Location Ukraine Ukraine

EU assistance to Ukraine: results so far are “fragile”, say Auditors

EU assistance to Ukraine had limited impact and, despite the impetus for reform since then, the results achieved so far remain fragile, according to a new report from the European Court of Auditors. Over most of the period audited, the unstable political, legislative and administrative context limited the effectiveness of EU assistance, say the auditors.

European court of auditors has issued special report setting out the results of investigation to situation in Ukraine. The auditors assessed whether European Commission and European External Action Service assistance was proving effective in supporting the reforms in Ukraine. They examined the areas of public finance management and the fight against corruption, as well as the gas sector, between 2007 and 2015.

EU-Ukraine cooperation advanced in the wake of the 2014 Maidan events, say the auditors, but the challenges faced by Ukraine still heavily affect the reform process and the risks posed by the former and new oligarchs remain high. From 2007 to 2015, EU financial assistance comprised €1.6 billion in grants, half of this in the form of budget support, and €3.4 billion in macro-financial loans.  The EU responded promptly to the 2014 crisis with a package of €11.2 billion over seven years. But this was an emergency solution. The EU allocated and disbursed large amounts of money rapidly and without first agreeing its strategy.

EU support for Ukraine remains a work in progress, despite good efforts by the Commission”, said Szabolcs Fazakas, the Member of the European Court of Auditors responsible for the report. “At the time of our audit, there was a strong political commitment to public administration reform. But management changes jeopardised the reforms and low salaries created openings for corruption. Further steps are needed to meet objectives.” For example, the results of anti-corruption measures remain to be seen.

Ukraine is one of the European Union’s largest and politically most important neighbours. However, institutional and political instability, governance issues, and economic and financial difficulties predominate in the country.

Ukraine has a record of poor economic performance since independence in 1991. Positive economic growth rates in the early 2000s were severely impacted by the 2008 global crisis and have struggled to recover ever since. Ukraine’s state finances have deteriorated over the years, mainly due to mismanagement of public funds. In addition, the revenue side of the state budget is negatively affected by a significant shadow economy. Despite reform efforts, Ukraine is still perceived as the most corrupt country in Europe. Vested interests influence public policy-making. Oligarchic clans continue to exert a dominant influence on Ukraine’s economy, politics and media.

 

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