Marshall Plan for Ukraine: Nothing More Than a Pipe Dream

Marshall Plan for Ukraine: Nothing More Than a Pipe Dream

The Lithuanian parliament (Seimas) has initiated the New European Plan for Ukraine (the so-called Marshall Plan) for 2017-20. According to the plan, Kiev will receive at least €5 billion annually to implement the long-awaited reforms. The proposed aid package is discussed internationally. Efforts are underway to form a group of Ukraine’s friends, which will try to create the necessary support for the initiative.

The idea of new long-term support for Ukraine was discussed at the European People's Party (EPP) summit in July. The plan for Ukraine will be submitted for consideration at the Eastern Partnership summit in November. Another European conference to consider the prospects for investments and aid package for Ukraine is expected to take place at the beginning of 2018 in Brussels. Taking money from the EU External Investment Plan (up to €88 billion by 2020) is an option.

Actually, it’s not something new. There have been other «Marshall plans» for Ukraine before. And they have all disappeared in a flash. Few people remember those initiatives, which hit headlines to be completely forgotten pretty soon. The Microeconomic Development and Social Enterprise in Ukraine: A «Marshall Plan» for Ukraine prepared by British People-Centered Economic Development was made public in 2013. The project was vividly discussed at all levels to be shortly swept under the rug. It was not exactly a new idea but rather the revival of the proposal put forward as far back as 2007.

Two British celebrities: businessman Richard Branson, and historian Timothy Garton Ash, as well as famous French philosopher Bernard-Henri Lévy, revived the idea in 2014. The plan included a world economic forum on the model of the one held each year in Davos but devoted to Ukraine, measures to attract investors and a large European bond issue floated by the Ukrainian treasury, with the bonds guaranteed by the European Central Bank and the International Monetary Fund.

Garton Ash wanted a visa-free regime, military equipment, supplies and transfers and training, and a lot of other things. But whatever he proposed happened too unaccomplishable due to what he himself called grotesque corruption. There's the rub!

In 2015, Dmitry Firtash, a Ukrainian billionaire of dubious reputation who was facing US extradition and out on €125m (£104m) bail, was the driving force behind the ambitious Ukraine recovery plan. Firtash said $300bn would be needed to stabilize the economy at the time of financial turmoil and collapse of Ukraine’s national currency.

In early 2016, Karl-Georg Wellmann, a lawmaker from the German CDU party, publicly presented his «Marshall plan» for Ukraine to be implemented with a large participation of funds from Germany. It was reported that the document was discussed behind closed doors. Nothing has been heard about it ever since.

There has been a plethora of «discussions», «seminars», «conferences» and whatever, with high fallutin’ speeches and almost nothing in concrete terms. The talking is always done by researchers and experts of all kinds but officials have never promised anything like a «Marshall plan» for Ukraine.

The Netherlands made the EU association agreement with Ukraine amended to underline it does not make Ukraine a candidate for EU membership and does not entitle Kiev to financial aid from the bloc. The Dutch parliament had a reason to do that. In 2015, the EU intended to grant €600 but finally agreed a €1.8bn loan to Ukraine. Back then, it was described as a landmark deal for a non-EU member. Now, Ukraine can hardly expect the bloc to give it more.

Kiev is under pressure from the EU and other international lenders to curb corruption and liberalize the economy. The Ukrainian government never spared words to promise what it has not lifted a finger to do. Besides, the EU leaders realize well that Ukraine will never pay the money back. After joining the EU in 2004, Poland received more than €100 billion for 10 years to have its economy recovered. It was supposed to start paying it back starting from 2014. The time has passed and Warsaw still receives aid for the EU though on a smaller scale.

And the prospects for Ukraine? In the latest Global Fraud Survey, which took place at the end of 2016, 88% of Ukrainian employees said that bribery and corrupt practices were widespread in business in that country. The Unz Review writes that this figure was 85% in the 2013 survey, the last year of «normalcy» before the Maidan. It was also at 80% in 2015. In short, overthrow of the «kleptocratic» Yanukovych made no difference to these figures. Zilch.

The reforms in pension, land and tax reforms, and privatization have failed. The same goes for military aid. A Rand Corporation report says that the country’s deeply embedded problems cannot easily be solved by foreign-provided weapons or assistance. There is no reform party in parliament that would push for changes. Most of the successful reformers have left the government.

According to European Commission chief Jean-Claude Juncker, «Corruption is undermining all efforts to rebuild Ukraine in line with European Union norms». Overhauls are taking longer than planned, which is causing repeated delays to payments from a $17.5 billion bailout from the International Monetary Fund. Prime Minister Volodymyr Hroisman said last month that the latest installment would be held up until at least the fall.

So, Ukraine is used as a host for NATO military infrastructure without any hope for membership in the bloc. It can get some lethal weapons from the United States but gratuitous military assistance is reduced, so it’ll have to pay for them. And there is no chance for enhanced partnership with Washington. One can say with confidence that Kiev’s aspiration for becoming a privileged partner of the West to receive substantial economic and financial assistance is nothing more than a pipe dream. 

Tags: Ukraine