Ukraine CRISIS: How the EU has saddled war-torn nation with huge debt

Brussels has been pumping billions into cash-strapped Kiev over the last few year but critics warn this has left the country facing crippling debts which will hamper its long-term recovery.

A bid for closer ties with Ukraine led swiftly to Russia’s annexation of Crimea in 2013 and the brutal conflict which followed.

Some policymakers insist there is a moral obligation to do more to protect Ukraine from Russian military aggression as a result, especially since Kiev has been willingness to introduce reform. 

But there are also serious concerns that Brussels has already provided too much aid and taken on too much risk for a country where corruption remains woven into the fabric of government and reform, particularly in the judicial, financial and energy sectors, has been too slow.

Despite the debt fears the European Investment Bank has announced an extra £33 million in financing to help prop up the country’s ailing agriculture sector. 

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The attempted show of support ahead of the summit means the EU has now poured £10.6 billion into Ukraine, including a 2014 financial package which was the largest ever given to a non-EU country.

But 94 per cent of the aid to Ukraine has been in the form of loans and over the next five years the country will have to repay £33 billion despite having just £4.45 billion reserves in the National Bank.

A new study commissioned by the European Parliament said: “Political agreement with the EU has brought Kiev closer to the EU and other Western institutions than ever before.

“In the wake of the Euromaidan Revolution and subsequent Russian challenges to Ukraine’s sovereignty, the era of geopolitical choice for Kiev is over.

“Still, these dramatic events have made EU and NATO membership more distant than ever.”

The report declared the Easter Partnership – the EU’s signature foreign policy initiative launched in Prague in 2009 – but the other five partner countries are also facing difficulties.

Armenia and Azerbaijan are still at war over the disputed territory of Nagorno-Karabakh, Moldova remains in a standoff with the pro-Russian breakaway region of Transnistria, two of Georgia’s territories – Abkhazia and South Ossetia – are essentially annexed by Russia and Belarus has become a largely isolated police state.

Lithuania’s ambassador to the EU Jovita Neliupšienė said: “We need to increase engagement with stakeholders, find the hearts of ordinary people, show they are not abandoned.”


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