EUROPEAN PARLIAMENT 2014 - 2019

Plenary sitting

A8-0056/2015

19.3.2015

***I REPORT

on the proposal for a decision of the and of the Council providing macro-financial assistance to Ukraine (COM(2015)0005 – C8-0005/2015 – 2015/0005(COD))

Committee on International Trade

Rapporteur: Gabrielius Landsbergis

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CONTENTS

Page

DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION ...... 5

EXPLANATORY STATEMENT ...... 6

OPINION OF THE COMMITTEE ON FOREIGN AFFAIRS ...... 8

PROCEDURE ...... 11

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DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION on the proposal for a decision of the European Parliament and of the Council providing macro-financial assistance to Ukraine (COM(2015)0005 – C8-0005/2015 – 2015/0005(COD))

(Ordinary legislative procedure: first reading)

The European Parliament,

 having regard to the Commission proposal to Parliament and the Council (COM(2015)0005),

– having regard to Article 294(2) and Article 212 of the Treaty on the Functioning of the , pursuant to which the Commission submitted the proposal to Parliament (C8-0005/2015),

 having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

– having regard to Rule 59 of its Rules of Procedure,

– having regard to the report of the Committee on International Trade and the opinion of the Committee on Foreign Affairs (A8-0056/2015),

1. Adopts its position at first reading, taking over the Commission proposal;

2. Calls on the Commission to refer the matter to Parliament again if it intends to amend its proposal substantially or replace it with another text;

3. Instructs its President to forward its position to the Council, the Commission and the national parliaments.

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EXPLANATORY STATEMENT

The Ukrainian economy is experiencing an acute and serious crisis, rooted in long-standing structural problems and aggravated by the armed conflict in the Eastern regions and the illegal annexation of Crimea by Russia. After a new government took office in February 2014, its ambitious macroeconomic adjustment and structural reform programme was underpinned by a financial assistance programme of the IMF and two EU macro-financial assistance (MFA) operations. However, Ukraine's reform efforts have been complicated by the continued armed conflict in the East, undeclared hybrid war and trade restrictions from Russia and the escalation of a natural gas dispute between the two countries. As a result, economic recession and capital flight have been more severe than initially expected, resulting in a sharp depreciation of the currency and a depletion of international reserves. A significant additional external financing gap has therefore emerged for 2015 and early 2016. As Ukraine has lost access to international debt markets, this gap can only be filled by additional official financial assistance. European Parliament has consistently expressed its support for assisting Ukraine, the associated partner of the EU, in its economic and political stabilisation and reforms. In its most recent resolution of 15 January 2015 on the situation in Ukraine, the European Parliament has welcomed the proposal by the Commission to extend an additional EUR 1.8 billion in macro-financial assistance to Ukraine and called for a development of a major assistance plan for Ukraine. The proposal of the Commission is also based on the European Council Conclusions of 18 December 2014 calling for "the EU and its Member States to stand ready to further facilitate and support Ukraine's reform process, together with other donors and in line with IMF conditionality".

The MFA is an exceptional EU crisis-response mechanism available to the EU's partner countries experiencing acute balance of payment problems. The additional MFA proposed by the Commission on 8 January 2015 can make an important contribution to a new package of international support to Ukraine, both directly through the proposed amount of EUR 1.8 billion and indirectly by mobilising other partners' contributions. It should also act as a catalyst for a gradual return of confidence and supporting the reform effort in the country through an accompanying policy programme to be agreed with the Ukrainian authorities. The MFA is complementary to the assistance of other donors in the context of IMF-sponsored economic programme. It will contribute to the EU objectives of promoting economic stability and development in Ukraine, and more broadly in the eastern European Neighbourhood. Through the conditionality, the programme will also contribute to strengthening the economic reform commitments of the Ukrainian Government. It is also a signal that the EU is ready to support countries embarking on reforms at the times of economic and political difficulty as well as the credibility of its political commitments.

Under the Joint Declaration by the European Parliament and the Council adopted together with Decision No 778/2013/EU of the European Parliament and of the Council of 12 August 2013 providing further macro-financial assistance to Georgia, the two co-legislators committed themselves "to fully reflect [the] considerations and principles [contained in the

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Joint Declaration] in the future individual decisions on granting Union's macro-financial assistance".

It should be pointed out that the Commission proposal fully reflects the considerations and principles contained in the above Joint declaration, agreed in conciliation procedure between the two co-legislators. The rapporteur can therefore entirely adhere to the Commission proposal. Moreover, in the current extremely difficult situation in which Ukraine finds itself, timely approval of the Commission proposal for macro-financial assistance to Ukraine is important to enable two of the three tranches (of EUR 600 million each) to be disbursed still in 2015. Such an approval of the Commission proposal by the European Parliament and the Council would prove that the EU can act swiftly, decisively and commensurate with its political commitments.

In the light of the above considerations your rapporteur proposes that the European Parliament approves the Commission proposal without amendments.

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12.3.2015

OPINION OF THE COMMITTEE ON FOREIGN AFFAIRS

for the Committee on International Trade

on the proposal for a decision of the European Parliament and of the Council providing macro-financial assistance to Ukraine (COM(2015)0005 – C8-0005/2015 – 2015/0005(COD))

Rapporteur: Jacek Saryusz-Wolski

SHORT JUSTIFICATION

The European Parliament should agree on the decision for a Macro-Financial Assistance to Ukraine under an expedited procedure, without amendments, as it reaffirms the long-standing commitment of the European Parliament as well as of the European Union to the reform process of Ukraine. Once adopted, this macro-financial assistance will make a tangible contribution to supporting the legitimate leadership of Ukraine. A timely assistance for Ukraine may ease what would remain a serious balance-of-payment crisis threatening the financial stability of the country.

Ukraine is not a poor country. It found itself in a drastic financial situation due to a lack of long overdue structural reforms, bad governance and economic and financial losses resulting from war, foreign invasion and occupation.

Ukraine needs immediate, increased and timely support, as it fights against Russian aggression in the East of the country, while simultaneously attempting to reform its state and economy. It is unprecedented in European history that a country faces two such challenges in parallel.

Ukraine faces a destabilizing financial and economic crisis, which is partially the consequence of the severing of up to twenty per cent of its economy by the aggressor, and of financial consequences and costs of its war effort towards defending itself.

Besides macro-financial assistance, which is urgently necessary and must be as generous as possible, the EU should also explore creative non-financial avenues that could ease Ukraine’s financial situation and thus diminish its need for future financial assistance. Several options should be envisaged by the EU:

• EU Member States should facilitate, through all possible legal and administrative

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means, the return to Ukrainian hands of those assets which were illegally detained by the former political leadership, and which are now hidden and frozen in banks in the EU.

• The EU should ensure that, should Ukraine recover the assets that were illegally detained by the previous leadership, those assets are not rerouted and used to satisfy any Russian claims, but are instead devolved to the benefit of Ukrainian state in need.

• The EU should support further Ukraine's fight against endemic corruption, as that would greatly improve the fiscal revenues of the State.

• The EU could also help financial stability of Ukraine by establishing a joint investigative body that would monitor the EU’s financial assistance towards Ukraine. Such body would not only ensure that the EU funds are spent properly, but would also serve as a capacity-building institution, being composed of the Ukrainian officials and anti-corruption experts from the EU, thus transferring to Ukraine best EU practice in financial control and auditing.

• EU assistance should be targeted at reinforcing the most vulnerable areas of Ukrainian economy, influencing its financial equilibrium, such as energy market, business environment, and fiscal administration and policy. By targeting these areas, the EU will maximise its contribution towards easing Ukraine's financial strains.

‘Amicus certus in re incerta cernitur.’

Ennius, in: Cicero, Laelius de Amicitia, 44 BCE, p. 64.

******

The Committee on Foreign Affairs calls on the Committee on International Trade, as the committee responsible, to propose that Parliament adopts its position at first reading taking over the Commission proposal.

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PROCEDURE

Title Macro-financial assistance to Ukraine References COM(2015)0005 – C8-0005/2015 – 2015/0005(COD) Committee responsible INTA Date announced in plenary 15.1.2015

Opinion by AFET Date announced in plenary 15.1.2015

Rapporteur Jacek Saryusz-Wolski Date appointed 26.1.2015 Date adopted 9.3.2015

Result of final vote +: 49 –: 11 0: 0

Members present for the final vote Lars Adaktusson, Michèle Alliot-Marie, Nikos Androulakis, Petras Auštrevičius, Amjad Bashir, Bas Belder, Goffredo Maria Bettini, Mario Borghezio, , Klaus Buchner, James Carver, Fabio Massimo Castaldo, Lorenzo Cesa, Aymeric Chauprade, Andi Cristea, Arnaud Danjean, Mark Demesmaeker, Georgios Epitideios, , Richard Howitt, Pablo Iglesias, Sandra Kalniete, Manolis Kefalogiannis, Tunne Kelam, Afzal Khan, Janusz Korwin-Mikke, Eduard Kukan, Ilhan Kyuchyuk, , , Sabine Lösing, Andrejs Mamikins, Ramona Nicole Mănescu, David McAllister, Jean-Luc Mélenchon, Francisco José Millán Mon, Pier Antonio Panzeri, Demetris Papadakis, Kati Piri, Andrej Plenković, Cristian Dan Preda, Sofia Sakorafa, Alyn Smith, Charles Tannock, Eleni Theocharous, László Tőkés, Ivo Vajgl, Johannes Cornelis van Baalen, Geoffrey Van Orden, Hilde Vautmans, Boris Zala Substitutes present for the final vote Nicolas Bay, Reinhard Bütikofer, Gabrielius Landsbergis, Antonio López-Istúriz White, David Martin, Marietje Schaake, Helmut Scholz, Traian Ungureanu Substitutes under Rule 200(2) present Eric Andrieu for the final vote

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PROCEDURE

Title Macro-financial assistance to Ukraine References COM(2015)0005 – C8-0005/2015 – 2015/0005(COD) Date submitted to Parliament 8.1.2015 Committee responsible INTA Date announced in plenary 15.1.2015 Committees asked for opinions AFET BUDG Date announced in plenary 15.1.2015 15.1.2015 Not delivering opinions BUDG Date of decision 20.1.2015 Rapporteurs Gabrielius Date appointed Landsbergis 21.1.2015 Discussed in committee 23.2.2015 Date adopted 19.3.2015

Result of final vote +: 30 –: 7 0: 0

Members present for the final vote William (The Earl of) Dartmouth, Maria Arena, Tiziana Beghin, David Campbell Bannerman, , Santiago Fisas Ayxelà, Yannick Jadot, , Alexander Graf Lambsdorff, Gabrielius Landsbergis, , Emmanuel Maurel, Emma McClarkin, Alessia Maria Mosca, Franck Proust, Viviane Reding, Matteo Salvini, Helmut Scholz, , , Adam Szejnfeld, Iuliu Winkler Substitutes present for the final vote Clara Eugenia Aguilera García, Eric Andrieu, Bendt Bendtsen, Goffredo Maria Bettini, Victor Boștinaru, Dita Charanzová, Aymeric Chauprade, Danuta Maria Hübner, Fernando Ruas, Pedro Silva Pereira, Davor Ivo Stier, Jarosław Wałęsa, Pablo Zalba Bidegain Substitutes under Rule 200(2) present Seb Dance, Jean-Luc Schaffhauser, Marco Valli for the final vote Date tabled 19.3.2015

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