Saturday

21st Apr 2018

Ukraine opts for Russian bailout instead of EU treaty

Ukrainian leader Viktor Yanukovych has opted for a no-strings-attached Russian bailout instead of the EU alternative.

He made the agreement at a meeting with Russian President Vladimir Putin in Moscow on Tuesday (17 December).

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

  • Official Kremlin photo of Yanukovych (pictured left) and Putin meeting (Photo: kremlin.ru)

Under the accord, Putin promised to use money from Russia's National Welfare Fund to buy $15 billion of distressed Ukrainian bonds. He also promised to cut gas prices from $400 or so per thousand cubic metres to $269 until 2019, saving Ukraine up to $2 billion a year.

He described Ukraine as a "strategic partner and ally."

"I want to bring to your attention the fact that it is not connected with any conditions, not connected with the increase, decrease or freezing of any social standards, pensions, subsidies or salaries," he said.

"I also want to calm everyone down: Today we did not discuss the question of Ukraine’s accession to the Customs Union," he added.

Yanukovych said: "Ukraine's trade with Russia makes it impossible for us to act in any other way … There is no alternative to this."

The alternative was to sign an EU association and free trade pact, triggering International Monetary Fund (IMF) support and top-up EU assistance.

But the EU-IMF package came with tough conditions: to increase domestic gas prices; modernise Ukrainian industry; relax his grip on judges; and free political opponents.

Yanukovych's Party of the Regions said in a statement the same day the EU pact is not dead: "Ukraine remains faithful to its strategic Euro-integration course."

Some EU politicians said the same.

Lithuania's foreign minister, Linas Linkevicius, told press in Brussels after visiting Kiev: "I was told clearly that not one single agreement of the 14 [accords signed in Moscow] would go against any commitments toward EU association, [there is] nothing on Customs Union, no withdrawal from the European Energy Community."

But speaking privately, EU diplomats say the Putin deal has killed hope Yanukovych might sign.

"For sure, it means no signature in the foreseeable future," one EU source told this website.

"We saw it coming. The question now is what Yanukovych will do with all those people who are still on the streets of Kiev," the source added.

The immediate reaction in the pro-EU protest camp was calm.

Opposition leader Vitali Klitschko told people on the barricades in Kiev's maidan square that Yanukovych "has given up Ukraine's national interests, given up independence." The protesters chanted "shame" and vowed to stay in place.

Ukrainian pop star Ruslana also gave a free concert later in the evening.

Meanwhile, few in Brussels believe the Russian deal is as good as it sounds.

The EU source told this website that Russia has in the past pledged cheap loans to Belarus and Ukraine, without paying a cent.

The source added that even if Yanukovych did not promise to join the Customs Union, he likely promised to sell Ukrainian state assets to Russian oligarchs at knock-down prices. "We have a saying in eastern Europe: You only get free cheese in a mousetrap," the source said.

For their part, EU leaders plan to make a short statement on Ukraine at a summit in Brussels on Friday.

Giving a foretaste of what they might say, Germany's new foreign minister, Frank-Walter Steinmeier, told the Bundestag on Tuesday: "It is utterly scandalous how Russia used Ukraine's economic plight for its own ends, also in order to prevent the signing of the association agreement with the EU."

According to the Reuters news agency, he cut a paragraph from the original draft of the speech.

"We [the EU] presented a financial and economic aid package that lay far behind what was necessary to keep Ukraine competitive and permanently tie it economically to Europe," the redacted text said.

Analysis

Is Germany more hawkish on Russia?

Germany's socialist foreign minister just said the EU should "step up pressure" on Russia. Merkel aired "political" doubts on a Russian pipeline.

News in Brief

  1. Audit office: Brexit 'divorce' bill could be billions higher
  2. MEPs urge better protection for journalists
  3. Dieselgate: MEPs back greater role for EU in car approvals
  4. European parliament adopts new organic farming rules
  5. EU granted protection to half million people in 2017
  6. Report: Facebook to carve 1.5bn users out of EU privacy law
  7. Greek court ruling permits migrants to travel to mainland
  8. Commonwealth summit hopes for trade boost after Brexit

Stakeholders' Highlights

  1. Nordic Council of MinistersWorld's Energy Ministers to Meet in Oresund in May to Discuss Green Energy
  2. ILGA EuropeParabéns! Portugal Votes to Respect the Rights of Trans and Intersex People
  3. Mission of China to the EUJobs, Energy, Steel: Government Work Report Sets China's Targets
  4. Martens CentreJoin Us at NET@WORK2018 Featuring Debates on Migration, Foreign Policy, Populism & Disinformation
  5. European Jewish CongressKantor Center Annual Report on Antisemitism Worldwide - The Year the Mask Came Off
  6. UNICEFCalls for the Protection of Children in the Gaza Strip
  7. Mission of China to the EUForeign Minister Wang Yi Highlights Importance of China-EU Relations
  8. Nordic Council of MinistersImmigration and Integration in the Nordic Region - Getting the Facts Straight
  9. Macedonian Human Rights MovementMacedonians in Bulgaria Demand to End the Anti-Macedonian Name Negotiations
  10. Counter BalanceThe EIB Needs to Lead by Example on Tax Justice
  11. ILGA EuropeTrans People in Sweden to be Paid Compensation for Forced Sterilisation
  12. International Partnership for Human RightsThe Danger of Standing Up for Justice and Rights in Central Asia

Latest News

  1. ECJ ruling set to end 10-year 'mouth tobacco' lobbying saga
  2. Whistleblowers, Syria and digital revolution This WEEK
  3. MEP friendship groups offer 'backdoor' for pariah regimes
  4. Macron and Merkel pledge euro reform
  5. Obscurity surrounds EU military fund's expert groups
  6. New EU party finance rules short circuit accountability
  7. Draghi to stay in secretive 'lobby' group
  8. Bulgaria offers lesson in tackling radical-right populists

Stakeholders' Highlights

  1. Mission of China to the EUChina and EU Must Work Together to Promote Global Steel Sector
  2. Swedish EnterprisesEU Tax Proposal on Digital Services Causes Concern for Small Exporting Economies
  3. Europea Jewish CongressCondemns the Horrific Murder of Holocaust Survivor Mireille Knoll in Paris
  4. Mission of China to the EUAn Open China Will Foster a World-Class Business Environment
  5. ECR GroupAn Opportunity to Help Shape a Better Future for Europe
  6. Counter BalanceControversial Turkish Azerbaijani Gas Pipeline Gets Major EU Loan
  7. World VisionSyria’s Children ‘At Risk of Never Fully Recovering', New Study Finds
  8. Macedonian Human Rights MovementMeets with US Congress Member to Denounce Anti-Macedonian Name Negotiations
  9. Martens CentreEuropean Defence Union: Time to Aim High?
  10. UNESDAWatch UNESDA’s President Toast Its 60th Anniversary Year
  11. AJC Transatlantic InstituteAJC Condemns MEP Ana Gomes’s Anti-Semitic Remark, Calls for Disciplinary Action
  12. EPSUEU Commissioners Deny 9.8 Million Workers Legal Minimum Standards on Information Rights