Government officials from the two countries, which are at risk of bankruptcy as a result of the global financial crisis, told the Daily Telegraph that the European Union`s biggest powers were in danger of repeating the worst mistakes of the 1930s depression by retreating into isolationism and protectionism, according to Telegraph.co.uk.
Grigory Nemyria, Ukraine`s deputy prime minister, said that the EU had to overcome bitter internal differences over how to deal with the economic crisis in eastern Europe when world leaders met next month at the G20 summit in England.
"The EU should not just be helping Ukraine because Ukraine is helpless," Mr Nemyria said. "It should be doing so because it is in the EU`s self-interest.
"There is a high exposure in the [Western European] banking sector to Ukraine, Latvia etc that can only be addressed by acting in concert. The cost of inaction will be far greater than the cost of action."
Strategists have warned that collapsing financial sectors in countries like Ukraine and Latvia could infect the rest of Europe, leading to a series of continent-wide bank failures.
But an Austrian plea for a £140 billion bail-out funded by the EU was rejected by Germany and a similar Hungarian proposal was given equally short shrift. Instead the West has signalled to some in the East that it will take care of itself first.
Nicolas Sarkozy, the French president, has come under fire after calling on leaders of industry to close factories in eastern Europe to save jobs in France. "An important challenge of the G20 is to send a message that such policies could lead to disaster," said Mr Nemyria.
His message was endorsed by Andris Miglaus, chief advisor at Latvia`s finance ministry.
"Populist protectionism is creating internal frontiers that will negatively affect other areas of Europe," he said.
After a decade of impressive growth, Ukraine`s export-driven economy is in meltdown. Demand for its steel and agricultural products in Russia and the European Union has collapsed, helping drive down Ukraine`s currency, the gryvnia, by over 50 per cent in the past nine months.
Forecasters say that Ukraine`s economy - like Latvia`s - could shrink 12 percent this year.
Most experts do not think Ukraine will default this year. Instead most concern is being directed at Ukraine`s financial sector, which is dominated by the subsidiaries of Western European banks.
Like other countries in the region, Ukraine has been on a credit binge. Since 2006, Ukraine`s mortgage bill has increased by over 4,000 per cent. Over 10 million Ukrainians have loans, compared with under 100,000 in 2002.
But many, like Olga Symonchuk and her husband Nikolai, are now struggling to repay the banks.
A year ago, the Symonchuks decided that life in a two-bedroom Kiev flat with their two sons and their fiancées was getting a little too cramped. They decided to take out a £58,000 mortgage with a subsidiary of BNP Paribas to buy a second flat in the capital`s suburbs.
They chose a mortgage based in dollars, because interest was half that of a local currency loan. But as the local currency collapsed, their repayments soared. The couple were also put on half-pay. Despite having their mortgage restructured, the Symonchuks have missed two monthly payments.
For the Symonchuks, read millions of Ukrainians, the majority of whom hold their debts in foreign currency.
As personal defaults grow, so do fears of a systemic collapse in the Ukrainian banking sector.
For the moment, the major foreign players in the market - Austria`s Raiffeisen and Italy`s UniCredit - have promised to support their Ukrainian subsidiaries. Swedish banks have promised to do the same in Latvia. But as the crisis worsens, it is unclear how long such commitments can be honoured.
Western European banks are exposed to over £1 trillion of eastern European debt, leading to comparisons with the subprime crisis in the United States. Austria is particularly affected, with an outstanding loan portfolio to eastern Europe of £213 billion, 71 per cent of GDP.
Austria`s exposure has drawn ugly comparisons with the past. In 1931 Austria`s Creditanstalt collapsed because of its exposure to Eastern Europe, triggering a wave of worldwide bank defaults and unleashing the darkest days of the Depression.