News / Economy

    Russia Eyes Loan, Gas Deal to Keep Ukraine in its Orbit

    Pro-European protesters warm themselves at a fire in front of barricade in central Kyiv, Dec. 16, 2013.
    Pro-European protesters warm themselves at a fire in front of barricade in central Kyiv, Dec. 16, 2013.
    Reuters
    Russia signaled on Monday it was about to agree to a loan and gas deal with Ukraine to help Kyiv stave off economic chaos and keep it in its former Soviet master's orbit.
     
    In Kyiv, the opposition went ahead with preparations for another big rally for Tuesday against what they see as moves by President Viktor Yanukovich to sell out national interests to Russia after backing away from a landmark deal with the European Union that would have shifted their country westwards.
     
    An aide to Russian President Vladimir Putin suggested a credit would be agreed at talks with Yanukovich in Moscow on Tuesday, and a Ukrainian minister said a deal was likely on lower prices for Russian gas.
     
    Yanukovich has turned to Moscow for money after spurning the chance of joining a free trade pact with the EU, despite the risk of protests against him swelling.
     
    • Portraits of Ukrainian President Viktor Yanukovych and Prime Minister Mykola Azarov are seen at a barricade during a rally in central Kyiv, Ukraine, Dec. 20, 2013.
    • A woman passes by Interior Ministry personnel as they block pro-EU demonstrators near the Ukrainian Ministry of Internal Affairs in Kyiv, Ukraine, Dec. 20, 2013.
    • Ukrainian pro-EU demonstrators warm themselves by a fire during a rally in Independence Square, Kyiv, Ukraine, Dec. 20, 2013.
    • A pile of garbage bags left by pro-European integration protesters lies in front of riot police officers in Kyiv, Ukraine, Dec. 20, 2013.
    • A Pro-European Union activist guards an entrance to the tent camp in Independence Square in Kyiv, Ukraine, Dec. 19, 2013.
    • A man reads a newspaper with a picture of Russian President Vladimir Putin on the front page during a pro-European Union rally in Independence Square, Kyiv, Ukraine, Dec. 19, 2013.
    • Pro-European Union activists warm themselves sitting in their shelter inside a barricade during a rally in Independence Square, Kyiv, Dec. 18, 2013.
    • Pro-European Union activists pass through a police line as they march against the government in Kyiv, Dec. 17, 2013.
    • A pro-European Union activist stands while warming himself near a bonfire at a heavily fortified tent camp in Independence Square in Kyiv, Dec. 17, 2013.
    • A man stacks wooden bars showing names of Ukrainian cities and settlements that are hometowns of demonstrators, during a rally in Independence Square in Kyiv, Dec. 16, 2013.
    • Pro-European integration protesters eat free meals near a barricade during a rally in Independence Square in Kyiv, Dec. 16, 2013.
    • Pro-European Union activists rally in Independence Square, Kyiv, Dec. 15, 2013. 

    “The situation in Ukraine is now such that without loans, from one side or another, they will simply fail to maintain economic stability,” Andrei Belousov, an economic adviser to Putin, told Interfax news agency. “I do not rule out that, if there is a request, a credit could be provided [to Ukraine].”
     
    Russia's Finance Ministry confirmed talks on a loan were under way, and Ukrainian Energy Minister Eduard Stavitsky said there was a great probability a deal could be reached on reducing the price of Russian energy supplies to Ukraine.
     
    Agreement on Tuesday would be seen in Moscow as a move keeping Ukraine in its political and economic orbit, more than two decades after the Soviet Union collapsed, and preventing a historic Westward shift by Kyiv.
     
    The EU's enlargement chief said on Twitter on Sunday the 28-nation bloc was halting work on a trade and political pact with the country of 46 million because the deeds of Yanukovich and his government were “further and further apart.”
     
    Stefan Fuele's words suggested the EU had lost patience with Kyiv's demands for financial aid and was irritated by the 'bidding war' with Russia over Ukraine. But divisions emerged in Brussels as other officials said the door remained open.
     
    “I think making policy on the basis of a Twitter notice by Mr. Fuele is perhaps not the best way of approaching this issue,” Dutch Foreign Minister Frans Timmermans said.
     
    Ukraine is seeking help to cover an external funding gap of $17 billion next year - almost the level of the central bank's depleted currency reserves.
     
    Belousov did not say how much Russia, whose own economy is stuttering badly, would offer Ukraine. But sources in Ukraine said the deal could be worth $15 billion, with Russian providing about $3-5 billion up front.
     
    The most Brussels has so far offered Ukraine is 610 million euros [$837.56 million] but EU officials are in discussion with the International Monetary Fund, the World Bank and other financial institutions on ways to help Ukraine.
     
    Putin eyes victory
     
    Apart from loans, Ukraine is seeking a lower price for Russian gas - now at around $400 per 1,000 cubic meters - to help it cope with its debt burden.
     
    Ukrainian Prime Minister Mykola Azarov was quoted as saying on Sunday that he hoped a deal on a cheaper price for gas deliveries would soon be concluded. A reduction of at least 10-15 percent is likely, sources in Kyiv said.
     
    Tuesday's talks are intended to conclude a “substantial package” of agreements to chart out a road map to removing trade barriers for Ukraine with Russia, both sides say.
     
    Yanukovich may be attempting to keep the attention of both Moscow and Brussels to strike as good a deal as possible to handle its huge debt and outstanding gas payments to Moscow.
     
    But it is a hazardous maneuver running the risk of alienating both parties and there is not certainty Ukraine can avoid default or a currency crisis.
     
    Securing an agreement with Ukraine would be hailed in Russia as a geopolitical victory for Putin, who regards Ukraine as vital to his dream of creating a political and economic union stretching from the Pacific to the EU's eastern borders.
     
    But Yanukovich is not expected to sign Ukraine up for a Russia-led customs union which Putin sees as the basis for his planned Eurasian Union stretching from the borders of Poland to the shores of the Pacific Ocean.
     
    Holding out on membership on the customs union could be Yanukovich's last bargaining chip as he tries to balance East against West and secure a good enough deal to be able to survive the protests in Kyiv and win a presidential election in 2015.
     
    In Kyiv, the main protest camp had thinned out again on Monday after about 200,000 people protested on Sunday. A few thousand people were listening to prayers, speeches and songs, trying to warm themselves after snowfall during the night.
     
    But these numbers could swell again on Tuesday. Leaders of Yanukovich's Party of Regions expressed dissatisfaction with the economic crisis and urged Azarov to take action against ministers who had 'underestimated' the effects on the economy of trying to strike a deal with the EU.

    You May Like

    Russian-speaking Muslim Exiles Fear Possible Russia-Turkey Thaw

    Exiled from Russia as Islamic radicals and extremists, thousands found asylum in Turkey

    US Presidential Election Ends at Conventions for Territorial Citizens

    Citizens of US territories like Guam or Puerto Rico enjoy participation in US political process but are denied right to vote for president

    UN Syria Envoy: 'Devil Is in the Details' of Russian Aleppo Proposal

    UN uncertain about the possible humanitarian impact of Russian proposal to establish escape corridors in Aleppo

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Philadelphia Uses DNC Spotlight to Profile Historic Role in Founding of United Statesi
    X
    July 28, 2016 2:16 AM
    The slogan of the Democratic National Convention now underway in Philadelphia is “Let’s Make History Again” which recognizes the role the city played in the foundation of the United States in the 18th century. As VOA’s Kane Farabaugh reports, local institutions are opening their doors in an effort to capitalize on the convention spotlight to draw visitors, and to offer more than just a history lesson.
    Video

    Video Philadelphia Uses DNC Spotlight to Profile Historic Role in Founding of United States

    The slogan of the Democratic National Convention now underway in Philadelphia is “Let’s Make History Again” which recognizes the role the city played in the foundation of the United States in the 18th century. As VOA’s Kane Farabaugh reports, local institutions are opening their doors in an effort to capitalize on the convention spotlight to draw visitors, and to offer more than just a history lesson.
    Video

    Video Uganda Unveils its First Solar-powered Bus

    A solar-powered bus described by its Ugandan makers as the first in Africa has made its public debut. Kiira Motors' electric bus, Kayoola, displayed recently at a stadium in Uganda's capital. From Kampala, Maurice Magorane filed this report narrated by Salem Solomon.
    Video

    Video Silicon Valley: More Than A Place, It's a Culture

    Silicon Valley is a technology powerhouse and a place that companies such as Google, Facebook and Apple call home. It is a region in northern California that stretches from San Francisco to San Jose. But, more than that, it's known for its startup culture. VOA's Elizabeth Lee went inside one company to find out what it's like to work in a startup.
    Video

    Video Immigrant Delegate Marvels at Democratic Process

    It’s been a bitter and divisive election season – but first time Indian-American delegate Dr. Shashi Gupta headed to the Democratic National Convention with a sense of hope. VOA’s Katherine Gypson followed this immigrant with the love of U.S. politics all the way to Philadelphia.
    Video

    Video A Life of Fighting Back: Hillary Clinton Shatters Glass Ceiling

    Hillary Clinton made history Thursday, overcoming personal and political setbacks to become the first woman to win the presidential nomination of a major U.S. political party. If she wins in November, she will go from “first lady” to U.S. Senator from New York, to Secretary of State, to “Madam President.” Polls show Clinton is both beloved and despised. White House Correspondent Cindy Saine takes a look at the life of the woman both supporters and detractors agree is a fighter for the ages.
    Video

    Video Dutch Entrepreneurs Turn Rainwater Into Beer

    June has been recorded as one of the wettest months in more than a century in many parts of Europe. To a group of entrepreneurs in Amsterdam the rain came as a blessing, as they used the extra water to brew beer. Serginho Roosblad has more to the story.
    Video

    Video First Time Delegate’s First Day Frustrations

    With thousands of people filling the streets of Philadelphia, Pennsylvania for the 2016 Democratic National Convention, VOA’s Kane Farabaugh narrowed in on one delegate as she made her first trip to a national party convention. It was a day that was anything but routine for this United States military veteran.
    Video

    Video Commerce Thrives on US-Mexico Border

    At the Democratic Convention in Philadelphia this week, the party’s presumptive presidential nominee, Hillary Clinton, is expected to attack proposals made by her opponent, Republican presidential nominee Donald Trump, to build a wall along the U.S.-Mexico border. Last Friday, President Barack Obama hosted his Mexican counterpart, President Enrique Peña Nieto, to underscore the good relations between the two countries. VOA’s Greg Flakus reports from Tucson.
    Video

    Video Film Helps Save Ethiopian Children Thought to be Cursed

    'Omo Child' looks at effort of African man to stop killings of ‘mingi’ children
    Video

    Video London’s Financial Crown at Risk as Rivals Eye Brexit Opportunities

    By most measures, London rivals New York as the only true global financial center. But Britain’s vote to leave the European Union – so-called ‘Brexit’ – means the city could lose its right to sell services tariff-free across the bloc, risking its position as Europe’s financial headquarters. Already some banks have said they may shift operations to the mainland. Henry Ridgwell reports from London.
    Video

    Video Recycling Lifeline for Lebanon’s Last Glassblowers

    In a small Lebanese coastal town, one family is preserving a craft that stretches back millennia. The art of glass blowing was developed by Phoenicians in the region, and the Khalifehs say they are the only ones keeping the skill alive in Lebanon. But despite teaming up with an eco-entrepreneur and receiving an unexpected boost from the country’s recent trash crisis the future remains uncertain. John Owens reports from Sarafand.
    Video

    Video Migrants Continue to Risk Lives Crossing US Border from Mexico

    In his speech Thursday before the Republican National Convention, the party’s presidential candidate, Donald Trump, reiterated his proposal to build a wall along the U.S.-Mexico border if elected. Polls show a large percentage of Americans support better control of the nation's southwestern border, but as VOA’s Greg Flakus reports from the border town of Nogales in the Mexican state of Sonora, the situation faced by people trying to cross the border is already daunting.

    Special Report

    Adrift The Invisible African Diaspora

    World Currencies

    EUR
    USD
    0.9098
    JPY
    USD
    105.75
    GBP
    USD
    0.7631
    CAD
    USD
    1.3189
    INR
    USD
    67.209

    Rates may not be current.