* EU speaking to China, U.S., Japan, Turkey on Ukraine aid
* Officials say "desirable" that Russia be involved too
* Ukraine says it needs $35 billion for 2014-15
* EU, U.S. officials emphasize need to work with IMF
By Luke Baker and Justyna Pawlak
BRUSSELS, Feb 24 Europe is discussing a range of
options for short- and longer-term financial assistance to
Ukraine, but any comprehensive package is only likely to take
shape after elections in May and in coordination with the
International Monetary Fund.
Ukraine's finance ministry said on Monday it needed $35
billion to survive 2014 and 2015 and asked for the first
payments to be made in the next one to two weeks, possibly
alongside a donors' conference.
It is highly unlikely Europe, the United States or anyone
else would put that much money on the table right away. But
smaller bilateral loans, possibly coordinated via the EU, could
be used to provide short-term assistance, officials said.
Discussions have already taken place with Japan, China,
Canada, Turkey and the United States on potential donations, a
senior European Commission official said, and efforts are being
made to keep Russia engaged in the process as well.
"Nothing can be ruled out," said a separate official
involved in efforts to help Ukraine.
"Many of the proposals we're working on require an IMF deal
to be in place, which means an operational government in
Ukraine, so it can't happen until after the elections.
"But the EU is in a good position to coordinate action if
member states want to provide money. They have the resources and
there is a willingness to help."
The European Commission confirmed a variety of options for
financial assistance were being discussed.
"The EU has been working on an international economic
support package for Ukraine - short, medium and long-term
support to address the challenges of the Ukrainian economy,"
said Commission spokesman Olivier Bailly.
"It's too early for us to point out one option or set of
options, but we are here to help provided there is economic
reform in Ukraine. We don't exclude any of the options necessary
to bring economic support to Ukraine."
He played down the possibility of a donors' conference but
indicated that Catherine Ashton, the EU's foreign affairs chief,
who is visiting Kiev, may announce something later.
"I'm not personally aware about any decision taken for such
a conference, but as high representative Catherine Ashton is
actually in Kiev, I'm sure she will be the first one to comment
if such an announcement is confirmed," he said.
Three months ago, the EU was hoping to sign Ukraine up to a
far-reaching free trade and association agreement that would
have brought the country of 46 million more closely into the
EU's political and economic sphere of influence.
Ukraine's now-deposed president, Viktor Yanukovich, rejected
that deal at the last minute, deciding instead to accept $15
billion in aid and cheaper gas from Russia. That led to weeks of
popular protests in Kiev and other cities, culminating in
Yanukovich's tumultuous removal from office at the weekend.
The EU now finds itself in a delicate balancing act. It had
thought that it had lost Ukraine to Russia and was beginning to
consider its longer-term options for engaging with the country,
which borders four EU member states.
Now history has speeded up and the EU finds itself trying to
come up with immediate solutions to handle the economic turmoil
and the fallout from the collapse of the government, while doing
everything it can to keep Russia constructively engaged.
While it is clear that Ukraine needs rapid financial
assistance, it is also true that it does not face any
substantial financing problems until late May, when it also
plans to hold elections for a new government.
IMF THE KEY
EU and U.S. officials have said they intend to coordinate
any long-term aid for Ukraine via the IMF, which has been in
discussion with Kiev on assistance for years. It agreed a $15.5
billion loan in 2010, but suspended the deal last year after
Ukraine failed to implement the required reforms.
After elections have been held, EU officials hope Ukraine
will be able to resume formal talks with the IMF and commit
itself to reforms, which include removing subsidies from gas and
freely floating the currency.
If Ukraine can strike a new agreement with the IMF, that
would allow the EU to disburse around 2-3 billion euros of extra
assistance, officials say, and could unlock further help from
the World Bank, the European Bank for Reconstruction and
Development, and the European Investment Bank.
But everything first hinges on the IMF.
"The IMF would be precisely the right partner," said Steffen
Seibert, spokesman for German Chancellor Angela Merkel.
"The main elements of what a possible aid package could look
like are known. There can be help from the IMF in supporting
economic reforms. Under the same conditions, namely the
readiness to undertake reforms, the EU is ready to support the
country, to offer macro-financial help."
At the same time, the EU needs to keep Russia on side.
Moscow has suspended any further payments from the $15 billion
it offered Ukraine in December and could also decide to raise
the price of gas it supplies.
In that regard, Russia still holds a tight grip on Ukraine,
despite the wholesale change in the government. Russian Prime
Minister Dmitry Medvedev questioned the legitimacy of the new
authorities in Kiev on Monday and said any extension of gas
contracts would need to be negotiated.
In a reflection of the difficult balance the EU finds itself
trying to make, French Foreign Minister Laurent Fabius, speaking
during a visit to Beijing, said it would be "desirable" for
Russia to offer support for Ukraine.