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Ukraine Aid Demands on EU Certain to Rise, German Minister Says

Germany's Deputy Foreign Minister Michael Roth
Michael Roth, Germany's Deputy Foreign Minister. Photographer: Thomas Trutschel/Photothek/Getty Images

March 28 (Bloomberg) -- Europe’s aid pledges to stabilize Ukraine are bound to increase as the scope of the country’s economic challenges becomes clear, German Deputy Foreign Minister Michael Roth said.

“Stabilizing Ukraine has its price,” Roth said in an interview in his office in Berlin on March 25. “Current EU pledges won’t suffice. Ukraine will need many billions in aid, and over an extended period.”

Roth, 43, a member of the Social Democratic Party that is Chancellor Angela Merkel’s junior coalition partner, is the most prominent German government official yet to warn of the possible financial commitments needed for the European Union to shore up Ukraine’s economy and counter Russian influence.

The EU is offering as much as 11 billion euros ($15.1 billion) to help Ukraine. With Ukraine at risk of default, the International Monetary Fund said yesterday it will provide $14 billion to $18 billion in loans over the next two years after the government moves to “stabilize the economy.”

Ukraine’s size and its economy “are a clear indication of the dimension of support needed,” Roth said, without citing specific aid numbers. Ukraine’s population of 46 million is about the size of Spain’s and the country is facing its third recession since 2008.

Finance Minister Wolfgang Schaeuble hinted that Germany, the EU’s biggest net contributor, is beginning to assess the potential costs of aiding Ukraine, saying Greece’s 240 billion-euro two-part bailout that began in 2010 holds lessons.

Greek Example

“If ever we were to reach a situation in which we had to stabilize Ukraine, we would have many experiences from Greece” to draw on, Schaeuble said on March 26 in the western German city of Duisburg.

Europe’s task of ensuring Ukraine’s territorial integrity and political stability “has priority,” Schaeuble said on March 25 in Berlin. At the same time, he’s upholding Merkel’s re-election campaign pledge of lowering Germany’s net new borrowing this year to the lowest level in 40 years and balancing the budget in 2015.

Russian President Vladimir Putin’s annexation of Ukraine’s Crimea region after Kremlin-backed Ukrainian President Viktor Yanukovych fled in the face of pro-European protests in Kiev caught the West by surprise, Roth said.

“Nobody expected that,” he said, because the EU never viewed its push to sign an association agreement with Ukraine as “expanding the EU’s sphere of influence” toward Russia.

To contact the reporters on this story: Brian Parkin in Berlin at bparkin@bloomberg.net; Birgit Jennen in Berlin at bjennen1@bloomberg.net

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net Tony Czuczka, Mark Williams

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