Ukraine’s prime minister said Wednesday that Kiev had avoided bankruptcy and social collapse thanks to a “historic” bail-out deal with Russia, as protesters accused the government of selling out to Moscow.
President Viktor Yanukovych faced angry criticism after Tuesday’s deal from Ukraine’s opposition who fear it will rob the country of a European future. But Prime Minister Mykola Azarov said it was the only way to rescue the economy.
“What would have awaited Ukraine (without the deal)? The answer is clear — bankruptcy and social collapse,” Azarov told parliament.
“This would have been the New Year’s present for the people of Ukraine,” he added with characteristic irony, describing the Moscow accord as a “historic event”.
Russia’s President Vladimir Putin on Tuesday agreed to buy $15 billion (11 billion euros) of Ukraine’s debt in eurobonds and slash its gas bill by a third, a move economists said would stave off the risk of a Ukrainian default for now.
The opposition to Yanukovych fears there must be hidden strings attached to the package, and vowed to keep pushing for early elections and a shelved deal with the European Union.
But Azarov said there was no way Ukraine could have signed the Association Agreement with the European Union as Kiev would have had to have accepted unfeasibly stringent IMF conditions for economic reform.
“The agreements that were signed offer good perspectives for the Ukrainian economy,” Azarov said of the Moscow talks, while giving a warning to the thousands still occupying Kiev’s Independence Square by saying the government “will not allow anyone to destabilise” the country further.
‘Yanukovych sold our country’
The deal — inked almost a month since Ukraine decided to back out of its long-mooted Association Agreement with the EU sparking the biggest protests since the 2004 Orange Revolution — has both the opposition and European diplomats fuming.
“Yanukovych used Ukraine as a pawn,” opposition leader and world boxing champion Vitali Klitschko told the crowd of about 50,000 on Independence Square late Tuesday, accusing the president of handing Ukraine’s industries to Russia as collateral in order to get the funding.
“The big question is, what did Yanukovych sign?” Klitschko said.
“Russian emergency loans to Ukraine risks further delaying urgent economic reforms and necessary EU modernisation,” Swedish Foreign Minister Carl Bildt tweeted. “Decline might continue.”
The help from Russia may allow Kiev to stave off the threat of an imminent balance of payments crisis and possible default, amid a recession that has seen the economy shrink since the first half of last year.
Hailed by the two leaders as a new page in the Kiev-Moscow strategic partnership, it also marks a further step away from integration with the European Union.
“We see this very negatively. We consider that Yanukovych sold off our country,” said pro-EU protester Artur, braving the freezing winter temperatures in Kiev.
White House spokesman Jay Carney indicated that Washington was unimpressed by the deal, saying it would “not address the concerns” of the thousands of protesters camped out day and night on Independence Square over the last weeks.
German Chancellor Angela Merkel warned against stoking further tug-of-war battles over Ukraine, saying in a televised interview that “a confrontation would not lead anywhere.”
Putin, in a clear message to the protesters in Kiev, said Russia did not discuss Ukraine’s membership in the Moscow-led Customs Union in exchange for the announced benefits — something the opposition widely expected.
It remained unclear however what Russia is getting in return for cutting natural gas price to Ukraine from about $400 to $268.5 per 1,000 cubic metres — a remarkable boon to the embattled Yanukovych.
The ex-Soviet nation of 46 million has been at the heart of a furious diplomatic struggle since Yanukovych’s shock decision last month to ditch the landmark EU partnership accord and seek closer ties with its traditional master Russia.
Analysts said the deals announced by Putin should reduce Ukraine’s current account deficit by around $4.5 billion a year but does not take the urgency out of overdue economic reforms.