REACHING OUT TO EASTERN NEIGHBOURS.

In recent years, the European Investment Bank (EIB) has been gradually increasing its presence in Russia, the Eastern countries (Moldova, Ukraine and eventually Belarus) and the South Caucasus (Armenia, Azerbaijan, and Georgia). The extension of the bank's mandate to the new neighbours' increased the budget by 3.7 billion in 2007-2013.

This EU funding is earmarked primarily, notes the EIB, for projects of significant interest to the Union in transport, energy, telecommunications and environment infrastructure. Priority should be given to projects on extended major Trans-European Network axes, projects with cross-border implications for one or more member states and major projects favouring regional integration through increased connectivity. In the energy sector, strategic energy supply and energy transport projects are of particular importance, as demonstrated by the recent gas delivery dispute' between Russia and Ukraine. In the environmental sector, the EIB should give particular priority in Russia to projects within the framework of the Northern Dimension environmental partnership.

Demand for EIB lending in this region is projected to grow continuously. An internal document of the European Commission indicates that the EIB is expected to sign loans for half of its 2007-2013 budget by 2009 and thus reach the 3.7 billion ceiling well before 2013.

UKRAINE - REGION'S CHAMPION

If the current trend continues, the bulk of the EIB's investment in the region will be allocated in the future to Ukraine. Although the EIB became operational in Ukraine only in 2006, the country has already signed two loans for a total of 350 million - the highest amount in the region. The first loan of 200 million, signed in 2007, finances motorway rehabilitation on the pan-European corridor between Kiev and Brody. The second loan of 150 million, signed in 2008, finances the reinforcement of the Ukrenergo power transmission network. The EIB approved, in September 2008 a third financing project in Ukraine. A loan of 175 million will finance the renovation of the country's ageing rail freight fleet. "The global financial crisis has paradoxically had a good effect on Ukraine in terms of its cooperation with the EIB," said a Ukrainian diplomat dealing with the matter.

For the moment, the EIB is financing in Ukraine projects mainly in the area of transport and energy. "Against the backdrop of the global financial crisis, the EIB should also consider investing in Ukrainian...