Tuesday

19th Jun 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).

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... our join as a group

  • 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.

Opinion

Europe could lose out in North Korean bonanza

South Korean businesses including Hyundai and Samsung are already scoping investment opportunities. Will North Korea become a 'new Vietnam' opportunity - or more like Myanmar, where slow Brussels policy-making meant EU exporters lost out.

News in Brief

  1. Report: Audi CEO arrested over Dieselgate
  2. EU-Australia trade talks kick off in Brussels next month
  3. France and Germany moving closer to eurozone reform
  4. Merkel to meet Conte to find migration compromise
  5. Seehofer gives Merkel time to strike EU migration deal
  6. Schroeder and Sarkozy appear with Putin at World Cup
  7. Tennis champ and 'EU diplomat' claims immunity
  8. Italy threatens to ditch EU-Canada free trade deal

Stakeholders' Highlights

  1. Macedonian Human Rights MovementMHRMI Launches Lawsuits Against Individuals and Countries Involved in Changing Macedonia's Name
  2. IPHRCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  3. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  4. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow
  5. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  6. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  7. Nordic Council of MinistersNordics Could Be First Carbon-Negative Region in World
  8. European Federation of Allergy and AirwaysLife Is Possible for Patients with Severe Asthma
  9. PKEE - Polish Energy AssociationCommon-Sense Approach Needed for EU Energy Reform
  10. Nordic Council of MinistersNordic Region to Lead in Developing and Rolling Out 5G Network
  11. Mission of China to the EUChina-EU Economic and Trade Relations Enjoy a Bright Future
  12. ACCAEmpowering Businesses to Engage with Sustainable Finance and the SDGs

Latest News

  1. Orban to EPP: turn 'Christian democratic' or face challenge
  2. Is EU retail sector equipped for 21st century?
  3. Tear gas bodes ill for Macedonia name deal
  4. EU asylum claims drop, Germany registers most
  5. EU summit: migrants get a 'vote' too
  6. Basque threat of 'second front' for independence
  7. Progressive regulation needed now for 21st century finance
  8. Greece and Merkel's fate top This WEEK

Stakeholders' Highlights

  1. Nordic Council of MinistersCooperation in Nordic Electricity Market Considered World Class Model
  2. FIFAGreen Stadiums at the 2018 Fifa World Cup
  3. Mission of China to the EUChina and EU Work Together to Promote Sustainable Development
  4. Counter BalanceEuropean Ombudsman Requests More Lending Transparency from European Investment Bank
  5. FIFARecycling at the FIFA World Cup in Russia
  6. Nordic Council of MinistersOECD Report: Gender Equality Boosts GDP Growth in Nordic Region
  7. Centre Maurits Coppieters“Peace and Reconciliation Is a Process That Takes Decades” Dr. Anthony Soares on #Brexit and Northern Ireland
  8. Mission of China to the EUMEPs Positive on China’s New Measures of Opening Up
  9. Macedonian Human Rights MovementOld White Men are Destroying Macedonia by Romanticizing Greece
  10. Counter BalanceControversial EIB-Backed Project Under Fire at European Parliament
  11. Nordic Council of MinistersIncome Inequality Increasing in Nordic Countries
  12. European Jewish CongressEU Leaders to Cease Contact with Mahmoud Abbas Until He Apologizes for Antisemitic Comments

Join EUobserver

Support quality EU news

Join us