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KIEV, Ukraine — Ukrainian officials on Wednesday called a financial aid and natural gas deal with Russia the country’s only hope to prevent economic collapse, although it was signed in defiance of a large and sustained protest in the capital.
KIEV, Ukraine — Ukrainian officials on Wednesday praised a financial aid package from Russia as the country’s only hope to prevent economic collapse, although it was signed in defiance of a large and sustained protest in the capital.
“Today I can firmly announce that the crisis moment has passed,” the prime minister, Mykola Azarov, said in comments reported by the Ukrainian news media. “We have a new and firm perspective of confidence. We will maintain social and financial stability. Now, nothing threatens the financial and economic stability of Ukraine.”
“Today, I can firmly announce that the crisis moment has passed,” the country’s prime minister, Mykola Azarov, said in comments reported by the Ukrainian news media. “We have a new and firm perspective of confidence. We will maintain social and financial stability. Now, nothing threatens the financial and economic stability of Ukraine.”
In a sharp rebuff to the West, Ukraine’s president, Viktor F. Yanukovich, and President Vladimir V. Putin of Russia announced Tuesday that Russia would come to the rescue of its financially troubled neighbor, providing $15 billion in loans and a steep discount on natural gas prices.
On Tuesday, Ukraine’s president, Viktor F. Yanukovich, and President Vladimir V. Putin of Russia said that Russia would come to the rescue of its financially troubled neighbor, providing $15 billion in loans and a steep discount on natural gas prices.
It was a bold but risky move by Russia, given the political chaos in Kiev, the Ukrainian capital, where thousands of demonstrators remain encamped in Independence Square, protesting their government’s failure to sign political and free trade accords with Europe, which had been seen as an alternative to the Russian deal.
The announcement seemed to have a deflating effect on the protesters, a tired and haggard group after spending more than three weeks encamped on Independence Square. A church choir sang. Protest leaders asked for patience as they scrambled to devise a new strategy.
The protest continued Wednesday much as it has in previous days, with fires burning in drums on the streets and in the square to keep demonstrators warm. Protesters occupied three large buildings, including City Hall. But momentum seemed to have stalled, with protest leaders, speaking on Tuesday evening, announcing no new actions on the street to counter the government’s defiance of their demands.
The protests were ignited by the government’s last-minute failure to sign political and free trade accords with Europe, which had been seen as an alternative to the Russian deal. Their demands, though, had expanded to seeking punishment for the police, accused of violently attacking demonstrators, and the resignation of Mr. Azarov, the prime minister.
A group on Wednesday planned to stage a minor action called “The Bloody Holiday Tree,” which would deliver holiday trees, used to celebrate New Year’s Eve here, to the offices of several major Ukrainian businessmen whose apparent acquiescence to the deal angered protesters. The trees would be decorated with photographs of police officers beating students.
The government is now prepared to negotiate with the protesters over those demands, Viktor Pinchuk, one of Ukraine’s most powerful businessmen, said in an interview. Concessions now from Mr. Yanukovich on these domestic political issues could defuse the demonstrations, even though the main demand, for European integration, went unmet.
One powerful Ukrainian businessman, Viktor Pinchuk, who is also the son-in-law of a former president, said in an interview that the country’s capitalist class, known as the oligarchs, could play a role in defusing the standoff between protesters and the president by using their ties to both government officials and opposition leaders.
The protest movement, he said, had evolved from a demand to sign the trade agreement with Europe to broader complaints about corruption and police abuse at home, so that concessions now from Mr. Yanukovich on these domestic political issues could defuse the demonstrations even though the main demand, for European integration, was unmet.
“People came to the streets today for values and against violence,” he said. “Now, they are not there for the association agreement,” the name of the wide-ranging trade deal with the European Union that Mr. Yanukovich rejected.
“People came to the streets today for values and against violence,” he said. “Now, they are not there for the association agreement,” the name of the wide-ranging trade deal with the European Union that Mr. Yanukovich rejected.
The White House issued a statement late Tuesday saying the accord with Russia would not satisfy the demands of protesters.
On Wednesday, opposition leaders said they had moved closer to obtaining enough votes in Parliament to dismiss the government of Mr. Mykola, the prime minister, signaling the shift in emphasis to domestic political issues.
For the moment, however, Mr. Putin seemed to have the upper hand over Europe and the United States in the contest for Ukraine, a former Soviet republic of 46 million that Russia sees as integral to its economic and security interests. It is by far the most populous and influential country in the region that has remained outside the European orbit.
The lack of a major reaction in the streets left Mr. Putin, for the moment, seeming to have the upper hand over Europe and the United States in the contest for Ukraine, a former Soviet republic of 46 million that is culturally, economically and militarily intertwined with Russia. It is by far the most populous and influential country in the region that has remained outside the European orbit.
For Mr. Putin, the jousting over Ukraine is the latest of several foreign policy moves that have served to re-establish Russia as a counterweight to Western dominance in world affairs. This year, he defied Washington by granting temporary asylum to Edward J. Snowden, the former National Security Agency contractor, and deflected an American military strike on his longtime ally, President Bashar al-Assad of Syria, with a proposal to eliminate Syria’s chemical weapons.
On Wednesday, Germany’s chancellor, Angela Merkel, appeared to be falling back on a less ambitious goal for the country, hinting at a solution that would integrate Ukraine’s economy with the European Union while not ruling out customs-free trade with Russia, as had been the stipulated in the failed association agreement.
There was no immediate quid pro quo for Russia — at least not in plain sight — as Mr. Putin announced the deal at the Kremlin with Mr. Yanukovich. 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. The union is essentially a trade zone across a large section of the former Soviet Union, allowing goods to cross borders without clearing customs.
In her first address to lawmakers since being sworn in for a third term as chancellor, Ms. Merkel said Wednesday that the European Union’s offer to Ukraine “remains on the table.” Ms. Merkel said that while she regretted Mr. Yanukovich’s decision not to sign the agreement, Germany would work “intensively” to ensure there is an end to the current tug of war between Brussels and Moscow over Kiev’s future.
Over the weeks of protests, however, it became clear that the customs union was a nonstarter for Ukraine, and Mr. Putin said that the subject did not come up in their discussions on Tuesday.
“It cannot be that a situation arises where a land that lies between Russia and the European Union must make a basic decision, that will always be seen as either for the one or the other,” Ms. Merkel said.
Opposition leaders in Parliament said that they would demand to review the text of agreements signed in Moscow. They expressed concern that Mr. Yanukovich had agreed to sell state-owned industrial assets to Russian business groups in exchange for aid.
She warned, however, that Ukraine had to guarantee basic democratic rights to its citizens.
They have also vowed to block any parliamentary approval for the deals or the 2014 budget that would take into account Russian aid. The chamber met Wednesday for only a few minutes because many deputies were absent and opposition members of Parliament blocked the rostrum.
The chancellor’s new foreign minister, Frank-Walter Steinmeier, who held the position in her first government from 2005 to 2009, travels to Warsaw on Thursday, where he is to hold talks with a trio of Polish officials: his Polish counterpart, Radek Sikorski; the Polish president, Bronislaw Komorowski; and Aleksander Kwasniewski, a former president who represented the European Union in negotiations with Ukraine over the failed agreement. Mr. Steinmeier’s party, the Social Democrats, have traditionally been softer on Russia than the chancellor’s conservative Christian Democratic Union.
The speaker, Volodymyr Rybak, said he would put the 2014 budget to a vote on Thursday.
Melissa
Eddy contributed reporting from Berlin.
The Russian aid throws Mr. Yanukovich an economic and political lifeline for the spending bill. It will spare him, for now, from negotiations with the International Monetary Fund, which was demanding significant changes to the government, judiciary and economy in exchange for aid.
While Mr. Putin portrayed Russia’s assistance as a gallant move, requiring Ukraine neither to commit to the customs union nor to enact any of the austerity measures demanded by the I.M.F., the rescue plan carries serious long-term economic and political risks. Experts say that unless Ukraine carries out overhauls, including increases in household utility rates, limits on government spending and pension increases, and improvements in the business climate, the country’s economic problems will continue, raising the likelihood that the aid will be wasted.
In addition, the political uncertainty raises the possibility of changes at the highest levels of government, perhaps even before the presidential elections in February 2015.
Then there is the immediate investment risk. Russia’s rules for its national welfare fund require investments in countries with long-term bond ratings of AA or better; both Fitch and Standard & Poor’s rate Ukraine below that.
Ukraine 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 an 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 the agreements that had been in the works for years with the European Union.
Mr. Putin’s ability to announce a major bailout of Ukraine highlighted the contrasts with the West, where a rescue plan on such a scale would typically require protracted debate and negotiation. In Russia, it was a decision that Mr. Putin, in consultation with a close coterie of aides, could make himself.
