Ukraine’s Tigipko Warns State Of Emergency Possible

KIEV, Ukraine -- Serhiy Tigipko, who came third in Ukraine’s Jan. 17 presidential vote and may become kingmaker in the Feb. 7 runoff, said a state of emergency is possible and there may be “problems” with the transfer of power.

Serhiy Tigipko

Opposition leader Viktor Yanukovych and Prime Minister Yulia Timoshenko will contest the second round after Tigipko and incumbent President Viktor Yushchenko were eliminated. Both candidates have said they’re prepared to contest the outcome of next month’s vote if they suspect irregularities. Tigipko said he had “consultations” with Yushchenko since Jan 17.

“There will be problems with the transfer of power” after the runoff, Tigipko, 49, said in an interview in Kiev today. “That may be prolonged for a certain period of time. Yushchenko has proved he is not afraid of tough decisions and he can introduce a state of emergency. I still want to believe that this won’t happen and that the loser in the runoff will accept defeat.”

The economy of the former Soviet state is suffering the severest contraction in eastern Europe after the credit crisis led to a slump in exports of steel and chemicals. Ukraine’s gross domestic product shrank 15.9 percent in the third quarter after declining 17.8 percent in the previous three-month period and a record 20.3 percent in the first quarter.

“The position of prime minister is the biggest priority,” said Tigipko. “What I am offered now, I view calmly. When we are talking about Timoshenko or Yanukovych, there will be no trust on my part. One should trust only one’s transparent and public position.”

The yield on Kiev’s $250 million notes due in 2015 was little changed at 13.966 percent, near its lowest level since Sept. 30, 2008, Bloomberg data show. Bond prices move inversely to yields.

Gas Transit Plans

The government of Ukraine needs to implement policies required by the International Monetary Fund’s stand-by loan program which Ukraine obtained at the end of 2008. Tigipko worked as a deputy prime minister, economy minister and central bank governor under President Leonid Kuchma. He led Yanukovych’s campaign in the 2004 election that resulted in the Orange Revolution, though he resigned before a runoff vote that Yushchenko won.

Ukraine “will need the IMF money,” Tigipko said, adding that cooperation with the lender “is going to give a green light” and signal to investors that the country is implementing reforms. He said he also wants Ukraine to sell stakes in its gas transit system, which transports Russian gas imports to western Europe.

Ukraine should keep a controlling share of the gas pipelines and allow both Russia and the European Union to hold stakes, he said.

Early Elections

If he becomes prime minister, Tigipko said he will revise a gas agreement with Russia signed by Timoshenko’s government in January 2009. “None of us knows what is in that contract, it’s not a transparent agreement,” he said.

Tigipko, who said he “clearly” supports parliamentary elections as early as May 31, expects “serious” talks with the two leading candidates next week, he said. “Today, I do not want to support any of the candidates. For me, this would be sharing responsibility for the promises they have piled up.”

Tigipko won’t urge his voters to back one candidate over another. “Neither Timoshenko nor Yanukovych understands clearly the complications of the economic situation,” Tigipko said. “They don’t have an economic strategy. This is what I have.”

Tigipko said he may run for the office of mayor of Kiev in May if doesn’t get the premiership.

“The post of Kiev mayor is a good position to stay on top of politics, as well as on top of people’s problems,” he said.

Source: Bloomberg