• Measures over Donbas conflict to stay until Minsk pact is met
  • Japanese loans to Ukraine hinge on reform, ambassador says

Russian actions to cool hostilities in eastern Ukraine are designed to win a rollback of international sanctions, and won’t achieve that goal unless President Vladimir Putin also helps fulfill a pact to end to the war, Japan’s ambassador to Kiev said.

Russia, which backs the militants who’ve been fighting Ukrainian troops for 1 1/2 years, calms the unrest whenever it sees an opportunity to have the penalties against it repealed, particularly those imposed by the European Union, Shigeki Sumi said in an interview. Without full implementation of a peace accord sealed in February in the Belarusian capital of Minsk, Group of Seven nations have "strong" intentions to maintain the sanctions, he said.

"We aren’t naive," Sumi said Wednesday in Kiev. "When the time to renew sanctions comes, Russia does something to ease the tension so they expect some sanctions to be lifted. So far, they don’t give up the idea of keeping Ukraine under their influence. We have to be careful when we discuss sanctions."

The sanctions, first enacted after Putin’s annexation of Crimea sent ties with the U.S. and Europe to a post-Cold War low, have compounded plunging oil prices to tip Russia into recession. With EU measures up for renewal in early 2016, fighting in Ukraine’s easternmost regions abated in September, though has worsened again in recent weeks. The conflict has killed more than 8,000 people, according to the United Nations.

Minsk Trigger

The U.S. says its full package of sanctions, which target individuals, companies and industries, will stay until fulfillment of the Minsk deal, including Ukraine regaining control over its eastern border. The EU plans to extend its penalties by six months, the Handelsblatt newspaper reported Nov. 9, citing unnamed German and EU officials.

Russia, which has responded to the measures against it with bans on EU food, says the deadline for completing the Minsk agreement should be pushed into 2016. It denies allegations by Ukraine, the U.S. and the EU that it’s stoking the conflict by supplying weapons and personnel.

As well as the military conflict, Ukraine is battling to steady its shrinking economy. Japan is among ally nations to pledge bilateral loans as part of a $40 billion financing package led by the International Monetary Fund. Japan has lent the Kiev government $1.1 billion to upgrade a sewage plant and provided $100 million for budgetary support.

Japanese Aid

While another $300 million is due next month, and Japan may supply $20 million and $50 million in the next few months to help rebuild bridges, hospitals, and schools in Ukraine’s east, there are strings attached, according to Sumi.

“G-7 countries provide big help, but not without conditions,” he said. "The problem with Ukraine is that there’s a lack of transparency. It has to be corrected. The reform process should be facilitated and expedited."

The U.S. has also encouraged President Petro Poroshenko and his government to speed reforms, while Qimiao Fan, who represents the World Bank in Kiev, said last month that Ukraine has "a long way to go" in its efforts to tackle corruption.

Ukraine has stagnated since the Soviet Union collapsed, while economies in other former Soviet-bloc nations such as Poland have thrived. After Ukraine’s 2005 Orange Revolution failed to deliver on promises of reform, officials must focus on stamping out graft to attract investment from abroad and reducing the reliance on foreign loans, Sumi said.

“I’d like to see more investments from Japan coming to Ukraine," he said. "I hope people realize that this is really, really the last chance for Ukraine to change."

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