Kremlin says EU aid to Ukraine will harm Europe's economy, won't change outcome of war

MOSCOW (Reuters) - The Kremlin said on Wednesday that any fresh European Union aid to Ukraine would not affect the outcome of the conflict there and that such spending would only hurt Europe's economy.

The Financial Times reported on Tuesday that the EU was preparing a back-up plan of funding worth up to 20 billion euros ($22.10 billion) for Kyiv.

The debt-funded scheme would sidestep Hungary, which opposes such aid to Ukraine, allowing the EU to release the funds to Kyiv quickly, the article said.

Asked about the report, Kremlin spokesman Dmitry Peskov suggested, without citing specific examples, that EU taxpayers were starting to understand that their money was being misspent by authorities in Ukraine.

"Both Europeans and Americans are already well aware of the level of corruption (in Ukraine) and they understand that a fair portion of this money is stolen," Peskov told a regular news briefing.

"This money will not be able to change the course of events (in the Ukraine conflict)... This money is allocated to the detriment of EU economies which are already going through difficult times..," he said.

Peskov reiterated that Moscow would press on with what it calls its special military operation in Ukraine until it had achieved "the goals that stand before us".

Moscow has previously said its military operations in Ukraine are aimed at the demilitarisation and "denazification" of the country. Kyiv and its Western allies say Moscow is bent on an imperial-style land grab in Ukraine.

The EU agreed on Dec. 14 to open membership talks with Ukraine despite the ongoing military conflict, but they could not agree on a 50 billion euro package of financial aid for Kyiv due to opposition from Hungary.

EU leaders, who would prefer a deal backed by all members but also have a plan B that would circumvent Hungary, are expected to revisit the issue at an emergency summit on Feb. 1.

Kyiv says it is doing its best to crack down on any corruption.

Ukraine's SBU security service and the Defence Ministry said earlier this month that they had uncovered a scheme for the fraudulent purchase of artillery shells that involved embezzlement of the equivalent of nearly $40 million.

($1 = 0.9050 euros)

(Reporting by Reuters; Writing by Gareth Jones; Editing by Andrew Osborn)