Ukraine Investment The Berlin-Kiev Airlift

Germany's ex-finance minister Peer Steinbrück, a former political challenger to Chancellor Angela Merkel, is among a group of European officials working with Ukrainian oligarchs to stabilize the war-torn country.
Peer Steinbruck wants to help Ukraine get back on its feet.

In the early 2000s, a meeting took place in Vienna of European energy companies that wanted to reduce the market dominance of Russian natural gas giant Gazprom by building a rival pipeline called Nabucco.

The big metal tube would have diversified delivery routes and, in its own way, transformed Europe. But the effort failed and the pipeline was never built.

Now Vienna is once again the setting of an attempt to reduce Russia's influence over eastern Europe – and to stabilize Ukraine.

Handelsblatt has learned that the meeting, which took place Tuesday, was attended by Peer Steinbrück, Germany's former finance minister and unsuccessful Social Democratic contender for chancellor in 2013.

Mr. Steinbrück is part of a European effort to help financially stabilize the Ukraine, a country whose existence is threatened by its conflict with Russia.

That situation grows more precarious every day.

On Tuesday, Ukraine's fourth-largest bank, Delta Bank, was declared insolvent by the country's central bank.

It is important for the German economy that employers and unions in Ukraine seek to realize a reform agenda and declare war on corruption. Rainer Lindner, managing director, Committee on Eastern European Economic Relations.

Mr. Steinbrück, an SPD member of the Bundestag, is a member of an advisory group called the Agency for the Modernization of Ukraine that is supported by three prominent Ukrainian oligarchs.

The group's western European founders include Karl-Georg Wellmann, a member of the Bundestag and a political ally of Chancellor Angela Merkel.

Mr. Steinbrück's SPD is the junior partner in Ms. Merkel's ruling coalition.

He  declined to comment on his role in the Ukraine in response to a request from Handelsblatt. At the same time, he confirmed his involvement in the group to German newspaper Frankfurther Allgemeine Zeitung.

"I will travel to Ukraine. The first meetings will be with the Ukrainian central bank and the finance minister," Mr. Steinbrück told the newspaper.

Mr. Steinbrück said he will be paid for his services in the Ukraine but declined to disclose details. The Ukrainian group wants to present a reform plan by October, Mr. Steinbrück told the newspaper.

Mr. Wellmann told the FAZ: "Ukraine is in need of a program similar to the Marshall Plan, running potentially in the hundreds of billions."

Three Ukrainian oligarchs -- Dmytro Firtasch, Rinat Akhmetov and Viktor Pinchuk -- are pushing for foreign aid to create a multi-million dollar investment fund that would encourage and partially guarantee foreign investment in Ukraine.

Mr. Firtasch, a Kiev chemical and gas magnate, hosted the conference in Vienna on Tuesday as head of the Ukrainian employers' association, which sponsored the event with Ukrainian trade unions.

 

Ukrainian Banks-01

 

“Together with Germany, we want to establish a guarantee fund of more than $500 million in which large entrepreneurs such as Rinat Akhmetov, Viktor Pinchuk, myself and others invest their money,'' Mr. Firtasch told Handelsblatt. "We want to give foreign investors a clear signal and security.”

Mr. Firtasch is currently free on bail awaiting a court decision in Vienna regarding his extradition to the United States, where he has been accused of leading a criminal organization allegedly involved in bribery and corruption.

He denies the charges.

Mr. Akhmetov is Ukraine's richest man, but has been accused by some of initially supporting pro-Russian separatists in his home region, Donets Basin. He also has denied aiding separatists.

Mr. Pinchuk is the son-in-law of former Ukraine president Leonid Kuchma.

Despite their controversial connections, investors say involvement of the oligarchs is helpful.

“It is important for the German economy that employers and unions in Ukraine seek to realize a reform agenda and declare war on corruption,” said Rainer Lindner, managing director of the Committee on Eastern European Economic Relations.

Moreover, Mr. Lindner said he considered it “a strong signal when former and currently active European politicians support the Ukrainian leadership in modernizing the country.”

Ukrainian companies are expected to fund the advisory group's initial operations, Mr. Wellmann, the German politician, told the FAZ.

Ultimately, his goal is to obtain E.U. funding, Mr. Wellmann said.

Mr. Steinbrück and Mr. Wellmann are not the only Western politicians on the committee, Handelsblatt learned.

The group also includes France’s Laurence Parisot, who is responsible for economic issues. Until 2013, Ms. Parisot was head of the French employers' association, and is currently on the supervisory board of BNP Paribas.

Rupert Scholz, a former German defense minister and expert in constitutional law, is tasked with helping Ukraine develop more decentralized structures.

Other members include former European commissioners Stefan Füle, responsible for E.U. integration issues, and Peter Mandelson, a U.K. policy maker responsible for trade. France's former foreign minister, Bernard Kouchner, will provide health care reform support.

Support for judicial reform will be provided by Ken Macdonald, the former head of the English criminal prosecution agency Crown Prosecution Service and a member of the U.K. House of Lords.

 

Mathias Brüggmann is head of the foreign affairs desk. Gilbert Kreijger, an editor with Handelsblatt Global Edition, contributed to this article. To contact the author: [email protected].