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Version 2 Version 3
Russia to Release Loan as Ukrainian Opposition Leaders Meet in Germany Russia to Release Loan Money for Ukraine, Lifting Leader
(about 3 hours later)
BERLIN — Russia said Monday that it would release the second payment of a promised $15 billion loan to Ukraine that had been frozen because of the political disarray there. KIEV, Ukraine — The protracted struggle for Ukraine between Russia and the West was on vivid display on Monday with Russia throwing an unexpected financial lifeline to the embattled Ukrainian president, Viktor F. Yanukovych, just as Germany rolled out an unusually high-level reception for two of the president’s most ardent opponents.
Russia’s announcement that it would buy $2 billion in Ukrainian bonds came as Chancellor Angela Merkel held discussions with two Ukrainian opposition leaders, continuing a tug of war that the Kremlin and Brussels began in November after President Viktor F. Yanukovych spurned a trade deal with the European Union and accepted the loan from Russia. As the Ukrainian opposition leaders, Arseniy P. Yatsenyuk and the former boxing champion Vitali Klitschko, huddled in Berlin with German leaders, including Chancellor Angela Merkel, Russia said it would this week unblock the next payment of a promised $15 billion credit for Ukraine that it had earlier frozen because of the political disarray in the Ukrainian capital, Kiev.
That decision ignited pro-Western protests that have destabilized the country, and neither the government nor the opposition has any clear remedy for the growing economic crisis. Shut out of global financial markets, Kiev needs to find billions of dollars to pay off foreign loans falling due in coming months or face default. Russia’s decision to resume financial support for Ukraine gives a needed lift to Mr. Yanukovych ahead of a parliamentary session on Tuesday at which the opposition is expected to push for constitutional changes to trim the president’s powers. It also does an end run around Europe’s sluggish efforts to support the opposition by coming up with an aid package of its own.
The United States and European Union have repeatedly said that they are "working on" an aid package with the International Monetary Fund, but so far no concrete offers have been forthcoming. The European Union and the United States have repeatedly said they are “working on” financial assistance for Ukraine in conjunction with the International Monetary Fund, but so far no offers have been made public. While insisting that they do not want to get into a bidding war with Russia for Ukraine’s allegiances, European leaders have come under pressure from prominent pro-European Ukrainians to provide concrete help, not merely high-minded declarations about the transformative power of European values.
Ms. Merkel met for more than an hour with the Ukrainian opposition leaders, Arseniy P. Yatsenyuk and Vitali Klitschko, who both expressed gratitude for the attention of Europe’s most important national leader. But there was no indication they were flying back to Kiev with promises of money or support. The issue of money has loomed over Ukraine’s political tug of war since the start of protests in November, set off by Mr. Yanukovych’s decision to spurn a trade deal with the European Union and tilt this former Soviet republic of 46 million toward Russia instead. Stuck in a deep economic crisis aggravated by endemic corruption and political deadlock, Ukraine needs to find billions of dollars to pay off foreign loans that will be due in coming months and stave off default.
Officials in Berlin cast the talks as part of a carefully choreographed series of moves designed to end the standoff between Mr. Yanukovych, and the opposition leaders and protesters who have occupied central Kiev and taken over many cities in the pro-European western half of Ukraine. Mr. Yanukovych negotiated the $15 billion loan with President Vladimir V. Putin of Russia in December, and Ukraine received a first segment of this soon afterward when Russia purchased Ukrainian bonds worth $3 billion. But Russia suspended further payments last month after violent street clashes in Kiev and the resignation of Ukraine’s Russian-born prime minister.
On Sunday, protesters left Kiev’s City Hall, which they had occupied for more than two months, cementing an amnesty deal with the authorities that indicated that both sides were seeking to reduce tensions in the volatile crisis. On Monday, however, Mr. Putin again showed his talent for putting rivals off balance when Russia’s finance minister, Anton Siluanov, told reporters during a visit to the Russian town of Cherepovets that Moscow would this week purchase a further $2 billion of Ukrainian bonds. This indicated that Moscow has now reactivated the previously suspended credit offer.
Still, the opposition leaders invited to Berlin do not necessarily control the so-called “people’s self-defense” units and freelance groups of young men armed with clubs and iron rods on the streets of central Kiev. On Monday, all was quiet in the Ukrainian capital, but members of the militant wing started reinforcing some of the barricades that were supposed to be removed after amnesty was granted for detained protesters. The news came as Ms. Merkel met for more than an hour with the Ukrainian opposition leaders, who expressed gratitude for the attention of Europe’s most important national leader before heading to a meeting with Foreign Minister Frank-Walter Steinmeier. There was no indication they were flying back to Kiev — where barricades erected by protesters have sealed off the center of the city for more than two months — with any promises of money or support.
On Hrushevsky Street, a cobblestone road smeared with soot after fierce battles last month between protesters and riot police officers that involved Molotov cocktails and burning tires, the narrow passageway through high barricades that had opened up on Sunday was sealed off again Monday by protesters. Masked men who identified themselves as members of the “31st self-defense unit” guarded the area, blocking pedestrians and vehicles. A spokesman for the German Foreign Ministry, Martin Schäfer, said the role of Russia had come up during the Ukrainians’ talks with Mr. Steinmeier, but added that there had been no mention of the Russian finance minister’s announcement. He described the timing of this announcement as “interesting,” and said he wondered what Russia’s conditions were.
Germany has played an active role in Ukraine, with Mrs. Merkel first insisting in Parliament on Nov. 18 that the Cold War must be over for all former Soviet lands, and that there was no clear yes or no choice for Ukraine between Europe and Russia. She later berated Mr. Yanukovych for spurning the proffered association agreement with the European Union. Mr. Steinmeier was in Moscow on Friday for talks with Foreign Minister Sergey V. Lavrov, and German news media reported that Ukraine was among the most intensely discussed topics.
Mr. Steinmeier, the German foreign minister, met with the two opposition leaders just over two weeks ago when they attended a security conference in Munich. Mr. Lavrov was quoted as saying that “there can be no foreign sphere of influence in Ukraine,” and that the European Union should be “honest” instead of somehow forcing Ukrainians to choose East or West.
Since then, leaked recordings of two telephone calls – one between the United States assistant secretary of state for European affairs, Victoria J. Nuland, and the American ambassador in Kiev, and the other between two top European diplomats – exposed differences between the American and European approaches to the crisis in Ukraine. They also suggested that Mr. Yatsenyuk, a former foreign minister and central bank governor in Ukraine, and Mr. Klitschko, a former heavyweight boxing champion, were seen by Western governments as the most likely to head some kind of transition arrangement before elections could be held in Ukraine. As well as not coming up with any money to induce Ukraine into embracing European standards and values, the European Union has balked at taking the alternative route of imposing sanctions.
German news media have closely followed the crisis and made something of a hero of Mr. Klitschko, whose name has frequently appeared above a column in Bild, the best-selling newspaper in the country. In his latest contribution, published on Monday, Mr. Klitschko wrote: “I wish Germany would take over the leading role in negotiations, we urgently need more independent observers in the country! During my visit I will again make clear that we want sanctions. We have been demanding for months accounts closed and an E.U. ban on travel for government members — now we want a clear signal!” Andreas Schockenhoff, a leading member of Ms. Merkel’s conservative bloc in Parliament, on Monday rejected calls from some quarters for immediate sanctions on members of Ukraine’s government. Mr. Schockenhoff, who is an expert on Eastern Europe, dismissed sanctions such as travel bans or closing the bank accounts of Ukrainian leaders, at least for now.
Still, the resumption of Russian funding is unlikely to win over protesters to the side of Mr. Yanukovych, and may even strengthen the protesters’ view that the president, although democratically elected in 2010, is the Kremlin’s lackey.
But many Ukrainian activists in a protest movement in its third month now seem eager to reduce tensions. On Sunday, protesters left Kiev City Hall, which they had occupied since December, cementing an amnesty deal with the authorities indicating that both sides want to step back from a head-on confrontation that last month spiraled into deadly violence in the capital.
A potential wild card is that the Ukrainian opposition, including the leaders invited to Berlin, do not necessarily control the so-called people’s self-defense units and freelance groups of young men armed with clubs and iron rods on the street in central Kiev. On Monday in the capital, all was quiet, but the militant wing started reinforcing some of the barricades that were supposed to be removed after the announced amnesty for protesters.
On Hrushevsky Street, a cobblestone road carpeted with soot after fierce battles between protesters and the riot police last month that involved firebombs and burning tires, a narrow passageway that had opened up on Sunday through high barricades was sealed off on Monday by a metal gate erected by protesters. Masked men who identified themselves as members of the 31st Self-Defense Unit guarded the area, blocking pedestrians and vehicles.