Tuesday, February 18, 2014

Russia To Release Loan Money For Ukraine, Lifting Leader

KIEV, Ukraine -- The protracted struggle for Ukraine between Russia and the West was on vivid display on Monday with Russia throwing an unexpected financial lifeline to the embattled Ukrainian president, Viktor F. Yanukovych, just as Germany rolled out an unusually high-level reception for two of the president’s most ardent opponents.


Chancellor Angela Merkel of Germany welcomed the Ukrainian opposition leaders Vitali Klitschko (L), and Arseniy P. Yatsenyuk on Monday in Berlin.

As the Ukrainian opposition leaders, Arseniy P. Yatsenyuk and the former boxing champion Vitali Klitschko, huddled in Berlin with German leaders, including Chancellor Angela Merkel, Russia said it would this week unblock the next payment of a promised $15 billion credit for Ukraine that it had earlier frozen because of the political disarray in the Ukrainian capital, Kiev.

Russia’s decision to resume financial support for Ukraine gives a needed lift to Mr. Yanukovych ahead of a parliamentary session on Tuesday at which the opposition is expected to push for constitutional changes to trim the president’s powers.

It also does an end run around Europe’s sluggish efforts to support the opposition by coming up with an aid package of its own.

The European Union and the United States have repeatedly said they are “working on” financial assistance for Ukraine in conjunction with the International Monetary Fund, but so far no offers have been made public.

While insisting that they do not want to get into a bidding war with Russia for Ukraine’s allegiances, European leaders have come under pressure from prominent pro-European Ukrainians to provide concrete help, not merely high-minded declarations about the transformative power of European values.

The issue of money has loomed over Ukraine’s political tug of war since the start of protests in November, set off by Mr. Yanukovych’s decision to spurn a trade deal with the European Union and tilt this former Soviet republic of 46 million toward Russia instead.

Stuck in a deep economic crisis aggravated by endemic corruption and political deadlock, Ukraine needs to find billions of dollars to pay off foreign loans that will be due in coming months and stave off default. Mr. Yanukovych negotiated the $15 billion loan with President Vladimir V. Putin of Russia in December, and Ukraine received a first segment of this soon afterward when Russia purchased Ukrainian bonds worth $3 billion.

But Russia suspended further payments last month after violent street clashes in Kiev and the resignation of Ukraine’s Russian-born prime minister.

On Monday, however, Mr. Putin again showed his talent for putting rivals off balance when Russia’s finance minister, Anton Siluanov, told reporters during a visit to the Russian town of Cherepovets that Moscow would this week purchase a further $2 billion of Ukrainian bonds.

This indicated that Moscow has now reactivated the previously suspended credit offer.

The news came as Ms. Merkel met for more than an hour with the Ukrainian opposition leaders, who expressed gratitude for the attention of Europe’s most important national leader before heading to a meeting with Foreign Minister Frank-Walter Steinmeier.

There was no indication they were flying back to Kiev — where barricades erected by protesters have sealed off the center of the city for more than two months — with any promises of money or support.

A spokesman for the German Foreign Ministry, Martin Schäfer, said the role of Russia had come up during the Ukrainians’ talks with Mr. Steinmeier, but added that there had been no mention of the Russian finance minister’s announcement.

He described the timing of this announcement as “interesting,” and said he wondered what Russia’s conditions were.

Mr. Steinmeier was in Moscow on Friday for talks with Foreign Minister Sergey V. Lavrov, and German news media reported that Ukraine was among the most intensely discussed topics.

Mr. Lavrov was quoted as saying that “there can be no foreign sphere of influence in Ukraine,” and that the European Union should be “honest” instead of somehow forcing Ukrainians to choose East or West.

As well as not coming up with any money to induce Ukraine into embracing European standards and values, the European Union has balked at taking the alternative route of imposing sanctions.

Andreas Schockenhoff, a leading member of Ms. Merkel’s conservative bloc in Parliament, on Monday rejected calls from some quarters for immediate sanctions on members of Ukraine’s government.

Mr. Schockenhoff, who is an expert on Eastern Europe, dismissed sanctions such as travel bans or closing the bank accounts of Ukrainian leaders, at least for now.

Still, the resumption of Russian funding is unlikely to win over protesters to the side of Mr. Yanukovych, and may even strengthen the protesters’ view that the president, although democratically elected in 2010, is the Kremlin’s lackey.

But many Ukrainian activists in a protest movement in its third month now seem eager to reduce tensions.

On Sunday, protesters left Kiev City Hall, which they had occupied since December, cementing an amnesty deal with the authorities indicating that both sides want to step back from a head-on confrontation that last month spiraled into deadly violence in the capital.

A potential wild card is that the Ukrainian opposition, including the leaders invited to Berlin, do not necessarily control the so-called people’s self-defense units and freelance groups of young men armed with clubs and iron rods on the street in central Kiev.

On Monday in the capital, all was quiet, but the militant wing started reinforcing some of the barricades that were supposed to be removed after the announced amnesty for protesters.

On Hrushevsky Street, a cobblestone road carpeted with soot after fierce battles between protesters and the riot police last month that involved firebombs and burning tires, a narrow passageway that had opened up on Sunday through high barricades was sealed off on Monday by a metal gate erected by protesters.

Masked men who identified themselves as members of the 31st Self-Defense Unit guarded the area, blocking pedestrians and vehicles.

Source: The New York Times

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