INSIGHT-West's offer to rebuild Ukraine faces reality check

Thu Feb 26, 2015 8:49am EST
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* West sees aid as way to counter Russian influence

* Including IMF, aid could total $60 bln for Ukraine

* Ukraine unable to spend donor money quickly enough

By Robin Emmott and Anna Yukhananov

BRUSSELS/WASHINGTON, Feb 26 (Reuters) - Western powers are preparing what they say may be their most potent weapon against Moscow's interference in Ukraine - a multi billion dollar aid package to rebuild a near-bankrupt state and realise the European dream cherished by many Ukrainians.

There is just one problem: foreign governments and international financing institutions are not willing to pour money into a dysfunctional state. Only this week the businessman brought in by the new authorities to clean up the tax service was himself suspended pending a corruption inquiry.

Donors say the former Soviet republic, crippled by war and corruption, is unable or unwilling even to identify how many roads, power plants and schools its 45 million people need, let alone meet new European standards for farms and factories.

"There's strong resistance because many people in various ways benefited from the old, inefficient and largely corrupt system," said Kalman Mizsei, the head of the EU's advisory mission to Ukraine.

Ukraine is one of the world's most corrupt places, ranking as 142 out of 175 in Transparency International's corruption perception index. By some estimates, the shadow economy accounts for up to 60 percent of economic output. [ID: nL5N0VQ3MF]   Continued...