Ukraine Blames IMF For Collapse Of Accord With European Union

MOSCOW, Russia -- Prime Minister Mykola Azarov of Ukraine told enraged opposition lawmakers on Friday that the government’s decision to walk away from far-reaching political and free trade agreements with the European Union was prompted by excessively harsh terms demanded by the International Monetary Fund in a debt refinancing plan.

Mykola Azarov

In response to the decision to abandon the accords with Europe, which were due to be signed next week at a major conference in Vilnius, Lithuania, opposition leaders called for the resignation of the Ukrainian government and for the impeachment of President Viktor F. Yanukovich.

Kiev was pulsing with emotion that officials and commentators said they had not experienced since the Orange Revolution of 2004.

On Thursday night, more than 1,000 people demonstrated against the government’s decision, waving European Union flags, and chanting “Ukraine is Europe!”

Another rally was scheduled for Friday evening and the country’s jailed former prime minister, Yulia V. Tymoshenko urged Ukrainians to take to the streets.

“I am calling on all people to react to this as they would to a coup d’etat — that is, get out on the streets."

Ms. Tymoshenko said in a statement that was read by her lawyer, Serhiy Vlasenko, in the city of Kharkiv, where she is hospitalized for back problems.

Two high-level European emissaries, Pat Cox, the former president of the European Parliament, and former President Aleksander Kwasniewski of Poland, visited Ms. Tymoshenko in the hospital on Friday.

Mr. Cox and Mr. Kwasniewski were in Kiev on Thursday hoping to see the Parliament approve the last pieces of legislation that the Europeans had demanded to move ahead with the politicla and trade agreements, including a bill that would have freed Ms. Tymoshenko to seek medical treatment in Germany.

It was their 27th visit to the Ukrainian capital, underscoring how much effort Brussels has expended on the Eastern Partnership program.

The Ukrainian government on Thursday said it was suspending plans to complete the agreements and instead would pursue improved economic relations with a competing trade bloc led by Russia.

“The IMF position presented in the letter dated November 20 was the last straw,” Mr. Azarov told the Parliament in Kiev, where he appeared on Friday with other government ministers.

“This decision is hard but it’s the only one possible in the economic situation in Ukraine,” he said, drawing a roar of jeers and denunciations from opposition lawmakers.

While Mr. Azarov sought to pin responsibility on the IMF, other officials said the decision to back away from the agreements with Europe was the result of fierce pressure by Russia, including threats of trade embargoes and other punitive steps that would have devastated the Ukrainian economy, which is already facing a severe crisis.

Jovita Neliupsiene, the chief foreign policy adviser to the Lithuanian president, Dalia Grybauskaite, said on Friday that Mr. Yanukovich had told her boss in a telephone conversation on Wednesday that he could not sign the agreements with Europe because of potential economic damage to eastern Ukraine.

Mr. Yanukovich’s base of political support is in the mostly Russian-speaking southern and eastern parts of the country, which are also home to a large portion of Ukrainian industry.

The phone conversation between the two presidents was first reported by the Baltic News Service, a news agency based in Vilnius.

“Ukraine could not withstand the economic pressure and blackmail,” Ms. Neliupsiene told the news service.

“It was threatened with restricted imports of its goods to Russia, particularly from companies in eastern Ukraine, which accommodates the greater share of its industry and employs hundreds of thousands of people.”

Ms. Neliupsiene said Friday that Mr. Yanukovich had spoken about “the immediate cost Ukraine will face after signing the association agreement.”

The assertions of Russian strong-arming fit a recent pattern.

In recent months, Russian officials have taken aggressive steps to prevent Ukraine and other former Soviet republics from moving forward with political and trade accords with Europe.

Russia has banned imports of numerous products, such as wine from Moldova, imposed new restrictions on goods at border crossings, and issued a series of threats, not only of grave economic consequences but also political fallout.

Russian officials at various points have suggested that the agreements with Europe were part of secret plots — in the case of Ukraine to remove Mr. Yanukovich from power and in the case of Moldova to facilitate an eventual absorption of the country by Romania.

Allies of the Russian government, including Kirill I, the patriarch of the Russian Orthodox Church, have issued statements criticizing European society as immoral.

In September, after a visit with President Vladimir V. Putin in Moscow, President Serzh Sargsyan of Armenia abruptly announced that he was abandoning talks with Europe and that Armenia would instead join a customs union formed by Russia, Belarus and Kazakhstan.

Despite the pressure from Moscow, Moldova and Georgia have both said they intend to move forward with the agreements under the European Union’s “Eastern Partnership” program — but they are not as far along in the process as Ukraine. 

Among the conditions Europe had set for signing the accords with Ukraine was a deal to free Ms. Tymoshenko, who is the main political rival of Mr. Yanukovich, and allow her to go to Germany for medical treatment.

Ms. Tymoshenko has suffered from chronic back problems.

The Ukrainian Parliament on Thursday resoundingly defeated six bills that would have dealt with Ms. Tymoshenko’s situation, and it now seems likely that she will remain in prison indefinitely.

Some European Union member states have suggested that it was a mistake to connect Ms. Tymoshenko’s situation to the agreements with Ukraine because it gave Mr. Yanukovich yet another reason to back away.

Mr. Yanukovich is planning to run for re-election in 2015.

In the end, though, it seems that economic imperatives drove the decision-making.

Because of its severe economic problems, Ukraine is expected to soon need a major package of financial assistance.

It is still unclear if Mr. Putin’s government has offered such help.

The decision largely scuttles what had been the European Union’s most important foreign policy initiative: an ambitious effort to draw in former Soviet republics and lock them on a trajectory of changes based on Western political and economic sensibilities.

The project, called the Eastern Partnership program, began more than four years ago. 

Ukraine’s decision is a victory for President Vladimir V. Putin of Russia.

He had maneuvered forcefully to derail the plans, which he regarded as a serious threat, an economic version of the West’s effort to build military power by expanding NATO eastward.

In September, similar pressure by Russia forced Armenia to abandon its talks with the Europeans.

European leaders reacted with fury and regret, directed at Kiev and Moscow.

“This is a disappointment not just for the EU but, we believe, for the people of Ukraine,” Catherine Ashton, the European Union’s foreign policy chief, said in a statement.

Calling the pact that Ukraine was walking away from “the most ambitious agreement the EU has ever offered to a partner country,” Ms. Ashton suggested the country would suffer financially.

“It would have provided a unique opportunity to reverse the recent discouraging trend of decreasing foreign investment,” she said, “and would have given momentum” to negotiations for more financial aid from the International Monetary Fund.

Ukraine faces a growing economic crisis, and it is widely expected to need a major aid package soon.

Others were more pointed in blaming Russia.

“Ukraine government suddenly bows deeply to the Kremlin,” the Swedish foreign minister, Carl Bildt, wrote on Twitter.

“Politics of brutal pressure evidently works.”

In Brussels, Stefan Fule, the European Commission’s senior official responsible for relations with neighboring countries, canceled a trip to Ukraine that he had announced just hours earlier, suggesting that officials saw little hope in reversing the decision.

“Hard to overlook in reasoning for today’s decision impact of Russia’s recent unjustified economic & trade measures,” he wrote on Twitter.

Ukraine’s announcement came in the form of a decree issued by the cabinet of ministers ordering the government “to suspend” preparations for concluding the agreements with Europe and instead begin planning for new negotiations with the European Union and Russia.

At virtually the same time, President Yanukovich, who was on a visit to Vienna, issued a statement saying, “Ukraine has been and will continue to pursue the path to European integration.”

In a move emblematic of Ukraine’s often inscrutable politics, Mr. Yanukovich barely acknowledged the developments in Kiev and, responding to a reporter’s question about the pacts with Europe, said, “Of course, there are difficulties on the path.” 

Moldova, the poorest country in Europe, is expected to move forward with the agreements in Vilnius even though Russia has banned imports of Moldovan wine, one of the country’s most important exports, and has threatened other repercussions including an immigration crackdown on more than 100,000 Moldovans working in Russia.

Georgia, which fought a brief war with Russia in 2008 and remains in conflict with Russia over the territories of Abkhazia and South Ossetia, is also planning to move forward with the accords.

At his inauguration on Sunday, the country’s new president, Giorgi Margvelashvili, said Georgia hoped to join the European Union and NATO.

It was unclear if the Kremlin had given Mr. Yanukovich any assurances of financial assistance.

It seemed probable that Ukraine would face difficulties obtaining additional help from the IMF after backing out of the agreements with Europe.

Source: The New York Times


Igor Skakovsky said…
Ukraine must not rush either direction, and choose traditional partners and European values to benefit both sides. Like in the good marriage, no one is perfect and all must have respect for each other and if necessary to compromise without harming its own people.
People of Ukraine please go home and take care of your families. Ukraine is working on becoming a part of Europe. It must take some time for excepted laws to show the results. AA agreement could be singed or not singed it makes no different at this point. Ukraine can be better or worth in EU or with Russia, in either case Ukraine must negotiate favorable conditions for its industries and as a result for its people. In either case Ukrainian industrial complex and agriculture must be heavily subsidized in order to be adapted to EU standards. It is critical for Ukraine that national industry and agriculture do not get destroyed and in its majority must belong to Ukrainians.
When negotiating with EU, Ukraine must ask for EU to open up its borders for Ukrainian goods only, not for EU products to come to Ukraine, for the sett period of time so, its industries could have a chance for adaptation. Opening of the EU borders could be set up for the selected sector of industry for specified period of time, in stages. After completion of each stage Ukraine will open its borders as well and agreement should move to the next stage.
When negotiating with Russia, Ukraine must protect its independence in the sense that Russian model may not be suitable for Ukraine and it should have an exit strategy in case things will not go right so, Ukraine do not end up as it did with the gas contract. For example each country jointly with Russia should find its one steps of progressing. Many steps and programs which are common for all participants could first be tested in Ukraine to see if they work and then adopted by others. Whatever is being worked out Ukrainian nationals must keep majority of its key industries to them self in order to guaranty that changes will be made for the interest of its businesses and its people, in that order.
Business must be profitable but not barbaric nor harmful for the community, no matter with whom Ukraine will associate. Russia is known to us but, law must restrict barbaric practices of business take over. With EU, law exist for everyone so, same subsidies for the all industries that exist in EU must be applied in Ukraine. It is most important to understand what is best for your people and then for the government and act with those understandings in mind.