Putin Pledges Billions, Cheaper Gas To Yanukovych
December 17, 2013
Russia has promised Ukraine $15 billion in loans and cheaper natural gas amid ongoing protests in Kyiv calling for closer ties with the European Union rather than Moscow.
The deals were announced after a meeting in Moscow between Russian President Vladimir Putin and his Ukrainian counterpart, Viktor Yanukovych.
Putin said the price of gas supplies to Ukraine would be cut by about one-third to $268.5 per 1,000 cubic meters, from about $400.
He said it was a 'temporary solution, bearing in mind that long term contracts should and will be agreed upon regarding both gas supplies to Ukraine and ensuring an uninterrupted transit [of gas] to Russian customers in Europe.'
Putin did not elaborate on the duration of the deal. But Ukrainian Deputy Prime Minister Yuriy Boyko said later the price cut would take effect on January 1, 2014, and would be valid until 2019.
Putin also announced that Russia would convert $15 billion worth of its National Welfare Fund, an emergency fund, into Ukrainian securities.
Ukraine urgently needs some $10 billion for looming debt repayments. The announced deal boosted the price of Ukraine's dollar debt, a sign of investors' confidence.
Russia also agreed to remove trade barriers it put up at the beginning of the year as reprisals for what at the time seemed as Yanukovych's clear intention to sign an Association Agreement with the European Union. But Yanukovych last month unexpectedly scuppered the key deal with the EU, sparking a huge protest movement.
On December 17, thousands of pro-EU protesters responded to a call from the opposition to turn out in force in Kyiv's Independence Square, wary that Yanukovych would bring Ukraine into a Russia-led customs union. But Putin said such a move was not discussed on December 17.
'I want to calm everyone down -- today we did not discuss the issue of Ukraine's accession to the customs union at all,' Putin said.
Yanukovych, in turn, praised the results of his meeting with Putin -- a message most likely aimed at showing pro-EU protesters back home that he obtained as much as possible from Putin while keeping Ukraine's European options open.
'Today's meeting confirmed that the interaction between Ukraine and Russia stands on a powerful basis and enjoys good prospects for further development,' Yanukovych said. 'Our negotiations culminated in us signing a very substantial and broad package of agreements.'
Traders, meanwhile, said Russia had also agreed to resume oil supplies to a refinery in Ukraine after a three-year interruption.
Speaking earlier at the session of the Russian-Ukrainian Interstate Commission, Putin said that Russia and Ukraine should cooperate closer on international issues, should resume comprehensive military and military-technological cooperation.
Putin also said Russia would be able to use Ukrainian defense capabilities 'including repairs and other issues.'
Putin and Yanukovych held closed-door talks for more than two hours. At the start of that meeting, Yanukoyvch told Putin that the two countries' 'strategic partnership' should be expanded.
Yanukovych has argued that signing the EU Association Agreement at a summit in Vilnius last month would have dealt a huge blow to Ukraine's already troubled economy by limiting economic ties with Russia.
While Ukraine needs an estimated $10 billion in loans to keep its economy afloat and meet payment obligations, the most Brussels has so far offered Ukraine is 610 million euros ($838 million).
On December 16 in Brussels, EU foreign ministers reassured Russian Foreign Minister Sergei Lavrov that closer EU-Ukraine ties posed no threat to Russia.
EU foreign-policy chief Catherine Ashton also said the EU remained ready to sign the accord with Kyiv.
With reporting by AFP, Reuters, and Interfax
Copyright (c) 2013. RFE/RL, Inc. Reprinted with the permission of Radio Free Europe/Radio Liberty, 1201 Connecticut Ave., N.W. Washington DC 20036.
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