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Štefan Füle

European Commissioner for Enlargement and Neighbourhood Policy

Address to the 14th European Union-Ukraine Parliamentary Cooperation Committee

Figures and graphics available in PDF and WORD PROCESSED

EU-Ukraine Parliamentary Cooperation Committee

Brussels, 22nd March 2010

Good afternoon. I am very grateful for this opportunity to address this 14th meeting of the EU - Ukraine Parliamentary Cooperation Committee. This Committee has played an important role in the past in helping to drive forward the relationship between the EU and Ukraine. I am sure that it will continue to do so now under the leadership of Mr Kowal and Mr Tarasyuk. I look forward to working with members of the Committee in the future.

Let me start by saying that 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 the 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 leaders of the EU were also encouraged by President Yanukovych’s visit to Brussels during which he expressed a strong commitment to European integration and above all to the reform agenda. Meetings with Prime Minister Azarov have also been very constructive with similar messages being delivered by the Prime Minister. Of course, as President Yanukovych himself has said, what is needed are concrete reform actions rather than encouraging words.

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 Ukraine so desperately needs.

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.

I started by saying that Ukraine matters for the EU. In our meetings with President Yanukoyvch both in Kyiv and Brussels we placed great emphasis upon the EU’s readiness to engage with Ukraine. We explained that we would support Ukraine in carrying out necessary reforms in practical and tangible ways.

What does this mean in practice? Firstly, as Ukraine moves forward in implementing reforms, the EU is ready to respond by specific support measures. So for example, if Ukraine puts the IMF Standby Arrangement back on to track, then the EU will be ready – subject to the agreement of Parliament and Council - to provide additional macro-financial assistance to a total of €610 million.

Similarly if Ukraine makes progress on gas sector reform, the Commission will work to make further progress on the gas support package that we discussed with the International Financing Institutions and the Tymoshenko government in March last year and again in July.

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 through ENPI and complemented today by the resources of the Eastern Partnership. This is not insignificant. The EU is the largest donor to Ukraine, having contributed €2.5 billion through ENPI and its predecessor since 1991 alone. Funding for Ukraine from ENPI for the period 2007- 2010 amounted to €494 million. An additional €74 million is available through the Eastern Partnership for Ukraine.

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.

Turning to the very important issue of a future visa free regime between the EU and Ukraine, we have said to the Government that if it implements the Priority Measures which are currently being agreed within the context of the Visa Dialogue, we will take forward our discussions with EU Member States on a possible future roadmap approach. No decision on this has been taken, but we want to demonstrate our good faith and determination to move forward provided Ukraine undertakes reform steps.

We believe that both the EU and Ukraine stand to benefit enormously from our cooperation. We welcome strongly the positive messages that have been delivered by President Yanukovych. We look forward to seeing those messages translating into concrete reform steps. We will accompany Ukraine in the difficult process of reform. Above all we will remain a strong and long-standing friend to Ukraine.

I should like to thank the Parliamentary Cooperation Committee once more for its invitation to this meeting. I should like to wish you every success in your work.

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