Putin slashes gas prices to help Ukraine

December 18, 2013 - 7:41:59 am
MOSCOW: President Vladimir Putin yesterday announced a plan to buy $15bn of Ukrainian bonds and slash Kiev’s bill for Russian gas imports, in a boost for embattled President Viktor Yanukovych as he faces monster protests over a rejected EU pact.

Russia also agreed to remove trade barriers it put up at the start of the year when it seemed that Kiev was on the verge of signing a historic trade and political association agreement with Brussels that would have pulled it out of Moscow’s orbit for the first time.

The help from Russia may allow Kiev to stave off the threat of an imminent balance of payments crisis and possible default amid a recession that has seen the economy shrink since the first half of last year.

“The Russian government made a decision to invest part of the National Welfare fund to the amount of $15bn in Ukrainian government securities,” Putin told reporters after holding about three hours of Kremlin talks with Yanukovych.

Russia’s Finance Minister Anton Siluanov said Moscow would invest the $15bn into Ukrainian eurobonds that Kiev intends to issue at a later date.

Putin also said Russian gas giant Gazprom would now sell gas to Ukraine at a price of $268.50 for 1,000 cubic metres, a huge discount from the current level of around $400.

But the Russian leader crucially stressed that the two sides did not discuss Ukraine’s membership in a Russian-led Customs Union that Putin hopes to build into a rival to the 28-nation bloc but which the opposition in Kiev fears could ruin their EU integration dreams.

“I would like to calm everyone down, today we have not discussed the issue of Ukraine joining the Customs Union at all,” Putin said.

‘Deepen strategic cooperation’

The ex-Soviet nation of 46 million has been at the heart of a furious diplomatic tug of war since Yanukovych’s shock decision last month to ditch a landmark EU partnership agreement and seek closer ties with its traditional master Russia.

Tuesday’s talks came two days after frustrated EU officials suspended months of partnership negotiations with Ukraine.

The Ukrainian leader stressed the importance of Kiev’s ties to Moscow during a signing ceremony that saw him exchange smiles and private whispers with Putin.

Yanukovych said the agreement on the removal of trade restriction in particular represented “a road map that will help us substantially” boost trade.

“The implementation of this action plan will substantially deepen our strategic cooperation in many areas,” the Ukrainian leader said.

Yanukovych’s reversal on the EU pact sparked the largest anti-government rallies since the 2004 pro-democracy Orange Revolution that first nudged Ukraine on a westward path.

AFP
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