Archive for August 25th, 2017


Marshall Plans and EaP Summits – Ukraine

August 25, 2017

Just over a fortnight ago, an entry appeared in which the strongest of hints was dropped regarding the possibility of an EU “Marshall Plan for Ukraine” and the timing of any official discussion – “That said, cynical or not, such invitations are worthy of note regarding timing – and November will bring about formal discussions regarding a Marshall Plan for Ukraine (if or however that Plan actually manifests by way of money (or not), strategy, reform priority, and duration et al).”

It has now been confirmed that the next EU summit for the Eastern Partnership nations will be held on 24th November in Brussels – thus perhaps putting forward a more specific date in November.

Meanwhile in the dimly lit bunkers and boiler rooms of Lithuanian and Ukrainian policy planning, numerous mandarins have been jointly sharpening pencils, thinking creatively (and perhaps somewhat hopefully), creating concepts, frameworks, plans, implementation models, benchmarks, time lines and all manner of bureaucratic structures and processes in a joint effort to arrive at something approaching a “Marshall Plan for Ukraine”.

That work is now complete.

The plan has been formally, if quietly, submitted to, and received by, the European Commission and other EU institutions.

At its core is a plan that would provide Ukraine with €5 billion to support reforms annually.

The blog has not seen the plan.  Ergo over how many years €5 billion is to be annually allocated is unknown.  The expected implementation time table for the EU-Ukraine Association Agreement is a decade.  Unreasonably high expectations a reader will suspect.

Likewise the “Ukrainian Marshall Plan” priorities and/or structure are unknown.

However Ukraine already has a legally binding and obligatory reform plan.  It’s called the EU-Ukraine Association Agreement, and that comes into full and ratified effect on 1st September.

It is an agreement that contains some time frame compliance – and therefore sets some priorities.

Ukraine also has an agreement with the IMF – which has been allowed to slide from the proscribed time lines due to Ukrainian political unwillingness to meet the IMF requirements to allocate tranches on time.  Ukraine certainly has the ability to meet IMF expectations for each programmed tranche, but the political will is not there.

Pension reform will get over the line prior to the year end.  The IMF has allowed the 2017 requirement relating to land reform to slide into 2018 – but not all delayed IMF requirements are so encompassing of society in its entirety.

There are matters such as granting NABU the right to conduct wiretaps that simply garners no political traction – for of course it will be the politicians (among others) that will be wiretapped by NABU.  The IMF is right to require NABU to be able to conduct its own wiretaps.  An independent anti-corruption body should not rely on the far more politically controlled SBU for such evidence gathering.

Obviously the Ukrainian political class currently feels little urgency when it comes to receiving IMF funds – though that may change at some point later in 2018 when the issues of external foreign debt repayment appear once again upon the 2019 horizon.  A requirement to play ball with the IMF once more, depending upon any successful re-entry into the commercial debt markets.

At the time of writing there seems little realistic expectation in any meaningful (and genuine) private finance FDI entering Ukraine following a totally uninspiring judicial reform that has left odious and nefarious judges in office, and the entire structure under presidential influence.

As such the possibility to rule by law, rather than the unerringly independent delivery of rule of law remains.

Ergo it follows that the privatisation programme is unlikely to be a major success when it comes to attracting FDI, or the much required dilution oligarch influence in domestic markets.  For that to occur there is an investor requirement to have faith in the integrity and application of the rule of law.

The end result being any significant incoming FDI will be via international institutions – and not corporations.

So, as Ukraine has long since begun to drag out agreed IMF reform requirements, it follows that  the annual €5 billion in any “Ukrainian Marshall Pla”n cannot simply be an annual electronic transfer in the expectation that either any “Ukrainian Marshall Plan”, or indeed all Association Agreement obligations will be met either fully or within framework timeliness.

Annually throwing €5 billion at Ukraine without an enforceable plan, is as much use as supplying Ukraine with Javelin missiles in 2017 (rather than in 2014/15 when they would have been useful).  What Ukraine needs far more by way of military equipment is EW, AD, and secure comms.

If the current IMF programme be a guide, any “Marshall Plan”and €5 billion per annum, therefore has to be accompanied with a large, pointy and painful EU stick of unforgiving strict conditionality – and a far more thorough and regular auditing by the EU.

There is also the small matter of existing EU and bilateral Member State grants and loans that are overt, together with the less overt costs of innumerable (and probably unnecessarily overlapping) EU missions, advisers, field workers, delegations, monitors, etc that are already in Ukraine and have been for years – delivering both the useful and the pointless.  Are these deductible from the €5 billion or additional costs?

In the absence of a copy of the submitted plan, there is little point in speculation as to its current content.  Perhaps it is replete with large and pointy sticks, strict time lines and unambiguous priorities – perhaps not.

Nevertheless, something nominally called a “Ukrainian Marshall Plan” is now documented and submitted by its co-authors.

More to the point, whatever the contents, it would appear that the EU Commission and other EU institutions will have between now and 24th November to mull over the joint Lithuanian-Ukrainian “Marshall Plan” – for both Lithuania and Ukrainian authors will be expecting some initial comment at such a gathering.

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