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Russia Offers Ukraine a Financial Lifeline Russia Offers Ukraine a Financial Lifeline
(35 minutes later)
MOSCOW — Playing a trump card in his diplomatic contest with the West over Ukraine, President Vladimir V. Putin on Tuesday said that Russia would come to the rescue of its financially troubled neighbor, providing $15 billion in loans and a sharp discount on natural gas prices. MOSCOW — Playing a trump card in his diplomatic contest with the West over Ukraine, President Vladimir V. Putin said Tuesday that Russia would come to the rescue of its financially troubled neighbor, providing $15 billion in loans and a sharp discount on natural gas prices.
It was a bold and risky move by Russia, given the political chaos in Ukraine, where thousands of anti-government protesters remain encamped in Independence Square. For the moment, however, Mr. Putin seemed to gain the upper hand with Europe and the United States in their contest for influence. It was a bold and risky move by Russia, given the political chaos in Ukraine, where thousands of anti-government protesters remain encamped in Independence Square in Kiev, the capital. For the moment, however, Mr. Putin seemed to gain the upper hand over Europe and the United States in their contest for influence.
There was no discussion of what Russia might receive in return for its assistance. Protesters in Kiev have been deeply worried that Mr. Yanukovich would cut a secret deal to join a customs union that Russia has established with Belarus and Kazakhstan. That would largely preclude any possibility of reviving the accords with Europe, but Mr. Putin said the subject had not come up. There was no discussion of what Russia might receive in return for its assistance. Protesters in Kiev have been deeply worried that President Viktor F. Yanukovich would cut a secret deal to join a customs union that Russia has established with Belarus and Kazakhstan. That would largely preclude any possibility of reviving the accords with Europe, but Mr. Putin said the subject had not come up.
While the implications for the more than three-week-old protest movement were not immediately clear, Mr. Putin’s announcement, at a meeting at the Kremlin with Ukraine’s embattled president, Viktor F. Yanukovich, substantially alters the political landscape. It throws Mr. Yanukovich an economic and political lifeline that will spare him for the time-being from negotiations with the International Monetary Fund, Europe or the United States. Mr. Yanukovich, whose political fortunes have appeared bleak in recent days, praised Mr. Putin’s leadership.
Ukraine, a former Soviet republic of 46 million people, has long been caught in the middle of battles between greater powers to the East and West. Mr. Yanukovich has repeatedly sought to play one side against the other, often infuriating everyone and coming across as a vexing and untrustworthy partner. “I will say openly: I know that this work wouldn’t have been done at this optimal speed if not for the Russian president’s political will,” he said.
While the implications for the protest movement were not immediately clear, Mr. Putin’s announcement, at a meeting at the Kremlin with Mr. Yanukovich, substantially alters the political landscape. It throws Mr. Yanukovich an economic and political lifeline that will spare him for now from negotiations with the International Monetary Fund, Europe or the United States.
Ukraine, a former Soviet republic of 46 million people, has long been caught in the middle of battles between greater powers to the East and West. Mr. Yanukovich has repeatedly sought to play each side against the other, often infuriating both and coming across as a vexing and untrustworthy partner.
The country has been grappling with a deepening financial crisis that only worsened after Mr. Yanukovich announced abruptly last month that he would not sign political and free-trade agreements with the European Union that had been in the works for years.The country has been grappling with a deepening financial crisis that only worsened after Mr. Yanukovich announced abruptly last month that he would not sign political and free-trade agreements with the European Union that had been in the works for years.
Mr. Putin said that the money to aid Ukraine would come from Russia’s hefty reserve funds, and that the price of gas sold by Gazprom, the state-controlled energy behemoth, would be dropped to $268.50 per 1,000 cubic meters — less than the $380 Western Europe pays for Russian gas — from $400. Mr. Putin said that the money to aid Ukraine would come from Russia’s hefty reserve funds, and that the price of gas sold by Gazprom, the state-controlled energy behemoth, would be dropped to $268.50 per 1,000 cubic meters — less than the $380 Western Europe pays for Russian gas — from between $395 and $410, saving Ukraine $2 billion a year.

Andrew E. Kramer contributed reporting from Kiev, Ukraine, and Andrew Roth from Moscow.

“With the goal of supporting the budget of Ukraine, the government of the Russian Federation made the decision to issue in bonds from the Ukrainian government part of its own reserves from the National Welfare fund in the amount of $15 billion,” Mr. Putin said, seated next to Mr. Yanukovich.
“I want to bring your attention to the fact that it is not connected with any conditions, not connected with the increase, decrease, or freezing of any social standards, pensions, subsidies, or salaries. And I want to calm everyone down, today we did not discuss the question of Ukraine’s accessions to the customs union.”
Mr. Putin’s description of the rescue package provided a stark contrast to the I.M.F., which had offered help to Ukraine but was in turn demanding major macroeconomic reforms, including a reduction in domestic gas subsidies and some tough austerity measures.
International financial experts have said those conditions were crucial to ensuring that Ukraine would be able to solve its economic problems and not need another bailout within a short amount of time. Many of the conditions, however, were politically unappetizing to Mr. Yanukovich, who is expected to seek a second term in elections scheduled for a little more than a year from now.
The decision to help Ukraine, without immediately demanding any commitment for joining the customs union or any other evident quid pro quo, not only secured Russia’s continued sway but also positioned Mr. Putin to further chastise Western officials for their aggressive efforts to support the anti-government protesters.
Senior Western diplomats, including Victoria Nuland, an assistant secretary of state, the German foreign minister, Guido Westerwelle, and Catherine Ashton, the European Union’s foreign policy chief, have all been in Kiev in recent days and expressed support for the demonstrators. They have urged Mr. Yanukovich to listen to the protesters’ demands and revive talks with Europe.
On Sunday, Senator John McCain, Republican of Arizona, whose strong views on what he has deemed Russian foreign policy aggression and human rights abuses draw close attention in Moscow, appeared onstage in Independence Square, where he told hundreds of thousands of demonstrators that the United States stood with them.
Russia had maneuvered aggressively to derail Ukraine’s accords ahead of a European Union conference in Vilnius, Lithuania, last month, where Mr. Yanukovich was expected to sign them. The Kremlin threatened draconian economic sanctions that could have devastated Ukraine’s already battered economy.
Mr. Putin and other senior Russian officials, however, had insisted that they were merely pointing out necessary steps that Russia would take to protect its own economic interests. They accused Western powers of interfering in Ukraine’s affairs after refusing to accept that Russia had won by making a persuasive case.
European leaders were visibly angry with Mr. Yanukovich during the conference in Vilnius last month, with Chancellor Angela Merkel of Germany at one point telling him, “We expected more.” Mr. Putin, too, has reportedly been irate with Mr. Yanukovich, apparently finding him untrustworthy and disapproving of his handling of the recent street protests, which seemed to swirl out of control.
On Tuesday, Mr. Yanukovich flew to Moscow from Ukraine, where protesters also gathered near the airport in a bid to remind the president of their preference for closer ties with Europe.
The unrest in Ukraine, which was further animated by a violent crackdown by the police on demonstrators on Nov. 30, has largely been driven by a sense of betrayal among protesters who had been assured by Mr. Yanukovich that their country was drawing closer to Europe politically and economically.
Mr. Yanukovich has insisted that Ukraine will ultimately move toward Europe and would even consider signing the accords at a later date. But over the weekend a senior European Union official said those discussions had been cut off.
By offering Ukraine lower gas prices, Russia eases its neighbor’s immediate cash crunch, but also maintains the ability to cut off the help, almost literally with the turn of a spigot. Mr. Putin acknowledged that gas prices remained a point of contention.
“We consider that this is also a temporary solution, having in mind that the long-term agreements should and will be reached,” he said. “This concerns the delivery of gas to Ukraine. This concerns the securing of uninterrupted deliveries to our consumers in Europe.”

Reporting was contributed by Andrew Roth from Moscow, and Andrew E. Kramer from Kiev, Ukraine.