Ukraine's Yushchenko Proposes Rival Yanukovich As PM

KIEV, Ukraine -- Western-leaning Ukrainian President Viktor Yushchenko proposed opposition leader Viktor Yanukovich as prime minister on Thursday in a deal that is likely to hand over huge powers to his pro-Moscow rival.


Yushchenko said he decided to propose Yanukovich -- the man he defeated in the 2004 "Orange Revolution" -- after extracting written guarantees that he would not try to overturn market reforms and pro-Western policies.

But there were no details on what concessions were made by Yanukovich, who favors closer ties with Moscow. Parliament was expected to vote him in as prime minister later on Thursday.

The deal ended four months of political deadlock in which Ukraine has had only a caretaker government.

After hours of talks deep into the night trying to hammer out a coalition deal, Yushchenko said in a televised address: "I have decided to put forward Viktor Yanukovich for the post of Ukraine's prime minister."

Yushchenko backed away from his other, high-risk option of dissolving parliament and calling new elections, choosing instead a potentially awkward "co-habitation" with Yanukovich.

Yanukovich was put forward as prime minister by a slim parliamentary majority made up of his Regions party, the Socialists and Communists.

ECONOMIC PRAGMATIST

Yushchenko's decision to propose Yanukovich as prime minister will cheer markets. It ends four months of deadlock as rival parties struggled to agree on a coalition government following an inconclusive parliamentary election in March.

It is a defeat though for supporters of the "Orange Revolution" -- the 2004 protests that overturned Yanukovich's presidential election victory and swept Yushchenko to power.

Anticipating anger from many of his orange supporters, Yushchenko said in his televised address: "I know that whatever decision I take, a part of our society would not accept it."

He added: "I appeal to the nation to try to understand that we have an unique chance to unite the country."

As president, Yushchenko retains control over foreign policy, defense and national security. But observers say he will now struggle to push through his policies.

He had been pressing for his allies to be given key posts in a Yanukovich-led Cabinet to preserve his influence. No details of who will be in the government have so far emerged.

Yanukovich, from Russian-speaking east Ukraine, is less keen than Yushchenko on the country's push for NATO and European Union membership -- key tenets of the "Orange revolution."

His party aides have said they will not block Ukraine's preparations for NATO membership. That is unlikely to happen for at least five years and all sides agree final accession will have to be put to a referendum.

On economic policy Yanukovich is seen as a pragmatist. He has said he will lower taxes for business, including the big industrial exporters that drive Ukraine's economy. Powerful business "oligarchs" are among his supporters.

He is also expected to use the central bank to weaken the hryvnia currency, which will also favor exporters.

Market analysts are concerned though that he will allow a return to cronyism and lack of transparency in economic policy. Challenging these problems was seen as one of Yushchenko's few achievements.

Source: Reuters

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