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European Commission

[Check Against Delivery]

José Manuel Durão Barroso

President of the European Commission

Working together for a united Ukraine in a united continent

Yalta European Strategy

Kiev, 12 September 2014

Ladies and Gentlemen,

It is a great pleasure to join you this year for the eleventh Yalta European Strategy Annual Meeting.

Every year, this meeting makes a valuable contribution to addressing a wide-range of regional challenges in the context of a fast-changing world.

In just one year Ukraine has lived through many key events. History was "fast-forwarded" with a popular uprising, people standing up for what they believed was right and just. But, history was also "rewound" through Russia’s actions which clearly do not belong to this century and should be long buried in history books.

The 1975 Helsinki Final Act established territorial integrity and human rights as central to the European security order. Almost 40 years later this consensus is being put to test. We are all in this world together. And only together - playing by the rules and not with the rules - will we be able to achieve freer, more tolerant, more prosperous and more inclusive societies for all our citizens.

The annexation of Crimea and destabilisation of Eastern Ukraine was a blunt challenge to international law and order. It concerns not just Ukraine, but Europe as a whole and the wider international community.

And, as we meet in Kyiv, not far from Maidan, I want to thank the people of Ukraine for their example. They clearly and courageously expressed their wish to take their future into their own hands.

Waving European flags and camping under open skies in freezing temperatures, the Ukrainian people demonstrated why Europe is important, what Europe means and what Europe stands for.

The Ukrainian people stood for freedom, democracy and rule of law. These are precisely the values which are at the core of the European Union. And, Europe will always stand with countries willing to engage on this path.

This is what we want for Ukraine and what our relationship is all about. To support Ukraine to become a more democratic and rule-governed country. A more prosperous and modern society. Ukraine deserves the same opportunities that were afforded to other countries in Eastern Europe after the fall of the Berlin Wall.

Just look at the evolution of Ukraine and Poland these last decades. In 1990 Ukraine was ahead of Poland in GDP and had about the same level in GDP per capita. Only 20 years later Polish indicators, both overall GDP and per capita GDP are three times higher. And, this transformation happened even before accession.

This was precisely the aim of our Association Agreement that was negotiated for more than 5 years and that will be ratified next week. Our entire Eastern Partnership policy was public and transparent. We never designed our policies "against" anyone. We never sought an exclusive relationship. On the contrary, we always encouraged our Eastern partners to have good relations with their neighbours.

The case of Armenia is instructive. This is a country which also negotiated an Association Agreement with the EU, which initialled it, but at the very last minute, under heavy pressure, decided not to sign. Did we criticise that decision? Did we interrupt our trade? Did we adopt measures against it? Of course not. We respected Armenia’s decision, even if we regretted it.

Unfortunately, what happened in the case of Ukraine was exactly the opposite. Ukraine wanted to sign, and eventually signed, the Association Agreement and Russia did not respect that. It did not want Ukraine to choose its path freely or determine its own future. And, this of course could not be accepted.

The rest of the story is unfortunately well known. There were certainly excesses committed during the transition from the previous regime to the current one. But, as history teaches us, those who make peaceful transitions impossible, make violent revolutions inevitable.

I came here to express our clear and unequivocal support to this country. We owe it to the people of Ukraine. In these last months the Commission has left no stone unturned to provide political, financial, economic and technical assistance to Ukraine.

In early March we promptly proposed an overall support package totalling €11 billion from the European budget and EU-based international financial institutions.

We also immediately dispatched a team to identify the economic and financial needs of the Ukrainian authorities. Two separate macro-financial assistance programmes worth a total of €1.6 billion are currently available to Ukraine. €600 million have already been disbursed and €760 million can be disbursed in the next month, provided some of the conditions are met, notably economic reforms and the fight against corruption. We have also concluded a State Building programme worth €350 million in grants, of which €250 million have already been paid. And, we are ready to consider further financial assistance.

So, we are firmly committed to helping Ukraine cope with the economic consequences of the crisis. We are notably ready to host a donor conference at the end of the year.

While economic and financial assistance are essential, trade and investment are also key instruments in helping secure long term sustainability for Ukraine.

The unilateral trade measures proposed by the European Commission in April – even before the signature of the Association Agreement – are already delivering results with an unprecedented 14% increase in Ukraine exports to the European Union in recent months.

We are also committed to addressing the harsh humanitarian situation of those most affected by the conflict and to promoting social and economic development throughout Ukraine. This is why I confirm that we will provide an additional €22 million to support the Ukrainian authorities in these efforts.

Finally, we are also helping Ukraine to meet its energy needs. The Commission has made proposals to enable gas reverse flows from EU Member States, notably from Slovakia, Poland and Hungary. And they are now working. They are, however, not a substitute for an overall deal that we are also actively seeking.

But, obviously this assistance is not a quick fix. It needs to be complemented by a clear commitment on the Ukrainian side to continue political and economic reforms.

Ukraine's best protection against any attempts to undermine its sovereignty is to build a strong democracy and a modern economy.

To be sustainable, Ukraine's reform efforts need to be inclusive. Despite Ukraine's difficult situation, it is of essence that the political reforms are based on a broad national dialogue. This is also an essential and indispensable part of finding a lasting, political solution of the crisis.

Key elements will be to move forward on reforms related to the constitution, to decentralisation – all to strengthen Ukrainian statehood by making Ukrainian citizens proud of their country.

Here again, the EU will continue to support and assist. We set up a permanent dedicated structure in the Commission, the Ukraine Support Group, to assist the Ukrainian authorities to deliver on this agenda.

But Ukraine's reform agenda must also be both much deeper and broader. It must go beyond the immediate crisis and help the country to move into the future.

Ukrainian politicians need to rise to this challenge. The bickering of the past did not enhance Ukraine's global standing. We hope that the upcoming elections will help boost this reform process.

The fact is that the consolidation of Ukraine's independence depends ultimately on the country's political stability and economic viability.

Ladies and Gentlemen,

We are here in Kyiv at a moment when Ukraine might be turning the tide against a conflict which has cost too many lives in the eastern part of this country. This includes the death of all the 298 people on board Malaysia Airlines flight MH17, shot down in July. No more blood should be shed.

The European Union has always advocated a negotiated and peaceful outcome to the current crisis. Any claims or concerns should be resolved politically, through political means.

We hope that the ceasefire agreement reached last Friday will be a first step towards such a sustainable political solution, based on respect for Ukraine's sovereignty, territorial integrity, unity and independence. And, we stand ready to support any efforts related to its implementation.

Let me in this regard commend the Ukrainian authorities and President Poroshenko for their patience and persistent readiness to engage in diplomatic talks - despite being confronted with recurrent escalation of the conflict. We are of course well aware of the fragility of the cease-fire, but it needs to be supported.

Let me be clear about this. Ukraine has the right and the duty as a sovereign nation to defend itself from any threat to its integrity and to ensure law and order on its territory. However, I would like to state that we should work for a political solution.. A military solution is no solution.

We need a negotiated settlement that includes international monitoring of the Russian-Ukrainian border, disarmament of illegal armed groups and the withdrawal of Russian forces operating on Ukrainian territory. This must be followed by political reforms that reassure all Ukrainians that they have a place in building a new Ukraine.

History teaches us some lessons. It teaches us that those who do not learn from it are condemned to repeat its mistakes. So, we cannot sleepwalk into open conflict. But, neither should we ignore or appease aggressive behavior. We need to act responsibly and decisively.

This is why we are following a two-track approach. First, keeping the channels open to achieve a negotiated solution. I can tell you, we spare no effort on this. I have personally been in contact with Presidents Poroshenko and Putin several times. In areas under the direct responsibility of the European Commission we are actively mediating trilateral talks on issues such as the Deep and Comprehensive Free Trade Area and also on Energy. We are ready to listen to Russia's concerns, but we will not abdicate our principles and values.

Secondly, we need to send a clear signal to Russia that its behaviour has costs. And, on this, since the beginning of the crisis, we have taken a number of measures. These include suspending our political dialogue, our bilateral cooperation; suspending Russia's participation in the G8; adding people and entities responsible for the annexation of Crimea and destabilisation of the East to a visa ban and asset freeze list; designing a non-recognition policy of Crimea's annexation that we will tighten; and adopting two rounds of restrictive measures on arms, dual use goods, sensitive technologies and financial services.

These sanctions are not an end in themselves but a means to induce Russia to change its behaviour. We know that sanctions alone will not solve the problem, but they had to be taken to signal our serious concern and condemnation.

I said recently that we were quickly approaching a point of no return in this conflict and in our relations with Russia. But, there was still time for a political solution. Let me tell you what I think could be done.

First, the ceasefire needs to be respected and all the conditions attached to it fulfilled. Rebels and militias need to disarm, Russian troops withdrawn, and independent and international monitoring of the borders put in place. Ukraine needs to go ahead with the reform of its constitution through a wide national dialogue; it needs to implement decentralisation and adopt an amnesty law.

Secondly, to be able to fully support the stabilisation of Ukraine, the Commission is ready, in the event that Ukraine ratifies the Association Agreement with the EU, to propose additional flexibility. Such flexibility will consist in delaying until 31 December 2015 the provisional application of the DCFTA while continuing autonomous trade measures of the EU to the benefit of Ukraine during this period.

On Energy, a price for new deliveries of gas should be agreed, past bills settled and an arrangement to have Ukraine as a transit country in the wider European gas network secured. Ultimately, Russia needs to choose if it wants to be a strategic partner or a strategic rival.

If Russia chooses the latter path, to be a rival, we would all collectively have to take the political, economic and security consequences.

But if it chooses the former, to be a partner, our offer to negotiate a New Agreement still stands. This agreement could be an important building block for an integrated economic space in the European continent, from Lisbon to Vladivostok.

We would also be ready to explore options to engage with the Customs Union. As I have said several times in the past, we are not opposed to regional integration. Actually, we support it. But, of course regional integration must be based on the free will and consent of the parties. And it should not be used to advance a new policy of blocks or spheres of influence. Rather, it should lower barriers and facilitate contacts.

So I do hope that Russia understands what is at stake and takes the right decisions, for the sake of Ukraine, but also for its own sake and the sake of stability in the entire European continent.

Ladies and Gentlemen,

Let me close by sharing with you my vision for the European continent. It is one of openness to all partners and to the world, of cooperation based on common values and principles, of free and integrated economies, and respect for the free will of the people.

It is on this vision that the European Union has built its enlargement policy and its Eastern Partnership. It is on this vision that we have worked all these years to deepen our partnership with Russia and other counties in the region.

We have recalled time and again that our relations with our Eastern neighbours are not detrimental to their relations with their other neighbours.

But, we also have to deal with the world as it is if it is ever to be as we wish. Therefore the EU will never accept the unacceptable. What would be at risk would be not just Ukraine's independence but the sustainability and the trust of a multilateral order based on values, equality and the rule of law.

We are committed to Ukraine's unity and to European peace and stability. We are committed to working together for a united Ukraine in a united continent.

Thank you for your attention.

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