Ukraine – freeloader of EU-grants

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Wolodymyr Oleksandrowytsch Selenskyj became famous via “Dancing with the stars”, an US casting show (BBC). As President of Ukraine he has now not only to dance with the lions in an US-impeachment inquiry, but also within his domestic industry.

Ukrainian companies and state authorities are in Western Europe repeatedly suspected of lying and cheating. But is the fact that sometimes scandals with considerable consequences become public are still on a case-by-case basis or is there systematic failure? The left-wing parties in the European Parliament have published a study that assumes the latter. 

“The results of our analysis indicate that in the last 3 years (between 2015-2017), iron ore exports from Ukraine were on average under-invoiced at least by 20% which is equivalent to $ 520 million of profits potentially shifted out of Ukraine to low tax jurisdictions through transfer pricing. (…) Thus, if one applies 20% under-invoicing, which we calculated for iron ore, to the whole of agricultural, iron ore and steel exports (~$14 billion), profit shifting of Ukraine’s commodities could be $3 billion per year. If this estimate is close to reality, retaining and taxing these profits in Ukraine could replace the macro-financial assistance which Ukraine is receiving from the EU at the expense of EU tax payers.” The study can be found here.

Iain King, Visiting Fellow, European Program at Center for Strategic and International Studies (CSIS) summarizes: “The European Union is the largest donor to Ukraine, and Ukraine is the largest recipient of EU macro-financial assistance to any non-EU country. The European Union has given, on average, over $710 million (€650 million) per year to the country since 2014—almost twice as much as the United States average.”

This fact-based view seems be the reverse as President Selenskyj himself looks at the issue. In the world-famous transcript of his phone call with US-President Trump, he stated: They (i.e. Germany & France) are not working as much as they should work for Ukraine. It turns out that even though logically, the European Union should be our biggest partner but technically the United States is a much bigger partner than the European Union and I’m very grateful to you for that because the United States is doing quite a lot for Ukraine. Much more than the European Union especially when we are talking about sanctions against the Russian Federation.”

All this tightens the relations between the European Union and Ukraine. Studies such as such of the left-wing groups in the European Parliament are no longer merely anti-capitalist show-off against a westward-oriented Ukraine. Waste of money, corruption and fraud in Ukraine are also increasingly disturbing conservative politicians. Mr Selenskyj will have to deliver. He has been elected for a new start and for a fight against the old elites. Selenskyj has been innocently drawn into the US impeachment. Nevertheless, this happens to politicians all the time. Being involved in misunderstandings in international diplomacy is misleading Selenskyj from the task he has been voted for. Don’t talk the talk if you can’t walk the walk….