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 Genome Initiative Urgently Works to Freeze DNA Before Species Go Extinct

Smithsonian senior research botanist Vicki Funk says ultimate goal is 'trying to get one-half of the diversity of plant life on Earth at the genus level in two years' More

Video Russia Accused of Abusing Interpol to Pursue Opponents

Report from member of British think tank says Russian extradition requests keep targets from traveling More

US Lawmakers Weigh Turkish Anti-terror Moves

Turkey’s two-pronged campaign against Islamic State militants, Kurdish PKK forces provokes mixed reactions on Capitol Hill More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Russia Accused of Abusing Interpol to Pursue Opponentsi
X
Henry Ridgwell
July 28, 2015 9:53 PM
A British pro-democracy group has accused Russia of abusing the global law enforcement agency Interpol by requesting the arrest and extradition of political opponents. A new report by the group notes such requests can mean the accused are unable to travel and are often unable to open bank accounts. VOA's Henry Ridgwell reports.
Video

Video Russia Accused of Abusing Interpol to Pursue Opponents

A British pro-democracy group has accused Russia of abusing the global law enforcement agency Interpol by requesting the arrest and extradition of political opponents. A new report by the group notes such requests can mean the accused are unable to travel and are often unable to open bank accounts. VOA's Henry Ridgwell reports.
Video

Video Genome Initiative Urgently Moves to Freeze DNA Before Species Go Extinct

Earth is in the midst of its sixth mass extinction. The last such event was caused by an asteroid 66 million years ago. It killed off the dinosaurs and practically everything else. So scientists are in a race against time to classify the estimated 11 million species alive today. So far only 2 million are described by science, and researchers are worried many will disappear before they even have a name. VOA’s Rosanne Skirble reports.
Video

Video Scientists: One-Dose Malaria Cure is Possible

Scientists have long been trying to develop an effective protection and cure for malaria - one of the deadliest diseases that affects people in tropical areas, especially children. As the World Health Organization announces plans to begin clinical trials of a promising new vaccine, scientists in South Africa report that they too are at an important threshold. George Putic reports, they are testing a compound that could be a single-dose cure for malaria.
Video

Video Special Olympics Athletes Meet International Friends

The Special Olympics are underway in Los Angeles, California, with athletes from 165 countries participating in an event that gives people with intellectual disabilities the chance to take part in an international competition. VOA's Mike O'Sullivan reports that for athletes and their families, it's also an opportunity to make new friends in an international setting.
Video

Video 'New York' Magazine Features 35 Cosby Accusers

The latest issue of 'New York' magazine features 35 women who say they were drugged and raped by film and television celebrity Bill Cosby. The women are aged from 44 to 80 and come from different walks of life and races. The magazine interviewed each of them separately, but Zlatica Hoke reports their stories are similar.
Video

Video US Calls Fight Against Human Trafficking a Must Win

The United States is promising not to give up its fight against what Secretary of State John Kerry calls the “scourge” of modern slavery. Officials released the country’s annual human trafficking report Monday – a report that’s being met with some criticism. VOA’s National Security correspondent Jeff Seldin has more from the State Department.
Video

Video Iran Nuclear Pact Wins Few New US Congressional Backers

Later this week, President Barack Obama returns from a trip to Africa to confront a U.S. Congress roiled by the nuclear accord with Iran, an agreement that has received the blessing of the U.N. Security Council. Days of intensive lobbying and testimony by top administration officials have won few new congressional supporters of the pact. VOA’s Michael Bowman reports.
Video

Video Washington DC Underground Streetcar Station to Become Arts Venue

Abandoned more than 50 years ago, the underground streetcar station in Washington D.C.’s historic DuPont Circle district is about to be reborn. The plan calls for turning the spacious underground platforms - once meant to be a transportation hub, - into a unique space for art exhibitions, presentations, concerts and even a film set. Roman Mamonov has more from beneath the streets of the U.S. capital. Joy Wagner narrates his report.
Video

Video Europe’s Twin Crises Collide in Greece as Migrant Numbers Soar

Greece has replaced Italy as the main gateway for migrants into Europe, with more than 100,000 arrivals in the first six months of 2015. Many want to move further into Europe and escape Greece’s economic crisis, but they face widespread dangers on the journey overland through the Balkans. VOA's Henry Ridgwell reports.
Video

Video Stink Intensifies as Lebanon’s Trash Crisis Continues

After the closure of a major rubbish dump a week ago, the streets of Beirut are filling up with trash. Having failed to draw up a plan B, politicians are struggling to deal with the problem. John Owens has more for VOA from Beirut.
Video

Video Paris Rolls Out Blueprint to Fight Climate Change

A U.N. climate conference in December aims to produce an ambitious agreement to fight heat-trapping greenhouse gases. But many local governments are not waiting, and have drafted their own climate action plans. That’s the case with Paris — which is getting special attention, since it’s hosting the climate summit. Lisa Bryant takes a look for VOA at the transformation of the French capital into an eco-city.
Video

Video Racially Diverse Spider-Man Takes Center Stage

Whether it’s in a comic book or on the big screen, fans have always known the man behind the Spider-Man mask as Peter Parker. But that is changing, at least in the comic book world. Marvel Comics announced that a character called Miles Morales will replace Peter Parker as Spider-Man in a new comic book series. He is half Latino, half African American, and he is quite popular among comic book fans. Correspondent Elizabeth Lee reports from Los Angeles.
Video

Video Critics of Japan Defense Policy Focus on Okinawa

In Okinawa, many locals have long complained that Tokyo places an unfair burden on the tiny island by locating most of Japan's U.S. military bases there. As Japan's government moves toward strengthening and expanding the country's defense policies, opponents of those plans are joining local protesters in Okinawa, voicing concern about where the country is headed. VOA’s Brian Padden reports from Okinawa.
Video

Video IS Uses Chemical Weapons in Syrian Attack

Islamic State militants have added a new weapon in their arsenal of fear: chemical weapons. VOA Kurdish service reporter Zana Omer was on the scene within hours of a recent attack in Hasakah, Syria, and has details of the subsequent investigation, in this report narrated by Miguel Amaya.
Video

Video Historic Symbol Is Theme of Vibrant New Show

A new exhibit in Washington is paying tribute to the American flag with a wide and eclectic selection of artwork that uses the historic symbol as its central theme. VOA’s Julie Taboh was at the DC Chamber of Commerce for the show’s opening.

VOA Blogs

World Currencies

EUR
USD
0.9043
JPY
USD
123.19
GBP
USD
0.6445
CAD
USD
1.3030
INR
USD
64.170

Rates may not be current.