Ukraine PM hails 'historic' deal with Russia

Kiev avoids "bankruptcy and social collapse" as a result of economic agreement with Moscow, PM Mykola Azarov says.

Last updated: 18 Dec 2013 19:39
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Mykola Azarov, the Ukrainian prime minister, hailed a "historic" economic agreement between his country and Russia and said that Kiev has avoided "bankruptcy and social collapse" thanks to the deal.

Azarov defined the deal, which involves Moscow to buy $15bn of Ukrainian bonds and slash natural gas prices by about one-third, as the only option for the country at a time of economic crisis.

[Moscow is] surprised by attempts to put overt pressure on the Ukrainian government, which continue despite the decisions made in Moscow.

Sergey Lavrov,  Russian FM

The settlement, reached at talks in Moscow between the Russian and Ukrainian presidents on Tuesday, came amid anti-government protests going on for over three weeks in reaction to Kiev’s decision to slash a free trade deal with the European Union.

"What would have awaited Ukraine [without the deal]? The answer is clear - bankruptcy and social collapse," Azarov told the parliament. "This would have been the New Year's present for the people of Ukraine," he added ironically.

Azarov said there was no way Ukraine could have signed the proposed Association Agreement with the EU as Kiev would have had to have accepted unfeasibly stringent International Money Fund conditions for economic reform.

But Russia has had to tap into a rainy-day fund to afford the bailout at a time when its own economy, driven by energy exports, is in trouble.

And it is not clear what it gets in return bar influence over the second most populous ex-Soviet state, whose 46-million population is a third that of Russia but whose ailing economy is less than a tenth the size.

Meanwhile, Sergei Lavrov, Russia’s foreign minister, said that Western countries continued to put "overt pressure" on the Ukraine to choose closer ties with Europe even though Kiev accepted the offer of financial assistance from Moscow.

Russia is "surprised by attempts to put overt pressure on the Ukrainian government, which continue despite the decisions made in Moscow yesterday," Lavrov said in remarks to Russia's upper house of parliament on Wednesday.

Russia-Ukraine deal is intended to help Ukraine stave off economic crisis as Moscow hopes to keep Kiev in its political and economic orbit.

Ukraine's Naftogaz energy company will pay Russia's state-owned Gazprom $268.5 per 1,000 cubic metres of natural gas, on which it is heavily dependent, instead of around $400.

Opposition on streets

The agreement could fuel protests in Kiev against Viktor Yanukovich, the Ukrainian president, who faces accusations of "selling" Ukraine to the highest bidder after spurning a trade deal with the EU and turning to Moscow for help.

Announcing the deal after talks with Yanukovich on Tuesday, Valdimir Putin, the Russian president, said Moscow was to help Ukraine through its problems as big debt repayments loom and that there had been no discussion on Kiev joining a Russia-led customs union.

Martin McCauley, an expert on Russia at the University of London, speaks to Al Jazeera on the Moscow-Kiev deal.

"I want to calm you down - we have not discussed the issue of Ukraine's accession to the customs union at all today," Putin said.

Moscow has been calling for Ukraine to join the initiative among some of the ex-Soviet countries. Belarus and Kazakhstan have declared that they would take part in the initiative.

Thousands of Ukrainians continue to brave snow and freezing temperatures in Kiev, calling for the government's removal. Opponents are demanding greater EU integration and are angry about the country's propinquity to the Kremlin.


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