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EU expert calls for a “Marshall Plan” for Ukraine

European Union expert Michael Emerson has called for a “Marshall Plan” for Ukraine to help the war-ravaged country on the first steps towards economic recovery. The Marshall Plan was the American aid initiative to help European economies recover after World War Two and Emerson former European Union ambassador to Moscow, believes the same could work for Ukraine.

The highly-respected scholar, an Associate senior Research Fellow at the Brussels-based European Centre for Policy Studies (CEPs), was speaking in Brussels on Tuesday at an international conference, entitled “Ukraine: Breakthrough and Challenges.”

The event, which was held at the Brussels Press Club on Tuesday, brought together MEPs and experts both from the EU and Ukraine and comes the day before the European Parliament, at its Brussels plenary, votes on whether Ukraine should be granted up to €1.8bn in EU macro-financial assistance for economic and political stabilization and reform.

This would be the biggest grant of financial help that the EU has ever made to a non-EU country under the Macro-Financial Assistance (MFA) programme.

EU foreign ministers meet later this week in Brussels to discuss how best to accelerate fragile peace process in Eastern Ukraine.

The conference sought to find ways to formulate a “plan of revival” for Ukraine. Other issues, including Ukrainian identity, economic and political independence, self-sufficiency of the state and ongoing reforms were also discussed.

With the ceasefire between the two sides still holding, there are hopes that an end may be in sight to the year-long military conflict although the country’s chronic economic problems are likely to take longer to solve.

Speakers agreed that, given the ongoing crisis, constructive dialogue between the Ukrainian government, civil society and European partners is needed in order to stimulate growth and development in the country.

Emerson, who served as EU ambassador to Russia from 1991 to 1996, said a Marshall Plan was necessary to help Ukraine recover from the civil war.

Emerson, a Briton whose main research interests focus on pan-European institutions, political economy of the wider Europe, said, “I like the idea of a Marshall Plan for Ukraine. My version of this though would take the form of a large programme of grants from the West for investment in energy.”

“Ukraine has huge energy problems and energy waste, particularly in the household sector, is enormous.

“The amount of funding Ukraine needs exceeds that which is being provided by the EU and International Monetary Fund. But if the funding was larger still the mechanism for delivering it would have to avoid the hazards of corruption which is widespread in the country.”

He added, “This is more than a grassroots solution but needs strategic action in order to help Ukraine get out of the hole it is in.”

Another keynote speaker, French Non-Attached MEP Jean-Luc Schaffhauser, agreed that a Marshall Plan-type response might aid Ukrainian recovery, adding, “However, for Ukrainian reconstruction to happen we first need peace and that is why the Minsk Agreement must be fully implemented by all sides.”

Under the agreement reached last month in Minsk, Belarus, Russia is obligated to withdraw all troops and equipment from Ukraine and return control of the border to the Kiev government by the end of this year.

The peace deal with Russia had sparked some hope of an end to the violence.

However, conflict in the key battleground of Debaltseve, in the Donbass region, has continued.

The conference also focused on Ukraine’s crippled economy.

It shrank at an alarming 14.8pc over the last three months of last year the as conflict with neighbouring giant Russia and simmering civil war have devastated the country.

The economy contracted by 6.8pc in 2014 but the slump could worsen to as much as 12pc in 2015 according to government forecasts.

A collapsing currency, dwindling central bank reserves and hyper inflation near 30pc have led to Kiev requesting a $17.5bn bail-out from the International Monetary Fund.

The EU aid package on which MEPs vote this week is the third tranche of loans released to the country. Two thirds could be disbursed by the end of this year but it would be conditional upon commitments to be agreed between the European Commission and the Ukrainian government.

The EU executive has saidthe conditions should include pledges to reform the economy, improve the transparency of the judiciary, and tackle corruption.

By Martin Banks