Katarina Mathernova, EU Ambassador to Ukraine

Loan to Ukraine should put on pause skeptical voices

As the European Commission unveiled today its proposals for the EUR 90 billion loan for Ukraine, paving way for the European Parliament and EU Council to approve it before money can be disbursed to Ukraine, Ukrinform sat down with the EU Ambassador to Ukraine, Katarina Mathernova, to talk about the conditionality of the budget support on Ukraine’s reform process, the novelty in defense procurement within the loan framework, the wider international support to Ukraine, and the signal the EU sends to Russia.

IT’S A GREAT DAY FOR BOTH THE EU AND UKRAINE

- The European Commission made its step and now the proposal for the loan is ready to be approved by the European Parliament and the EU Council, so now it's up for co-legislators to do their part of work. How confident are you that they will be swift enough to make sure that Ukraine gets the money in the second quarter as expected?

- I will get to answering your question right away but I just want to say upfront that I very much hope that people in Ukraine will see this as a demonstration of Europe standing by Ukraine and delivering that so quickly after the leaders met in December.

The European Commission was able to put on the table and approve the legislative proposal. And I very much hope that this will give a pause to the skeptical voices that on can hear. 

I think this is a great day for the EU and a great day for Ukraine.

How certain am I that the legislators will act fast? I am fairly certain because support for Ukraine is something that both the European Parliament and the EU Council are unified on. Now, the word “unified” is with the asterisk because this proposal was adopted under so-called enhanced collaboration. As we know, it's supported by 24 out of the 27 member states.

So I'm fairly certain that Ukraine enjoys a lot of cross-party support in the EP and in the EU Council and this will be dealt with very rapidly so that legislation can be done and we can act very quickly.

UKRAINE CAN ALREADY START PREPARING FOR DELIVERING ON REFORMS

- What is now expected from Ukraine’s authorities to make sure the loan gets disbursed?

- Obviously, just like with every previous budget support and with the Ukrainian Facility, there are a lot of concrete discussions with the Ukrainian authorities on the terms of the of the loan, on the conditions, etc. All of that is still to come. And the good thing is that that preparation can take place already now and does not need to wait until the adoption of the legislative proposal.

- Can you dwell more on the conditionality of the loan because there are two main mechanisms that were mentioned, the Ukraine Facility, and the macro financial assistance. Will both instruments be equally engaged?

- I am fairly certain that both instruments will be engaged. For example, last year when the ERA loan was adopted, it was done through the mechanism of budget support, but the conditionality was aligned between budget support and the Ukraine Facility. In other words, we are not going to be coming with extra things. We will insist on conditions, that is clear, but everybody will be interested in making sure that it’s coherent with all the different steps that Ukraine has already been taking, and with the EU integration ambitions of Ukraine.

FOR UKRAINE, DEFENSE PROCUREMENT UNDER EU LOAN IS EVEN BETTER THAN SAFE

- Shortly about the defense part of the loan. What’s new about the defense procurement for Ukraine in this case? And what flexibility will Ukraine have to buy weapons or parts in third countries if they are unavailable domestically or in the EU/EEA?

- As President von der Leyen mentioned during the press conference today, there is clearly preference to buy directly in Ukraine. That’s the novelty – supporting procurement and purchasing of Ukrainian weapons. I think that's first important element. Secondly, yes, there is a European preference, but as the president said, if there are going to be capabilities that don't exist in Europe or are not produced in Ukraine, then procurement can take place from certain countries, including the US.

- Is this process somehow intertwined with the SAFE initiative in terms of defense procurement and investment?

- I would not say it’s intertwined. SAFE is an instrument for member states, and for Ukraine only indirectly. But this here is an instrument for Ukraine. So in that sense, it’s even better than SAFE. This is money for Ukraine, not money for member states to work with Ukraine.

THE LOAN SENDS A CLEAR SIGNAL TO RUSSIA

- What is the implication of the EU loan for Ukraine for financial contributions by other international partners of Ukraine?

- Vice President of the European Commission Valdis Dombrovskis said today how important it is for the financing package under a new IMF program. Next week, the board of the IMF is expected to approve that program, and it’s really important now that this step has taken place.

For their program to be able to be adopted, they need to have financing assurances that Ukraine’s financing gap is closed, and I think this is the kind of instrument that gives them that assurance.

- Overall, what signal does the EU loan send to Russia?

- To Russia, it’s a very clear signal that the EU stands with Ukraine and supports both its military and its public services, its economy and state. It’s also extremely important to recall that this loan will only be repaid if Russia pays reparations to Ukraine. I think that's a very generous structure and very important element of the overall support.

Ievgen Matiushenko, Brussels