Speech by Vice-President Dombrovskis at the Yalta European Strategy Annual Meeting: Ukraine – Test Case for the West.

Kyiv, 16 September 2016

Excellencies, ladies and gentlemen,

First of all, I would like to thank the organizers of Yalta European Strategy Annual Meeting for the invitation and for the excellent organization of the event.

It is important for Ukraine's partners to debate how they can – as the title of this panel reads – pass this 'Test for the West'. But it is even more important for all of us to show our commitment to the country itself: Ukraine has fallen victim to brutal military aggression. The territorial integrity of the state has been violated by force. We cannot and we should not accept this in the 21st century Europe.

Despite difficult geopolitical and security situation, the country is undertaking a major democratic and economic transformation. In the recent years Ukraine has implemented more reforms than any European country. This is truly remarkable. But it still faces further 'tests'.

UNITY

Few of us will doubt that Ukraine is also a serious 'test for the Western powers' unity. It is a test: of their diplomatic model of 'soft power'; and most of all: of their staying power.

It was always meant as a test by those who seek to exploit the West's perceived weakness. But, contrary to their expectations, Europe showed strength:

politically, the condemnation of Russia's actions and the support for Ukraine's territorial integrity were strong and persistent;

backing for economic sanctions was firm. This week the EU took a decision to prolong economic sanctions against Russia and we have made it clear that full implementation of the Minsk agreements is a precondition for them to be lifted;

solidarity with Ukraine's transformation efforts continues. The EU-Ukraine Association Agreement is the most comprehensive the EU has ever offered to a third country. EU macro-financial assistance to Ukraine is the biggest program the EU has ever given to a non-member state. The provisional application of the Deep and Comprehensive Free Trade Agreement (DCFTA) since the beginning of this year provides a good opportunity for Ukraine to move ahead with its economic integration with the EU.

The first seven months of 2016 have shown an increase in Ukrainian exports to the EU by 4.6%, compared to the same period in the previous year. The EU remains Ukraine's largest trading partner, accounting for more than a third of its trade.

SUPPORT

The immediate challenges of security and stability can only be met if the economic foundations are sound. Since the outbreak of the crisis in early 2014, the EU and its Member States have pledged nearly €13 billion of support to Ukraine for the period up to 2020. More than €7 billion has been committed already.

For example, the European Commission supports Ukraine through its Macro-Financial Assistance instrument, for a total of €3.41 billion, through three consecutive programmes of low interest loans, conditional to reforms.

These reforms are important in themselves, not just for the satisfaction of creditors. If the government stays on course of reforms, we could disburse the next tranche of €600 million by the end of this year.

The EU will deliver further support in numerous other areas as well: with the anti-corruption support initiative; through our public administration reform programme; with the rule of law assistance programme; and through the Justice Sector Reforms Project. We assist the strengthening of local government as well as capacity-building for SMEs. And we provide humanitarian assistance to people affected by conflict in Eastern Ukraine.

ACHIEVEMENTS

It's also important to acknowledge what has been achieved already, despite the complex geopolitical, economic and military circumstances:

constitutional amendments and reform in the justice sector;

reforms in civil service and public procurement;

reforms in the governance of state-owned enterprises and in the energy sector.

The results are there:

the Ukrainian authorities have managed to regain macro-economic stability, also thanks to the prudent fiscal policy, which was instrumental for the macroeconomic stabilisation;

we expect the economy to return to growth of 1 - 2% this year and further pick up speed next year with 3.0%;

inflation is clearly going down;

the budget deficit targets are met;

and international reserves have increased.

FURTHER REFORM

But there is a lot to do. Indeed, the biggest test lies within Ukraine.

In the end, the effectiveness of our economic support is conditional on Ukraine's own efforts. Success can only come from continued and credible reforms within Ukraine. We cannot do that for you.

I would urge the Ukrainian government to act further, in particular against corruption. Concrete actions against corruption and the strengthening of anti-corruption institutions, are necessary to build a modern state and economy. 

It is also crucial to regain the trust of the Ukrainian people in their own country and to cement the country's position within international community. Internally and internationally, people want to be reassured that Ukraine's leadership has the determination to keep up its reform efforts.

Ladies and gentlemen,

The question for Europe is - as I said before - one of staying power: can we continue to stay united and firm for Ukraine in light of other economic, political and security challenges that we face?

Ukraine should not become a forgotten conflict. The West cannot afford this to happen. We must stand up not only for Ukraine, but for the broader values of sovereignty and democracy, and for the logic of peaceful diplomacy.

Thank you!