MOVING FORWARD WITH UKRAINE, BELARUS, AND GEORGIA

1. (SBU) Summary: On July 9, Poloffs and EUR/ACE Larry
Silverman met with Malena Mard, Director of the Eastern
Europe and Central Asian Department, and Johan Frisell, Head
of the Eastern Europe Desk. Mard gave a rundown on the
challenges Sweden expects during its EU Presidency between
the EU and Ukraine, Belarus and Georgia. Sweden wants to
direct aid to Ukraine to prepare it for eventual EU
membership; is pessimistic about a rapprochement with
Belarus; and wants the EU to deliver on promises to Georgia,
because Russia "is winning." End Summary.

Ukraine


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2. (SBU) Sweden's aid program to Ukraine has a "long-term
vision," according to Mard, and its assistance goes directly
to those who implement the programs as often as possible.
She said there is concern that many international donors will
pull out because Ukraine is better off than many of its
neighbors. However, Sweden will remain to keep Ukraine
focused on reforms as a means to deepen its integration with
the EU. After hearing our plans for increased U.S.
assistance to Crimea, Mard commended the U.S. and noted we
and EU Member States should be more visible in the Crimea to
encourage the Ukrainian government to better integrate Crimea
into the rest of the country.



3. (SBU) As Sweden's support to Ukraine is more flexible than
the EU's, it plans to implement a program to help Ukraine
prepare for the EU Commission's eventual budget support
program. This aid will focus on democracy, human rights,
environment and energy. Sweden and the EBRD are preparing to
launch a large district heating program; it will reach out to
potential aid donors this fall to fund the 100 million euros
it estimates is needed for its completion. Mard said the
PM's office is very supportive of the district heating
program, as it is a positive move in solving the climate
change problem.



4. (SBU) Frisell said a deep trade agreement could have been
concluded with Ukraine this year had the financial crisis not
occurred. Sweden therefore "lost" an EU Presidency
deliverable.

Belarus


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5. (SBU) The EU Council views Belarus in a "very bad light,"
Mard said, perceiving the situation to be "no better than in
Baku or Tashkent." However, Belarus borders numerous EU
members and its situation cannot be ignored: the EU must have
a high-level dialogue to prevent problems and solve those
that already exist. As EU President, the Swedes must be
prepared for the worst-case scenario. On July 28, FM Bildt
will participate in a Troika meeting with Belarusian FM
Sergei Martynov to start discussions on the way forward. The
EU is ready for rapprochement, is unlikely to downgrade
relations, and is preparing for more contact, absent very
negative developments. However, said Mard, Belarus is
telling the EU it will make progress on the human rights
front in October. But by then it will be too late, said
Mard, and the EU will likely renew the suspension of
sanctions, not end sanctions. EU policy on Belarus had been
almost completely determined by human rights, but now other
issues, including energy, are factors, she added. Government
reforms have been stalled, she said, adding that Lukashenko
is "shrewd and knows he must do a balancing act." The EU is
increasingly concerned about Belarus' sovereignty in the
light of Russia, Mard added.

Georgia


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6. (SBU) The EU is watching the U.S. for cues on how to
proceed with Georgia, said Mard. She said President
Saakashvili is waiting for the EU to deliver on promises made
last August to curb Saakashvili's reaction to Russia's
invasion. "It is time for the EU to deliver," she said,
because Russia is winning the popularity contest on the
ground in Abkhazia and South Ossetia. Sweden knows it must
put the issue before the EU 27 during its Presidency. The
challenge is to deliver concrete items that bring Georgia
into the EU fold; Mard suggested that visa facilitation could
be a deliverable. The EU is working on a four-year country
strategy, focusing on the environment, democracy, and human
rights.



7. (SBU) Comment: The Swedish government realizes it must
round up EU support to extend a handful of cookies to the
Georgians. If the EU does not act now, as Mard cautioned,
the Russians will score points and any EU counter measures

STOCKHOLM 00000444 002 OF 002


will be costlier. FM Bildt has kept in close contact with
Georgian officials since last August, and while his
anti-Russian public statements have subsided due to the EU
Presidency, his support for Georgia and behind-the-scenes
lobbying have not.
SILVERMAN