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Reforms in exchange for investments – EU сommission is starting to implement Marshall plan for a Ukraine

Marshall plan for Ukraine
Reforms in exchange for investments – EU сommission is starting to implement Marshall plan for a Ukraine
Article by: Gediminas Kirkilas, Andrius Kubilius (MPs and ex PMs of Lithuania)
We have read with great interest the op-ed announced on 25 April 2018 by Mr. Johannes Hahn, Member of the European Commission, on the Reform Contract for Investment in Ukraine.

This is a first, some would say perhaps modest, but we will argue, an important step forward. We appreciate this initiative is being taken now, in a juncture of current political and economic challenges to Ukraine and a tremendous progress on reforms taken so far.

If used wisely, the announced EU investment into real economy support for 2018 in Ukraine could leverage up to 16 billion UAH (500 million EUR) in private investment. It also requires a fulfillment of three conditions relating to energy regulator, business ombudsman institution and a current requirement for anti-corruption activists to submit e-declarations.

It follows a logic similar to the one we have been advocating in our initiative of “Marshall Plan for Ukraine,” as it creates an undividable bond of investments and reforms, two indispensable elements for economic growth in Ukraine. In this respect, we fully share an analysis by the EU, that the growth of the economy in Ukraine is not yet sufficient to meet the legitimate aspirations of the ordinary Ukrainian citizens. We were working with the initiative of “Marshall Plan for Ukraine” since the spring of 2017 and we traveled together with our Ukrainian colleagues through different capitals: Brussels, Berlin, London, Paris, Warsaw, Washington, Ottava, and Copenhagen.

We are really happy that EU Commission after all our discussions made a good step forward.

Read also: Why Europe should support a “Marshall Plan” for Ukraine

We see initiative of Reforms Contract for Investment as an encouragement to combine our forces with international donors, partners, and financial institutions in making the investment-related support to Ukraine tangible and visible, and most importantly linked with a progress on investment capacity building and implementation of reforms.

Furthermore, if it succeeds well on the delivery side, the Reform Contract for Investment can grow further into fully-fledged investment package, working as an anchor for an economic growth in Ukraine by employing smart investments, conditionality and mobilization of international and donor assistance. In this respect, we hope it will include investment-related reforms and will keep the implementation of recently launched EU External Investment Plan, as well as the discussions on the next EU multiannual financial framework in the loop.

And, we will argue, Ukraine will succeed, as we see the progress in Ukraine is making its way forward.

The dialogue at the level of the Government level has proved us it can work. A few weeks ago in Kyiv, Mr. Andrius Kubilius had an occasion to attend a joint meeting of Ukrainian institutions on the development prospects of a comprehensive investment package to Ukraine, which was chaired by vice Prime Minister Mr. Stepan Kubiv. Vice-ministers of MEDT and MOF were present as well, together with international financial institutions and other important stakeholders, EU and Canada, which is now holding the presidency of G7.

It was a unique possibility to discuss together the outstanding challenges to reforms, investment capacity building, making it regular with major partners, especially in discussing a credible major project pipeline or removing the bottlenecks to investments. We should note Lithuania has also an experience of working with public investments, which we would be ready to share.

We see an emerging understanding within the authorities of Ukraine on the urgency of solving these challenges. Especially in addressing the unspent investments into a real economy, which can grow up to 5 billion EUR coming from the international pledges by international financial institutions made since 2014. Our experience shows an institutional remedy to this problem is necessary to build a capacity and take care of short to medium term priority projects in areas of public infrastructure, municipalities, social-environmental investments, private capital mobilization and especially of East Ukraine regeneration.

We believe an agreement on these issues, including on the reforms and investments, can be done in a constructive dialogue between the international community and the major political actors in Ukraine. We appreciate very much the key role of the EU Support Group for Ukraine and of G7 Ukraine Support Group, with whom we have very constructive and fruitful cooperation.

We understand we have to continue our work in endorsing the Reform Contract for Investment further and encourage the progress in a run-up to G7 Summit (June 8-9), Ukraine Reform Copenhagen Conference (June 27), and EU-Ukraine Summit in July.

There are remaining many things we have to achieve, but with this initiative, we a getting halfway through.

We believe the Reform Contract for Investment, a contract for providing the investments in exchange for implementing the reforms, will find its right place in Ukraine and will be accepted by leaders of the international community (EU, G7, IFIs), as did an original Marshall Plan more than 70 years ago in Europe.

It is important not only to Ukraine. It is important to all of us, be it Lithuania, Ukraine’s neighborhood, EU or the western community as a whole. We have to acknowledge that success of Ukraine is our success too, and we should be ready to do all possible and necessary for this one initial step to become a giant leap for the Ukrainian economy.

Moving forward together,

Initiators of Lithuanian initiative “Marshall Plan for Ukraine”

Mr. Gediminas Kirkilas, MP
Prime Minister of Lithuania
2006 – 2008, social democrat
Mr. Andrius Kubilius, MP
Prime Minister of Lithuania

1999 – 2000 and 2008 – 2012
Homeland Union (EPP)

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