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Russia deal saved Ukraine from bankruptcy - PM Azarov Russia deal saved Ukraine from bankruptcy - PM Azarov
(35 minutes later)
Ukraine's decision to suspend a deal on closer EU ties and sign a Russian aid agreement instead has helped avoid bankruptcy, Prime Minister Mykola Azarov has told ministers in Kiev.Ukraine's decision to suspend a deal on closer EU ties and sign a Russian aid agreement instead has helped avoid bankruptcy, Prime Minister Mykola Azarov has told ministers in Kiev.
Russian President Vladimir Putin has agreed to buy $15bn (£9.2bn, 11bn euros) of Ukrainian government bonds and slash the price of Russian gas. The government's surprise U-turn on an EU association agreement last month has sparked weeks of mass demonstrations.
Mr Azarov said the package would protect financial stability. But Mr Azarov said the package from Russia would provide stability.
But the opposition has demanded to know what was offered to Russia in return. Russia has agreed to buy $15bn (£9.2bn, 11bn euros) of government bonds and slash the price of gas.
The government's surprise U-turn on an EU association agreement last month sparked mass demonstrations. Ukraine's opposition has demanded to know what Ukraine offered Russia in return.
Thousands of pro-EU protesters have been holding rallies in Kiev - occupying the capital's Independence Square - and other cities in western and central Ukraine.
'Revival''Revival'
Mr Azarov defended the deal with Russia in a government meeting on Wednesday. Critics say President Viktor Yanukovych has sold out to Russia and are calling for him and his government to step down.
"What would have awaited Ukraine? The answer is clear - bankruptcy and social collapse," he said. But Ukraine's prime minister defended the deal with Russia in a cabinet meeting on Wednesday.
"What would have awaited Ukraine? The answer is clear - bankruptcy and social collapse," Mr Azarov said.
"What a present for New Year that would be for the people of Ukraine."What a present for New Year that would be for the people of Ukraine.
"The agreements between the Ukrainian and Russian presidents allow us to plan the years to come as years of development and people's confidence about their stable lives.""The agreements between the Ukrainian and Russian presidents allow us to plan the years to come as years of development and people's confidence about their stable lives."
He said a pact to lower gas prices by about a third would allow for "a revival of economic growth".He said a pact to lower gas prices by about a third would allow for "a revival of economic growth".
There was no way Ukraine could have signed the EU agreement as Kiev would have had to accept unfeasibly stringent IMF conditions for economic reform, he added.There was no way Ukraine could have signed the EU agreement as Kiev would have had to accept unfeasibly stringent IMF conditions for economic reform, he added.
"Yesterday was a historic event," Russia's Interfax news agency quoted Mr Azarov as saying. German Chancellor Angela Merkel told parliament in Berlin she regretted Ukraine's decision - but said the offer of the EU trade pact was still open.
Russian Foreign Minister Sergei Lavrov criticised the West on Wednesday for exerting pressure on Ukraine to choose closer EU ties, and said the deal with Moscow was "mutually beneficial". Russian Foreign Minister Sergei Lavrov earlier criticised the West for exerting "overt pressure" on the country to favour closer EU ties, adding that the deal with Moscow was "mutually beneficial".
He told Russia's parliament he was "surprised by blatant attempts to exert overt pressure on the government of Ukraine, which continue despite the decisions that were taken yesterday in Moscow".
Much of the detail of the agreement remains unclear.
Ukraine urgently needs to cover an external funding gap of up to $17bn (£10.4bn; 12.3bn euros) next year to avoid defaulting on its debts.Ukraine urgently needs to cover an external funding gap of up to $17bn (£10.4bn; 12.3bn euros) next year to avoid defaulting on its debts.
Opposition leader, Vitali Klitschko, told pro-EU protesters in Kiev on Tuesday that Mr Yanukovych was betraying Ukraine's independence by joining with Russia. The country relies on imports of Russian gas and some 75% of Ukraine's engineering exports go to Russia.
After talks between Mr Putin and Mr Yanukovych in the Kremlin, it was announced on Tuesday that Russia would buy $15bn-worth of Ukrainian government bonds.
The cost of Russian gas supplied to Ukraine has been slashed from more than $400 (£245; 291 euros) per 1,000 cubic metres to $268.5.
Much of the detail of the agreement still remains unclear.
But Mr Putin said the assistance was not "tied to any conditions".
An opposition party leader, Vitali Klitschko, told pro-EU protesters in Kiev on Tuesday that Mr Yanukovych was betraying Ukraine's independence by joining with Russia.
"He has given up Ukraine's national interests, given up independence," said Mr Klitschko, a former boxing champion."He has given up Ukraine's national interests, given up independence," said Mr Klitschko, a former boxing champion.
He called on the Ukrainian president to hold a snap election.He called on the Ukrainian president to hold a snap election.
The US has warned the Ukrainian government that the deal with Russia would not satisfy the protesters, who have been occupying Independence Square in Kiev.