EU commissioner: no compensation to Kyiv for losses incurred by EU expansion (11/23/03)

EU commissioner: no compensation to Kyiv for losses incurred by EU expansion

by Roman Woronowycz
Kyiv Press Bureau

KYIV - The European Union has no plans to compensate Ukraine for the losses it might incur after its nearest Western neighbors become EU members next year, announced Chris Patten, EU commissioner for external affairs, during a visit to Kyiv on November 10.

"The current state of relations between Ukraine and the EU does not stipulate any compensation on the part of the EU for loses incurred by Ukraine," explained Mr. Patten.

Mr. Patten said that loss of trade or negative trade balances were not areas in which the EU and Ukraine had compensation agreements. He noted that Russia has a huge trade balance advantage over the EU, but the common market is not demanding compensation in return. Mr. Patten underscored, however, that Brussels was not averse to negotiations on adjusting levels of trade on certain critical Ukrainian exports, such as steel.

During three days in Kyiv, the foreign minister in the EU government attended a conference of representatives of the foreign ministries of the EU and neighboring countries, which took place in Kyiv on November 10, and met with students of Kyiv State University, as well as with high-ranking Ukrainian officials. He signed several agreements on helping Ukraine strengthen border controls and complete the construction of two nuclear reactors.

At present, for Ukraine the matter with the most immediate consequences is the potentially catastrophic loss of major export markets after neighbors Poland, Slovakia and Hungary and the three Baltic countries enter the EU beginning in May 2004. Ukraine has special trading arrangements with all six countries - agreements that will be voided as the countries become EU members and adopt its trade policies. For Ukraine this could mean losses of $350 million to $370 million dollars in exports.

Ukraine's President Leonid Kuchma said that the loss of export markets in Poland and Hungary is especially damaging.

"The EU is a closed, elite market. No matter how good your products, they will not be allowed in. At the most you get an import quota," explained Mr. Kuchma in addressing the matter during a press conference on November 12.

Mr. Patten, however, tried to place a positive outlook on the looming EU enlargement, which will increase EU membership by 10 countries - eight of them from the Eastern European region. While Kyiv believes that the new members will redirect their trade away from Ukraine towards fellow EU countries, Mr. Patten said that past evidence suggests that the larger overall EU market will benefit Ukraine in the end.

"Every previous EU enlargement has led to an increase in economic growth that creates a bigger market," Mr. Patten said.

To help Ukraine make the adjustment, Mr. Patten announced that Brussels had approved $246 million in technical assistance and loans for Kyiv in 2004-2006.

During the conference of diplomats from Eastern Europe and EU, which Mr. Patten attended, Ukraine's Minister of Foreign Affairs Kostyantyn Gryshchenko continued to press the EU for a special visa regime for Ukraine. He proposed the creation of single readmission policy for Russia, Moldova, Ukraine and the EU, which would speed up the movement of nationals among those countries. Mr. Gryshchenko also noted the need to keep moving forward on implementing the concept of four freedoms: the free movement of people, capital, goods and services.

He said that, overall, he was "pleased with the openness and level of dialogue with the EU."

Ukrainian politics and Tuzla dispute

The EU has already noted that it is keenly watching the political processes taking place as the presidential election season nears. After a private meeting with Mr. Gryshchenko, Mr. Patten answered a reporter's query on the disturbances surrounding Our Ukraine coalition events in Donetsk and Sumy by responding that the incidents were an internal matter for Ukraine. While he did not repeat the wording of an EU statement received at Ukraine's Foreign Affairs Ministry the previous week, which expressed "concern" over the events in Donetsk, he noted that Brussels was watching.

"We are not going to interfere with Ukraine's inner affairs and democratic processes, but of course, we are interested in how the election process develops," explained the EU official.

During a meeting with President Kuchma and Verkhovna Rada Chairman Volodymyr Lytvyn, Mr. Patten underscored that Ukraine had to hold "democratic and transparent" elections in order to continue the dialogue on future membership for the country in the EU.

Mr. Patten also addressed the border dispute between Russia and Ukraine over delimitation of the Azov Sea and the Kerch Strait, and called on Moscow to refrain from unilateral actions in resolving the problem associated with Tuzla Island.

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