As part of Ukraine’s campaign to win Germany’s sympathies, the country’s deputy Prime Minister Alexander Vilkul visited Berlin on 22-23 May, meeting with senior German officials in an attempt to highlight economic benefits the Association Agreement will bring to Germany and the European Union as a whole.
The association agreement, totalling more than 1,000 pages, was initialled more than a year ago but its signature is awaiting progress on conditions imposed by the EU, including the release from prison of former prime minister Yulia Tymoshenko (see background).
Ukraine hopes to have the Association Agreement signed at the 28-29 November Eastern Partnership summit, held in Vilnius under the Lithuanian EU Presidency.
Lithuania, Estonia and other EU countries favour the signature of the agreement, in spite of the imprisonment of Tymoshenko, arguing that the Union should not lose Ukraine over the fate of one person.
In Berlin, Vilkul, an influential member of the new Ukrainian government, emphasised that Germany had the largest trade turnover with Ukraine, reaching $9.4 billion (€7.3 billion) in 2012, and has a long history of political relations with Kyiv.
Germany is the Ukraine's third largest trading partner, letting only Russia and China to take the lead. In fact, as an EU investor, Germany comes second in Ukraine after Cyprus, but the latter is largely seen as a place from where money from the region is recycled.
“We are grateful to Germany for its enormous contribution to the economic development of Ukraine. We also see great potential for German investments in key sectors of Ukrainian economy. Germany can be a conductor of European investments in our country,” said Vilkul.
A meeting of the Ukrainian-German High Level Group on Economic Cooperation was held, co-chaired by Vilkul and Anna Ruth Gerkes, state secretary of the Federal Ministry of Economics and Technology of Germany. In their statements, both sides confirmed interest in boosting bilateral economic cooperation.
Energy savings, environment, agriculture, banking, road construction and infrastructure were mentioned as areas raising particular interest for German investors in Ukraine.
German banks are already involved in several critically important projects in Ukraine, such as the modernisation of the Ukrainian gas transit system supplying Russian gas to European consumers. Deutsche Bank has opened a credit line of €53.5 million for the modernisation of a pipeline compressor station, and Ukraine is deeply interested in further German involvement in energy security.
Ukraine imports Russian gas from Germany through a reverse-transit system. According to reports in December Ukraine's Naftogaz paid $407.5 per 1,000 of cubic metrrs of gas imported from Germany, while still paying $429.3 for Russian gas.
Last month, Gazprom warned European companies against re-selling Russian gas to Ukraine. However, gas market experts say that reverse gas supplies between Ukraine and Europe are legal.
To facilitate trade contacts and investments, the two governments reportedly are working on setting up a Joint German-Ukrainian Chamber of Commerce. Berlin is also advising Kyiv on the establishment of the state Agency tasked to support national producers on foreign markets.
“Germany is a key partner of Ukraine in the European Union and we count on its support,” said Vilkul.
He added that as a “state manager”, he took every effort to create favourable conditions for foreign business in Ukraine.
“We all understand, however, that the Association Agreement between Ukraine and EU will create unprecedented opportunities for German business in Ukraine. Europe will only benefit from this new era of Ukraine’s involvement into common market,” the Ukrainian official pleaded.