US in early talks with EU on Ukraine financial support-State Dept

by Reuters
Monday, 3 February 2014 20:11 GMT

WASHINGTON, Feb 3 (Reuters) - The United States and the European Union are in preliminary discussions on possible financial assistance for Ukraine once a new government is formed, a State Department spokeswoman said on Monday.

"This is a very preliminary stage. We are consulting with the EU ... and other partners about support Ukraine may need after a new technical government is formed," spokeswoman Jen Psaki told a daily briefing.

U.S. officials have emphasized that Ukraine will need an IMF-backed economic program to put its economy on a more stable footing. Psaki said any final decision on US financial support for Ukraine "will be guided by events in Ukraine and consultations with the new government after it is formed."

Ukraine's economy has been hard hit by more than two months of unrest, which followed a decision by President Viktor Yanukovich in November not to pursue trade and other deals with the EU, which would have brought Kiev closer to Western Europe.

Yanukovich is caught in a tug of war between Russia and the West. Russia committed a $15 billion bailout for Ukraine after Kiev scrapped plans for EU deals.

U.S. confirmation of initial talks with the EU on a financial package follows comments at the weekend by EU foreign policy chief Catherine Ashton who told the Wall Street Journal that the financial help "won't be small".

She said the package, which she referred to as "a Ukrainian Plan" would not only consist of money but also contain "guarantees" or help on luring new investment.

U.S. Secretary of State John Kerry met Ukrainian opposition leaders on Saturday on the sidelines of a security conference in Munich.

"Obviously there are several steps that need to be taken between now and then. Those steps will be a factor" in determining the decision on financial support, Psaki added.

As the largest member of the IMF, the United States will have sway over how much funding and conditions are put into any IMF-supported program for Ukraine.

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