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

Video Migrants Caught in No-Man's Land In French Port

The deaths of hundreds of migrants in the Mediterranean this week has only recast the spotlight on the perils of reaching 'Fortress Europe' More

Video Westgate Mall Attack Survivors Confront Painful Memories

On anniversary of terror attack, survivors discuss how they have coped with trauma they experienced that day More

New Hints That Dark Matter Exists

New evidence from International Space Station hints at existence of dark matter and dark energy More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Migrants Caught in No-Man's Land Called Calaisi
X
Lisa Bryant
September 19, 2014 5:04 PM
The deaths of hundreds of migrants in the Mediterranean this week has only recast the spotlight on the perils of reaching Europe. And for those forunate enough to reach a place like Calais, France, only find that their problems aren't over. Lisa Bryant has the story.
Video

Video Migrants Caught in No-Man's Land Called Calais

The deaths of hundreds of migrants in the Mediterranean this week has only recast the spotlight on the perils of reaching Europe. And for those forunate enough to reach a place like Calais, France, only find that their problems aren't over. Lisa Bryant has the story.
Video

Video Westgate Siege Anniversary Brings Back Painful Memories

One year after it happened, the survivors of the terror attack on Nairobi's Westgate Shopping Mall still cannot shake the images of that tragic incident. For VOA, Mohammed Yusuf tells the story of victims still waiting for the answer to the question 'how could this happen?'
Video

Video Militant Assault in Syria Displaces Thousands of Kurds

A major assault by Islamic State militants on Kurds in Syria has sent a wave of new refugees to the Turkish border, where they were stopped by Turkish border security. Turkey is already hosting about 700,000 Syrian refugees who fled the civil war between the government and the opposition. But the government in Ankara has a history of strained relations with Turkey's Kurdish minority. Zlatica Hoke reports Turkey is asking for international help.
Video

Video CERN Accelerator Back in Business

The long upgrade of the Large Hadron Collider is over. The scientific instrument responsible for the discovery of the Higgs boson -- the so-called "God particle" -- is being brought up to speed in time for this month's 60th anniversary of the European Organization for Nuclear Research, known by its French acronym CERN. Physicists hope the accelerator will help them uncover more secrets about the origins of the universe. VOA’s George Putic reports.
Video

Video Whaling Summit Votes to Uphold Ban on Japan Whale Hunt

The International Whaling Commission, meeting in Slovenia, has voted to uphold a court ruling banning Japan from hunting whales in the Antarctic Ocean. Conservationists hailed the ruling as a victory, but Tokyo says it will submit revised plans for a whale hunt in 2015. Henry Ridgwell reports from London.
Video

Video Russian Economy Reeling After New Western Sanctions

A new wave of Western sanctions is hitting Russia’s economy hard. State-owned energy firms continue to bleed profits and Russia’s national currency plunged to a new low this week after the U.S. and the European Union announced new sanctions to punish Russia's aggressive stance in eastern Ukraine. But as Mil Arcega reports, the sanctions could also prove costly for European and American companies.
Video

Video Belgian Researchers Discover Way to Block Cancer Metastasis

Cancer remains one of the deadliest diseases, despite many new methods to combat it. Modern medicine has treatments to prevent the growth of primary tumor cells. But most cancer deaths are caused by metastasis, the stage when primary tumor cells change and move to other parts of the body. A team of Belgian scientists says it has found a way to prevent that process. Zlatica Hoke has more.
Video

Video Mogadishu's Flood of Foreign Workers Leaves Somalis Out of Work

Unemployment and conflict has forced many young Somalians out of the country in search of a better life. But a newfound stability in the once-lawless nation has created hope — and jobs — which, some say, are too often being filled by foreigners. Abdulaziz Billow reports from Mogadishu.
Video

Video A Dinosaur Fit for Land and Water

Residents and tourists in Washington D.C. can now examine a life-size replica of an unusual dinosaur that lived almost a hundred million years ago in northern Africa. Scientists say studying the behemoth named Spinosaurus helps them better understand how some prehistoric animals adapted to life on land and in water. The Spinosaurus replica is on display at the National Geographic museum. VOA’s George Putic has more.
Video

Video Iraqi Kurdistan Church Helps Christian Children Cope find shelter in churches in the Kurdish capital, Irbil

In the past six weeks, tens of thousands of Iraqi Christians have been forced to flee their homes by Islamic State militants and find shelter in churches in the Kurdish capital, Irbil. Despite U.S. airstrikes in the region, the prospect of people returning home is still very low and concerns are starting to grow over the impact this is having on the displaced youth. Sebastian Meyer reports from Irbil on how one church is coping.
Video

Video NASA Picks Boeing, SpaceX to Carry Astronauts Into Space

The U.S. space agency, NASA, has chosen Boeing and SpaceX companies to build the next generation of spacecraft that will carry U.S. astronauts to the International Space Station by the year 2017. The deal with private industry enables NASA to end its dependence on Russia to send space crews into low Earth orbit and back. Zlatica Hoke has more.
Video

Video Future of Ukrainian Former President's Estate Uncertain

More than six months after Ukraine's former President Viktor Yanukovych fled revolution to Russia, authorities have yet to gain control of his palatial estate. Protesters occupy the grounds and opened it to tourists but they are also refusing to turn it over to the state. VOA's Daniel Schearf reports from Mezhigirya, just north of Kyiv.


Carnage and mayhem are part of daily life in northern Nigeria, the result of a terror campaign by the Islamist group Boko Haram. Fears are growing that Nigeria’s government may not know how to counter it, and may be making things worse. More

AppleAndroid

World Currencies

EUR
USD
0.7768
JPY
USD
108.84
GBP
USD
0.6124
CAD
USD
1.0999
INR
USD
61.042

Rates may not be current.