russia, meanwhile, has condemned EU moves to bolster ties with countries it sees in its sphere of influence, but has urged the EU to come up with a loan for Kiev to pay for its gas.

But Prime Minister Vladimir Putin on Wednesday showed Moscow was prepared to use its capacities, saying that Russia has already paid Ukraine 2.2 billion dollars for its 2009 gas transit fees to Europe.

"I hope very much that discipline within the framework of existing contracts will be maintained by both sides and in the future," he added, saying the pre-payment of the sum essentially amounted to a loan.

Steinmeier and Sikorski said Poland and Germany aimed to build on the "Eastern Partnership" extended to Ukraine and five other ex-Soviet republics by the EU in May, which offers financial incentives for crucial reforms.

Sikorski also announced a new Ukrainian-Polish agreement on opening border traffic that will come into force July 1.

"The free movement of people is important to the Eastern Partnership and we want to be helpful to the Ukrainians in that way as well," he said.

Source: AFP

Comments