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Moscow sends mixed messages on Ukraine aid installment

MOSCOW: Russian President Vladimir Putin ordered his government on Wednesday to honor a $15 billion bailout deal for Ukraine, but a minister suggested the make-up of a new government in Kiev will determine how quickly the vital aid is dispatched.

In Kiev, Ukraine's new interim prime minister promised to try to limit the economic damage inflicted by more than two months of turmoil, and said he expected Russia to disburse a further $2 billion aid installment "very soon".

Moscow, however, sent mixed messages on how quickly the money which Ukraine urgently needs would arrive.

Putin repeated a promise he made on Tuesday to provide the aid even if the opposition forms the next government in Kiev. "I would ask the government to fulfill all our financial agreements in full," he said, according to Interfax news agency.

However, his Economy Minister Alexei Ulyukayev cast doubt on the timing of the installment. "Our commitment to fulfilling these obligations has been confirmed. As for the schedule and parameters, this is an issue that requires further discussion with our Ukrainian colleagues and consideration of the restructuring of the government," Interfax quoted him as saying.

Putin agreed the aid package with Ukraine in December, throwing the ex-Soviet state a lifeline in what the opposition and the West regard as a reward for scrapping plans to sign political and trade deals with the European Union and promising to improve ties with Russia.

In what looked like a reminder to President Viktor Yanukovich not to install a government that would tilt policy back towards the West, Moscow tightened border checks on imports from Ukraine.

The Ukrainian association of producers said the extra checks, backed by demands for increased duties, were on food and machinery being taken into Russia by road and rail.

Russia took similar action in August in what was seen as part of Moscow's campaign to dissuade its neighbor from signing the association and trade agreements with the EU.

Ukraine has been gripped by mass unrest since Yanukovich walked away from the EU deals last November.

Prime Minister Mykola Azarov resigned on Tuesday in an attempt to appease the protesters and the opposition, and though his deputy has taken over as acting prime minister it is unclear when a new government will be formed.

Leonid Kravchuk, the first president of independent Ukraine, stressed the depth of the crisis on Wednesday.

"The state is on the brink of civil war. We must call what is happening by its proper name. What is happening is revolution because we are talking about an attempt to bring about a change of power," he told parliament.

With Yanukovich and loyalist deputies in parliament now making concessions to defuse the crisis and with Azarov, a Russian-born hardliner, gone there had been speculation that Moscow might slow or even halt the stream of aid.

But acting prime minister Serhiy Arbuzov appeared to have been cheered by Putin's promise on Tuesday to extend the $15 billion in credits and cheaper gas.

"We have already received the first tranche of $3 billion and expect to receive the second tranche of $2 billion very soon," he said, chairing his first cabinet meeting. Russia is offering the funds by buying Ukrainian government bonds.

Figures compiled by UniCredit bank before the bailout put Ukraine's gross external financing requirements at $3.8 billion in the first three months of this year alone, including $2.29 billion for gas which is covered by the deal with Moscow.

That rises to $5.5 billion in April-June, including repaying a $1 billion bond which matures then. Altogether the government would need $17.44 billion this year to pay its foreign bills, including for Russian gas.

Source: Reuters

 

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