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UPDATE 1-Ukraine PM urges ECB to offer E.Europe euro funding

Published 03/04/2009, 05:35 AM
Updated 03/04/2009, 05:48 AM

(Adds background, extra quotes)

PARIS, March 4 (Reuters) - The European Central Bank should offer countries outside the euro zone access to funding in the common currency, Ukrainian Prime Minister Yulia Tymoshenko said in a newspaper column, warning against a new "iron curtain" in Europe.

"We should not let the euro become an iron curtain that would consign non-members to a high-risk zone where investors dare not venture," she wrote in a column in French daily Le Figaro published on Wednesday, before a meeting with President Nicolas Sarkozy at 1530 GMT.

Ukraine has got help from the International Monetary Fund to ease its economic crisis, but the Fund has yet to release its latest tranche of funding due to differences with Kiev.

Noting that the U.S. Federal Reserve has opened currency swap lines offering countries including Brazil, Mexico, Singapore and South Korea access to U.S. dollars, Tymoshenko said a similar arrangement should be looked at in Europe.

"The European Central Bank should consider offering this type of facility to European countries outside the euro zone to make trade and commercial exchanges more fluid," she said.

The ECB is already providing central banks in Denmark, Poland and Hungary with access to euro liquidity. All three are outside the euro zone but, unlike Ukraine, they are members of the European Union.

An ECB spokesman declined comment on the article.

The IMF has suspended release of a second tranche of its loan to Ukraine -- worth about $1.84 billion -- due to a number of differences with Kiev, including the size of the budget deficit and a lack of political unity to battle the economic crisis that has gripped the country.

Tymoshenko's visit to France comes after Sunday's meeting of European Union leaders that rejected a bailout of central and eastern European member states. However, it held out the prospect of bringing them under the protection of the euro zone more quickly. (Writing by James Mackenzie; editing by David Stamp)

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