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Ukraine and Russia leaders hold talks in Kremlin over loan and trade deal Vladimir Putin offers Ukraine financial incentives to stick with Russia
(about 1 hour later)
The presidents of Russia and Ukraine are holding talks in the Kremlin on a possible loan deal and a range of trade agreements, as protesters continue to rally in Kiev against the government's decision to abandon an integration deal with the EU in favour of closer relations with Russia. The Russian president, Vladimir Putin, has raised the stakes in the battle over Ukraine's future, saying Moscow will buy $15bn (£92.bn) worth of Ukrainian government bonds and sharply cut the price of natural gas for its economically struggling neighbour.
The deals, if signed, have been seen as the Kremlin's reward to Kiev for not signing the EU deal. Ukraine's president, Viktor Yanukovych, pulled out of the deal at the last minute last month, saying it would prove catastrophic for the Ukrainian economy. The announcements came after Putin held talks in Moscow with his Ukrainian counterpart, Viktor Yanukovych, who is facing massive protests at home for his decision to shelve a pact with the European Union in favour of closer ties with Russia.
In brief remarks to the media before they began talks, Vladimir Putin said that Ukraine "is without doubt, in the full sense of the word, our strategic partner and ally". He said that over the past two years, trade levels between the countries had dropped, but that a range of agreements due to be signed on Tuesday would rectify that. Economic experts say Ukraine desperately needs at least $10bn in the coming months to avoid bankruptcy.
"The time has come to take energetic steps not only return to the levels of recent years but to go further," said Putin. Putin sought to calm the protesters in Kiev by saying on Tuesday that he and Yanukovych did not discuss the prospect of Ukraine joining the Russian-dominated Customs Union. But the sweeping agreements are likely to fuel the anger of demonstrators who want Ukraine to break from Russia's orbit and integrate with the 28-nation EU.
Membership of the Customs Union, a Moscow-led trade grouping into which the Kremlin has been keen to entice Ukraine, is unlikely to be on the agenda in the near future, but it is believed that in return for a package of loans and trade concessions, Yanukovych has agreed not to sign the EU association deal. The Russian finance minister, Anton Siluanov, said after the Kremlin talks that Russia would purchase $15bn in Ukraine's Eurobonds, starting this month.
Putin looked relaxed before the meeting, slouching in his chair, while Yanukovych sat bolt upright and spoke with long pauses between sentences. Ukrainian media reported that Yanukovych's delegation had asked the Russians not to arrange a joint press conference after the meetings finish. Putin said the Russian state-controlled gas monopoly, Gazprom, will cut the price that Ukraine must pay for Russian gas deliveries to $268 per 1,000 cubic metres from the current level of about $400 per 1,000 cubic metres.
Nevertheless, Yanukovych said the documents on the table represented a "strategic decision" and that two sides should work harder to develop closer relations going forward. He also told Putin he hoped that the "traditional" issue of gas prices could be solved. In brief remarks to the media before they began the talks, Putin said Ukraine "is without doubt, in the full sense of the word, our strategic partner and ally". He said that over the past two years, trade levels between the countries had dropped, but that the range of new agreements would rectify that.
Yanukovych's words about the strategic decision in favour of Russia is likely to inflame anger in Kiev further, where demonstrators have sealed off the centre of the city for several weeks and repulsed police efforts to remove them. On Tuesday morning, several hundred protesters stood on Yanukovych's route to the airport, holding signs that read: "Turn the plane round to Europe!" "The time has come to take energetic steps not only to return to the levels of recent years but to go further," he said.
Membership of the Customs Union, a Moscow-led trade grouping into which the Kremlin has been keen to entice Ukraine, is unlikely to be on the agenda in the near future, but it is believed that in return for a package of loans and trade concessions, Yanukovych has agreed not to sign the EU deal.
Putin looked relaxed before the meeting, slouching in his chair, while Yanukovych sat bolt upright and spoke with long pauses between sentences. Ukrainian media reported that Yanukovych's delegation had asked the Russians not to arrange a joint press conference after the meetings finished.
Nevertheless, Yanukovych said the documents on the table represented a "strategic decision" and that the two sides should work harder to develop closer relations in future. He told Putin he hoped the "traditional" issue of gas prices could be solved.
Demonstrators have sealed off the centre of Kiev for several weeks and repulsed police efforts to remove them. On Tuesday morning, several hundred protesters stood on Yanukovych's route to the airport, holding signs that read: "Turn the plane round to Europe!"
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