Russia raises pressure on Ukraine

January 30, 2014 - 3:31:48 am

Anti-government protesters rally in Kiev yesterday, marking the 96th anniversary of a battle near the small city of Kruty in which 300 students, cadets and schoolboys were killed during combat with the Red Army to protect the newborn Ukraine’s People Republic against Bolshevik aggression.

MOSCOW/KIEV: President Vladimir Putin raised the pressure on Ukraine yesterday, saying Russia would wait until it forms a new government before fully implementing a $15bn bailout deal that Kiev urgently needs.

Putin repeated a promise to honour the lifeline agreement with Ukraine in full, but left open the timing of the next aid instalment as Kiev struggles to calm more than two months of turmoil since President Viktor Yanukovich walked away from a treaty with the European Union.

A day after Prime Minister Mykola Azarov resigned on Tuesday, hoping to appease the opposition and street protesters, Russia tightened border checks on imports from Ukraine in what looked like a reminder to Yanukovich not to install a government that tilts policy back towards the West.

Ukraine’s new interim prime minister promised to try to limit the economic damage inflicted by the sometimes violent street protests, and said he expected Russia to disburse a further $2bn aid instalment “very soon”.

Putin had less of a sense of urgency. “I would ask the (Russian) government to fulfill all our financial agreements in full,” he said, repeating a promise made on Tuesday after the government resigned in Kiev.

However, he signalled that the latest instalment was on hold in remarks he made during a meeting with senior government officials, extracts of which were broadcast later on Russian TV.

“Let’s wait for the formation of a Ukrainian government,” he said, before telling the meeting: “But I ask you, even in the current situation, not to lose contact with our (Ukrainian) colleagues,” adding that discussions should continue before a new government is formed.

Putin agreed the aid package with Ukraine in December, throwing the ex-Soviet state a lifeline in what the opposition and the West regard as a reward for scrapping plans to sign political and trade deals with the EU and promising to improve ties with Russia.

Alarm about Ukraine is growing in the West. German Chancellor Angela Merkel telephoned Putin and Yanukovich on Wednesday, urging a constructive dialogue between the government and opposition in Kiev. “The situation must not be allowed to spiral again into violence,” a German government spokesman quoted her as saying.

Nato Secretary General Anders Fogh Rasmussen was more forthright, blaming Russia for Kiev’s failure to sign the EU deals. “An association pact with Ukraine would have been a major boost to Euro-Atlantic security, I truly regret that it could not be done,” he told the French newspaper le Figaro. “The reason is well-known: pressure that Russia exerts on Kiev.”

Ukraine badly needs the Russian money. Figures compiled by UniCredit bank before the bailout put its gross external financing requirements at $3.8bn in the first three months of this year alone, including $2.29bn for gas which is covered by the deal with Moscow.

That rises to $5.5bn in April-June, including repaying a $1bn bond which matures then. Altogether the government would need $17.44bn this year to pay its foreign bills, including for Russian gas.

The EU’s foreign policy chief, Catherine Ashton, called for sincere discussion during Ukraine’s crisis. “The dialogue which has happened from time to time needs to become a real dialogue. We hope to see real progress in these coming days. Time is really of the essence,” she said after meeting Yanukovich.

In an apparent sign of further pressure from Moscow, the Ukrainian association of producers said Russia had started extra border checks, backed by demands for increased duties, on cargoes of food and machinery being shipped into the country by road and rail.

Russia took similar action in August in what was seen as part of Moscow’s campaign to dissuade its neighbour from signing the association and trade agreements with the EU.

Ukraine has been gripped by mass unrest since Yanukovich walked away from the EU deals last November.

Leonid Kravchuk, the first president of independent Ukraine, stressed the depth of the crisis yesterday.

“The state is on the brink of civil war. We must call what is happening by its proper name. What is happening is revolution because we are talking about an attempt to bring about a change of power,” he told parliament.

With Yanukovich and loyalist deputies in parliament now making concessions to defuse the crisis and with Azarov, a Russian-born hardliner, gone there had been speculation that Moscow might slow or even halt the stream of aid.

But acting prime minister Serhiy Arbuzov appeared to have been cheered by Putin’s promise on Tuesday to extend the $15bn in credits and cheaper gas.

“We have already received the first tranche of $3bn and expect to receive the second tranche of $2bn very soon,” he said, chairing his first cabinet meeting. Russia is offering the funds by buying Ukrainian government bonds.

In Kiev opposition deputies and Yanukovich loyalists were in back-room talks over the wording of a draft law under which protesters detained by police would get amnesties.

In an unusual move, Yanukovich himself was reported to have gone to parliament to intervene in the debate. Opposition leaders, quoted by local media, said he was insisting any amnesty law should be conditional on barricades being removed and government offices occupied by protesters being cleared.

REUTERS

comments powered by Disqus