After the European Union announced on Wednesday a larger than expected package of $15 billion in loans and grants to Ukraine, Washington also wants to help.
The U.S. government is preparing $1 billion in assistance to help Ukraine’s most vulnerable citizens weather the storm of economic reform measures slated to dismantle Russian-supported energy subsidies, reduce government spending and devalue the national currency.
The U.S. House of Representatives approved on Thursday the $1 billion U.S. loan guarantee, which Secretary of State John Kerry first announced during his visit to Kiev. Now Kerry is working to build a coalition of European allies to present a united front against Russia, as well as a firm commitment to support Ukraine’s interim government.
“Our proposed package of loan guarantees can help the Ukrainian government as it undertakes required reforms and help to cushion the impact of reduced energy subsidies on vulnerable Ukrainians,” Noel Clay, a spokesperson for the State Department, told Devex.
The U.S. aid package will accompany a major International Monetary Fund loan program, which will make loans contingent on Ukraine’s willingness to implement a set of deep economic reform measures, including opening up the country’s currency to market forces and doing away — at least in part — with Russian-supported energy subsidies supported that have propped up high energy use rates in the country.
Clay said the IMF “will be at the center of an international package for Ukraine.”
Legal referendum will facilitate aid
A new referendum for the separation of Crimea — now partially occupied by the Russian military — from Ukraine has escalated tensions on the peninsula, but it is unclear how or if the referendum, if passed, would affect assistance plans for the country.
“Any referendum on Crimea must be conducted consistent with Ukrainian law. It is our understanding that the Ukrainian Constitution requires an all-Ukraine national referendum to alter the territory of Ukraine,” Clay told Devex.
The House Foreign Affairs Committee passed its own resolution on Thursday, calling for the United States to “participate with its European allies and other countries in a coordinated effort to provide the Ukrainian government with financial, economic, and technical assistance.”
Meanwhile, with few levers available to influence — or even monitor — the escalating tension in Crimea, the U.S. Agency for International Development is looking ahead to support Ukraine’s national elections in May and promising technical assistance for the country’s “mismanaged” financial sector.
USAID is promising election observers, civil society support, press freedom advocates, and financial sector technical assistance to Ukraine — but whether there is any role for U.S. foreign assistance to play in the immediate situation in Crimea remains unclear. International monitors from the Organization for Security and Cooperation in Europe have reportedly been turned away from the peninsula.
A Foreign Affairs Committee hearing on Thursday probed how U.S. and multilateral financial and technical assistance levers can counteract Russian influence and a legacy of widespread financial “mismanagement” in the Eastern European nation that has been a U.S. development partner since it gained independence from the Soviet Union in 1991.
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About the author
Michael Igoe@AlterIgoe
Michael Igoe is a Senior Reporter with Devex, based in Washington, D.C. He covers U.S. foreign aid, global health, climate change, and development finance. Prior to joining Devex, Michael researched water management and climate change adaptation in post-Soviet Central Asia, where he also wrote for EurasiaNet. Michael earned his bachelor's degree from Bowdoin College, where he majored in Russian, and his master’s degree from the University of Montana, where he studied international conservation and development.