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EU Moves Closer To Approving 1 Billion-Euro Aid For Ukraine

European Commission Vice President Valdis Dombrovskis (left) and Ukraine's Finance Minister Oleksandr Danyliuk in Brussels in September
European Commission Vice President Valdis Dombrovskis (left) and Ukraine's Finance Minister Oleksandr Danyliuk in Brussels in September

BRUSSELS -- The European Commission is moving closer to approving a 1 billion-euro ($1.22 billion) financial package to Ukraine, although officials are awaiting further signs from Kyiv to ensure that its reform process remains on track before the funds will be delivered.

Commission Vice President Valdis Dombrovskis told RFE/RL in an interview that commissioners had given tentative approval on February 28 for a new Macro-Financial Assistance (MFA) proposal -- the third in a series of financial aid packages for Ukraine.

He said commissioners were likely to give final approval next week, then send the plan to the European Council and European Parliament for their approval.

With that approval, Dombrovskis said, the funds could be delivered as soon as this summer if Kyiv meets several conditions that prevented it from receiving a previous aid distribution.

Following a request from Ukraine in late 2014 for additional financial assistance as a result of the deterioration of its macroeconomic situation, the European Commission adopted a third MFA operation of up to 1.8 billion euros in 2015.

The first tranche of 600 million euros was disbursed in July 2015, while the second tranche was released in April 2017.

However, the EU in December 2017 said Kyiv -- while making progress on several requirements -- had failed to meet four specific demands required under the MFA agreement.

"Against this background, the commission is not in a position to disburse the last tranche of the current MFA program. We encourage Ukraine to maintain the reform momentum in the many areas that have progressed well, and complete the measures outstanding under the current program," the EU said at the time.

The EU said the four conditions that Ukraine must meet are verification of asset declarations by government officials; the validation of data provided by Ukrainian companies of their beneficial owners; the establishment of a central credit registry; and the lifting of a ban on Ukrainian wood exports.

Dombrovskis expressed guarded confidence Kyiv can deliver this time around, saying the effort continued to make progress.

"It does not mean that between December and now all the work has been stopped in Ukraine. For example, this credit registry is likely to be finalized really soon, even if there is no macro-financial program."

Still, he said, "We think it is important that those conditions that were there to finalize the previous MFA are now set as a condition for a first disbursement of the proposed program."

If the European Parliament and European Council give their approval and the commission determines that its conditions are being met, Dombrovskis said, the first tranche of the new MFA could be delivered in the summer or early fall in tranches of 500 million euros each.

But the most important hurdle could be the resistance from various EU member states voicing concerns that Ukraine's reform process has stalled in recent months, although Dombrovskis said he was confident of moving forward.

"It is important that the EU stays with Ukraine and this support continues. Of course, the support is conditional also on the reform agenda in Ukraine, so we will be able to engage with Ukraine and also facilitate reform delivery in Ukraine."

For the second tranche, more demands for reforms will be worked out between the EU and Ukraine in the coming months, he said.

Ukraine's financial situation deteriorated after Russia seized and annexed its Crimean Peninsula and has continued to aid separatists fighters in the eastern portion of the country in a war that has killed more than 10,300 since April 2014.

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    Rikard Jozwiak

    Rikard Jozwiak is the Europe editor for RFE/RL in Prague, focusing on coverage of the European Union and NATO. He previously worked as RFE/RL’s Brussels correspondent, covering numerous international summits, European elections, and international court rulings. He has reported from most European capitals, as well as Central Asia.