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Ukraine needs to court investors, EU says

Ukraine serves as a key gas-transit nation for European economy.

By Daniel J. Graeber

BRUSSELS, Dec. 1 (UPI) -- Ukraine, an important energy transit nation for Europe, needs to rebrand itself as a safe haven for foreign investors, Europe's neighborhood commissioner said.

Ukraine erupted in violence following a November 2013 decision to abandon efforts to join the European Union. With a new government in Kiev warming again to the EU, European Neighborhood Policy Commissioner Johannes Hahn briefed lawmakers following his visit last week to Ukraine.

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"I was able to sign an agreement for regional development worth $68 million with the acting Minister of the Economy Valery Piatnitsky," he said Monday.

Ukraine's battered economy was left in shambles following last year's political upheaval. Energy reforms were part of the loan conditions offered after the revolution by the International Monetary Fund.

Hahn said the IMF was reviewing Ukrainian reforms with the view of releasing as much as $2.72 billion in additional support.

"Internal reforms are essential: the rule of law creates the necessary climate for investment by Ukrainian investors but also from foreign enterprises," the commissioner said. "Interest is there if the conditions can be created."

Ukraine serves as a key energy transit country for the European economy. Europe gets about a quarter of its natural gas needs met by Russia, though more than half of that runs through the Soviet-era pipeline network in Ukraine.

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Ukraine, with the help of European negotiators, brokered an interim deal with Russia to secure a discount on gas prices and reliable supplies through the winter in exchange for commitments to repay the billions of dollars in debt owed to Russian gas supplier Gazprom.

Ukraine has said it was trying to lessen its dependence on Russia by working with its neighbors to reverse the direction of natural gas supply lines and by exploiting domestic shale reserves.

Europe, meanwhile, is wary of any pipeline developments that would involve Gazprom or other similar state-backed entities, saying producers shouldn't be controlling the means of delivery.

A report Monday from the International Energy Agency said the EU has made progress in liberalizing its energy market, through there remains much room for improvement.

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