EU Says Corruption Is Undermining Ukraine's Reform Efforts

(Bloomberg) -- The European Union said Ukraine isn’t tackling corruption quickly enough as delayed reforms hold up the flow of financial aid to the former Soviet republic.

Officials from the bloc including EU President Donald Tusk and European Commission President Jean-Claude Juncker met Ukrainian leader Petro Poroshenko during an annual bilateral summit Thursday in Kiev. Juncker urged the government to step up anti-graft efforts, though indicated that the EU may soften a request to create an anti-corruption court.

“What we’re asking -- we won’t be lecturing the country because this isn’t a country that needs to be lectured -- is to increase the fight against corruption,” Juncker said in the Ukrainian capital. “Corruption is undermining all the efforts this great nation is undertaking.”

While notching successes in revamping the energy and banking industries, other 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 week that the latest installment would be held up until at least the fall. Among the requirements is legislation to remake the pension system.

Lawmakers, who break for a month and a half after Thursday’s session, approved the retirement bill, aimed at reducing the system’s $5.5 billion deficit, in the first of three readings. They will vote on the revamp in the second and final readings in September, Hroisman said. To qualify for the next slice of aid, they must also back bills on privatization and on creating an anti-corruption court.

EU Aid

The IMF may be flexible over a request to reform the sale of agricultural land. Additional assistance may arrive from the EU, which has pledged 600 million euros ($685 million) for Ukraine should it keep its program with the Washington-based lender on track.

Those funds will depend on improvements in electronic asset declarations by officials, greater transparency of corporate ownership and better coordination of anti-graft efforts, according to EU Commissioner Valdis Dombrovskis. “The conditions need to be implemented already in October so that in November we can do the assessment and disburse in December,” he said in Kiev.

The EU praised some of Ukraine’s efforts and reiterated that it welcomes the country’s aspiration to eventually join the bloc. Poroshenko reaffirmed what he called the nation’s European choice, having signed an association agreement with the EU after a pro-democracy revolution in 2014.

With time running out before the summer break, Parliament Speaker Andriy Parubiy suggested extending the current session. Three votes on his proposal failed to win support. Outside the legislature, protesters blocked entrances demanding progress on creating the anti-corruption court and stripping lawmakers of their immunity.

To contact the reporters on this story: Daryna Krasnolutska in Kiev at dkrasnolutsk@bloomberg.net, Volodymyr Verbyany in Kiev at vverbyany1@bloomberg.net.

To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net, Andrew Langley, Andrea Dudik