Foreign Affairs Minister Chrystia Freeland meets with The Globe and Mail's editorial board in Toronto, on Dec. 1, 2017.Christopher Katsarov/The Globe and Mail
Lithuania is urging Canada to sign on to a long-term package of support for Ukraine that would funnel more investment into the Eastern European country and strengthen its ties with the West as Kiev struggles to fight internal corruption and rebuild its economy despite a war with Moscow-backed militants.
The Lithuanian government in concert with Ukraine is championing what is provisionally called a "European Plan for Ukraine" and would disburse an estimated $7.47-billion annually to Ukrainian recipients for a period of 10 years.
Lithuania remains concerned about Russia's continuing efforts to destabilize Ukraine and the idea, spearheaded by former Lithuanian prime minister Andrius Kubilius, has been likened to the Marshall Plan aid initiative that helped rebuild Western Europe after the Second World War.
A key goal would be to replacing aging Soviet-era infrastructure in Ukraine and make other highly visible investments that demonstrate to Ukrainians the West is playing a key role in their recovery and help prevent the rise of anti-European politicians. The disbursement of capital for investment projects would be linked to further reforms of governance and Ukraine's investment climate.
This proposal remains in the formative stages and financing and partners are still being assembled.
A Lithuanian government delegation, which visited Washington and Ottawa near the end of 2017 to press its case, hopes that Canada, which will serve as chair of the Group of Seven countries throughout 2018, can make Ukraine a priority for its tenure.
More than 1.3 million Canadians, including Foreign Affairs Minister Chrystia Freeland, can trace their heritage to Ukraine, where Canada is currently training Ukrainian soldiers to fight the Moscow-backed rebels.
It was Ukraine's earlier efforts to deepen Western ties – a deal with the European Union – more than four years ago that angered Russia and first sparked massive upheaval there. Less than six months later, Russia annexed Ukraine's Crimea peninsula and commenced support for a war in eastern Ukraine that is sapping Kiev's resources.
The conflict has cost more than 10,000 lives and is reducing the Donbass region, once a key part of Ukraine's industrial heartland, to an economic wasteland.
It's not clear how much Canada would be asked to make available to Ukraine in the form of loans or donations.
Canada has already lent Ukraine close to three-quarters of a billion dollars in the past decade, including more than $250-million in 2009 to finance a Canadian-built satellite system. Since January, 2014, Canada provided more than $400-million in low-interest loans to help Ukraine stabilize its economy and undertake reforms.
Canada, the United States and other potential donors and international financial institutions, from the European Union's European Investment Bank to the World Bank's International Finance Corp. to Scandinavia's Nordic Investment Bank, have been invited to an "Invest Ukraine" conference in Brussels early this year to discuss the project including the establishment of a central agency to manage this initiative.
Ms. Freeland's office, reached Sunday, declined to say whether Canada would join this proposed Ukraine financing effort.
Her director of communications, nevertheless, said Canada stands firmly with Ukraine.
"Our government is unequivocal in its support for Ukraine. We condemn in the strongest terms Russia's illegal annexation of Crimea and ongoing violence in eastern Ukraine," Alex Lawrence said.
Ms. Freeland visited Ukraine in late December where she met with President Petro Poroshenko and other key officials.
Her office said she is in frequent conversation with other Western allies on "on how they can collectively support Ukraine and deliver a peaceful and prosperous future for Ukrainians."
Ukraine has been trying to reorient its economy away from trade with Russia, but it's finding some of the prescriptions difficult. For instance, the World Bank in a recent report said Ukraine desperately needs to remove a moratorium on agriculture land sales. The country has one third of the world's fertile black soil but crop yields fall far behind other European countries because those using the land have little incentive to invest and have trouble getting credit to make more improvements.
Ukrainian lawmakers voted last month to extend the moratorium another year. Those opposed to lifting it say foreign investors would start buying up Ukrainian land if the ban were removed.
Ukraine has already received billions of dollars of loans through international financial institutions, but disbursement of this money has been slow – in part because necessary reforms have yet to be implemented and backers envision the project-management agency proposed in this European Plan as helping management of existing aid as well.
Michael Carpenter, a former U.S. State Department foreign service officer and foreign policy adviser to former U.S. vice-president Joe Biden, writing for Foreign Policy this month, said corruption is hobbling Ukraine and he applauded the Lithuanian-backed plan for investment there.
Mr. Carpenter said it's not realistic to expect Ukraine will be allowed to join NATO or the EU in the near future and as such the incentives are not strong enough for Ukrainian party leaders "to back difficult reforms and cut off the vested interests that finance their re-election campaigns."
A Western-managed investment fund would serve as a bridging mechanism to spur reforms and good governance for the immediate future, he argued.
Steven Chase