* European Union says ready to provide $15 bln to Ukraine
* Aid in loans and grants for next "couple of years"
* European leaders to meet Ukraine's PM on Thursday
* At summit, EU leaders will discuss measures against Russia
(Releads, adds details on amounts to be loaned and how)
By Luke Baker
BRUSSELS, March 5 The European Union offered a
larger than expected package of aid to Ukraine on Wednesday,
saying it was willing to provide $15 billion in loans and grants
over the next several years to help get the shattered economy
back on its feet.
European Commission President Jose Manuel Barroso said the
assistance, to be discussed by European Union leaders at a
summit in Brussels on Thursday, would require widespread reforms
by the new Ukrainian government and the signing of a deal
between Ukraine and the International Monetary Fund.
The EU had been expected to come up with a package of
short-term assistance worth around 1 or 2 billion euros, but
instead presented a more comprehensive programme that perhaps by
coincidence matched the amount Russia had offered Ukraine before
president Viktor Yanukovich's government collapsed.
"The package combined could bring an overall support of at
least 11 billion euros over the next couple of years, from the
EU budget and EU-based international financial institutions,"
said Barroso. "It is a package designed to assist a committed,
inclusive and reforms-oriented Ukrainian government."
Among the elements is 1.6 billion euros in direct loans and
1.4 billion euros in grants, of which 600 million can be
disbursed ove the next two years.
Beyond that, 3 billion will be released from the European
Investment Bank between 2014-2016 and the European Bank for
Reconstruction and Development, another EU-related institution,
is looking into funding totalling 5 billion euros.
Other money will be raised by leveraging funds available
from the EU's Neighbourhood Investment Facility, a fund set up
to invest in projects in the EU's neighbouring states.
EU leaders will discuss the aid package with Ukrainian Prime
Minister Arseny Yatseniuk who will attend Thursday's summit.
After taking office late last month, Yatseniuk said the
country needed $35 billion to survive the next two years. EU
officials are currently in Kiev to assess more exactly its
needs, which they have indicated are much lower than that.
GAS AND TRADE
While the EU's $15 billion offer is likely to be warmly
received in Kiev, it is still contingent on the government
striking a deal with the IMF on a longer-term aid package.
After years of bad relations between Ukraine and the IMF,
the indications are that an agreement can be struck, although it
will still require some harsh economic medicine for Ukraine.
At the same time, the United States is finalising its plans
for assistance to Ukraine's new leaders, including around $1
billion of loan guarantees. It has said it will also send
technical experts to advise the central bank and finance
ministry on how to tackle economic crisis.
Ukraine is on the verge of bankruptcy after years of
financial mismanagement, high energy costs and currency turmoil.
The situation has deteriorated further since the overthrow of
Yanukovich and the conflict with Russia.
The West has in recent days stepped up efforts to persuade
Moscow to pull its forces from Ukraine's Crimea peninsula and
avert the risk of a wider conflict.
As well as financial aid, the EU plans to bring forward
trade benefits that Ukraine would have received had it signed an
association agreement with the EU in November last year.
Yanukovich rejected that deal, triggering the protests that led
to his overthrow.
The EU says it will also work on providing energy to Ukraine
via "reverse flows" of gas from the EU. Currently, Ukraine is
almost entirely dependent on imports of Russian gas. By using
"reverse flows" the EU can supply Ukraine with gas that it has
received from Russia or elsewhere.
(Additional reporting by Justyna Pawlak; editing by Ralph