March 8, 2014
Russia boosts Ukraine with new credit
Russia said today it would give Ukraine a fresh cash injection of $2 billion to support its heavily indebted economy in a boost to the embattled president in Kiev, who has been forced onto the back foot by 12 weeks of unrest.
Viktor Yanukovich is contending with an opposition-led street revolt after he walked away from a trade pact with the European Union in November and opted instead for forging closer economic ties with Russia.
With the opposition, backed by the United States and its EU allies, pressing hard for Yanukovich to allow the formation of an independent government, the Kremlin had hinted strongly that a $15-billion lifeline would be frozen unless he produced a government acceptable to Moscow to replace the cabinet whose prime minister quit three weeks ago to appease the protesters.
But ahead of a parliament session in Kiev, when prospects for a new government are to be discussed, Russia's finance minister, Anton Siluanov, said Moscow would buy $2 billion of Ukrainian eurobonds by the end of this week, in addition to the $3 billion it bought in late December.
A Ukrainian government source said it expected the money from Russia to arrive on Wednesday.
November's revolt, sparked by the U-turn on the EU pact, has spiralled into countrywide protests at perceived sleaze and corruption in the Yanukovich administration, and has triggered a tussle between East and West in which Yanukovich has had to ponder his future strategic alliances.
As Russia beckons with the aid package - a quick fix to plug holes in Ukraine's indebted economy - the United States and its Western allies have urged Yanukovich to move back towards an IMF-backed deal with Europe.
Russia's commitment to continue to drip-feed its aid package to Ukraine, as announced by Siluanov, appeared to strengthen Yanukovich's hand as he ponders a replacement for Russian-born premier Mykola Azarov, who resigned on Jan. 28.
But if he resists opposition calls for constitutional change and names another hardliner - perhaps more suitable to Moscow - the streets could return to uproar.