Ukrainian leader heads to Russia seeking deal
KYIV — Hidden behind the tug of war over whether Ukraine will cast its lot with Europe or Russia is the prospect of bankruptcy. Someone will need to chip in at least $10 billion in the coming months if Ukraine wants to keep its economy afloat.
With talks on resuming credit from the International Monetary Fund stalled, Ukranian President Viktor Yanukovych heads to Moscow on Tuesday to see what Russia might offer in exchange for freezing a strategic trade deal with the European Union.
Analysts say if Russian President Vladimir Putin offers anything, it could be a mix of credit, investment pledges and a discount on energy prices, particularly natural gas.
But the Russian leader is unlikely to be very generous, given the crisis being endured by Yanukovych and his ruling party and the flip-flopping by Ukraine leadership about whether its allegiance lies with Moscow or Brussels.
Massive crowds have protested in the centre of Kyiv for weeks against Yanukovych’s decision last month to shun closer ties with the EU and to push his country toward Moscow. The demonstrations were galvanized after dozens of activists were injured when riot police violently broke up a small rally on Nov 30.
After a string of visits to Kyiv by top western diplomats and a threat of sanctions from Washington last week, Yanukovych has been trying to appease the protesters.
He has called for the release of some of the detained demonstrators and suspended two top officials for their alleged roles in the violence.
On Monday, the ruling Party of Regions demanded a government reshuffle but ignored the protesters’ demand that the president and government resign.
But all eyes will turn to Moscow, where the embattled Yanukovych will meet his potential saviour, Putin.
Timothy Ash, an analyst with Standard Bank in London, said Russia would like to “drip feed” aid to Ukraine until Yanukovych’s political clout is restored — a hope that dims the more he bud- dies up to the Kremlin.
“Whatever Moscow offers in terms of credit/long-term investment commitments, it is unlikely to ease street protests in Ukraine. Indeed, if anything this may see an intensification of these protests,” Ash said.
Ukranian First Deputy Prime Minister Serhiy Arbuzov said earlier this month that Ukraine needs a loan of about $10 billion to meet its payment obligations.
Ukraine was hoping to get a loan facility with the IMF for as much as $15 billion, but in return the Washingtonbased bank’s demands would include Ukraine weakening the local currency to boost export industries, balancing its budget and raising household energy prices.