Posts Tagged ‘International Monetary Fund’

Separatists Build Barricades in East Ukraine — Kiev Threatens To Use Force

April 9, 2014

Ukraine: Pro-Russian militants free 56 ‘hostages’ after US and EU diplomats set up their first direct talks with Moscow and Kiev aimed at resolving the worst East-West standoff since the Cold War

A man stands in front of barricades at an entrance to the Ukrainian regional office of the Security Service in Luhansk

A man stands in front of barricades at an entrance to the Ukrainian regional office of the Security Service in Luhansk Photo: Igor Golovniov/AP

Pro-Russian separatists reinforced barricades around the state security building in the eastern Ukrainian city of Luhansk on Wednesday and called on President Vladimir Putin for help after the government warned it could use force to restore order.

But protesters were also engaged in talks to ease the standoff, which Kiev has said could provide a pretext for a Russian invasion, and lawmakers from eastern Ukraine proposed an amnesty for protesters to defuse tension.

The former KGB headquarters is one of three government buildings seized this week in eastern Ukraine by protesters demanding regional referendums on independence from Kiev, like the one in Crimea that led to its annexation by Russia.

Tensions have risen in the mainly Russian-speaking east since the overthrow of Ukraine’s Moscow-backed president and the installation of a new pro-European government.

“Of course we must ask Russia to take us in because I don’t see an alternative,” said a man dressed in camouflage who gave his name as Vasiliy and said he was the commandant of the building. “Putin help us!” he said.

Sandbags and wooden crates were piled near the entrance of the building to defend it against the police. Men with rifles could be seen through broken windows above.

Local police spokeswoman Tatyana Pogukai said protesters had found an arsenal of weapons within the building. Protesters say they have 200-300 Kalashnikov automatic rifles. She denied previous reports that hostages had been taken.

She said negotiations had been carried out overnight but the two sides had not come to an agreement.

“They won’t put down their weapons until there is agreement on a referendum,” she said.

People gather in front of a barricade at the regional administration building in Donetsk (AP)

Protesters in Donetsk, to the south, remain in control of the main regional authority building, but authorities have ended the occupation in the city of Kharkiv.

“A resolution to this crisis will be found within the next 48 hours,” Interior Minister Arsen Avakov told reporters in the capital Kiev.

“For those who want dialogue, we propose talks and a political solution. For the minority who want conflict they will get a forceful answer from the Ukrainian authorities,” he said.

Ukraine’s state security service said that 50 people had left the building in Luhansk overnight. Protesters confirmed that some had left.

Activists, many in balaclavas and masks, continued to build makeshift barricades and prepared petrol bombs.

“Those who left were not ready to stay and fight,” said Vasiliy, who said his “soldiers” would fight on until a referendum on independence from Kiev was held.

Ukraine’s government says the actions are part of a Russian-led plan to dismember the country, a charge Moscow denies.

US Secretary of State John Kerry accused Russian agents and special forces on Tuesday of stirring up separatist unrest and said Moscow could be trying to prepare for military action as it had in Crimea.

Russia denied the accusations on Wednesday and dismissed concerns over a troop buildup near the border with Ukraine in what has become the worst East-West crisis since the end of the Cold War in 1991.

“The United States and Ukraine have no reason to be worried,” the Russian Foreign Ministry said. “Russia has stated many times that it is not carrying out any unusual or unplanned activity on its territory near the border with Ukraine that would be of military significance.”

A lawmaker from the most popular political party in the east, the Party of Regions, on Wednesday said he planned to ask parliament to amnesty the protesters, following the success of a similar move to reduce tension in Kiev two months ago.

“The situation is so tense and complex that one stray word might cause a flare-up,” said Oleksandr Yefremov. “To prevent people suffering … we are proposing a draft law on an amnesty.”

Several hundred people remained camped outside the regional administration building in Donetsk manning barricades of tyres and barbed wire as the Soviet anthem played over loudspeakers.

A member of parliament who supports the Donetsk protesters said they would remain at the building until their demands for increased independence from Kiev were met.

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Russia’s President Vladimir Putin threatens to start charging Ukraine in advance for vital gas supplies

April 9, 2014

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Pro-Russian activists set their flags over the entrance to the regional administration building in Donetsk, Ukraine, Tuesday, April 8, 2014. In the city protesters dug in for their third day at the 11-story regional administration headquarters they captured on Sunday and began to declare their own parallel government. Ukrainian authorities on Tuesday reasserted control over an administration building in the country’s second-largest city of Kharkiv, 250 Km ( 155 miles) north of Donetsk, which had been seized by pro-Russian protesters, and authorities detained some dozens. (AP Photo/Efrem Lukatsky)

MOSCOW (AP) — Russia’s President Vladimir Putin threatened Wednesday to start charging Ukraine in advance for vital gas supplies — a move that could sharply hurt his neighbor, which is already on the verge of bankruptcy.

It was just the latest way Moscow is tightening the economic screws on Ukraine since its pro-Russian president Viktor Yanukovych was ousted from power in February after months of street protests.

Chairing a meeting with government ministers in his suburban residence outside Moscow, Putin said asking for advance gas payments “corresponded with the contract” between Ukraine and Russia. Still, he suggested that the state energy giant Gazprom to refrain from such drastic measures until “additional consultations” between both sides.

Russia has already eliminated a gas discount it had given Ukraine, arguing that it was tied to a lease for Russia’s Black Sea Fleet base in Crimea, a Ukrainian region that Russia annexed last month. And Ukraine has promised the International Monetary Fund that it will cut energy subsidies to residents in exchange for a bailout loan of up to $14 billion — so gas prices were set to rise 50 percent on May 1 even before the latest salvo from Putin.

Speaking in Kiev earlier, Ukrainian Energy Minister Yuri Prodan said Ukraine will pay for March deliveries of gas from Russia only after it reaches an agreement on the price. He rejected the new, much higher price that Gazprom announced earlier and said Ukraine has not pumped in any gas from Russia so far this month.

Authorities in Kiev also warned Wednesday they are prepared to use force to clear several government buildings seized by pro-Russian separatists in the east of the country.

Interior Minister Arsen Avakov said the standoff in Luhansk and the two neighboring Russian-leaning regions of Donetsk and Kharkiv must be resolved within the next two days.

“I want to repeat that there are two options: political settlement through negotiations and the use of force,” Avakov told reporters. “We are ready for both options.”

As he spoke, anti-government protesters in Luhansk erected high barricades along a thoroughfare running in front of the security service premises.

All the cities affected by the uprisings are in Ukraine’s industrial Russian-speaking heartland in the east, which has a large population of ethnic Russians and where economic and cultural ties to Russia are strong. Many residents are suspicious of government that took power in February.

In a sign of the public relations battle going on between the two nations, some Russian media — including state-run RIA Novosti — switched their description of those occupying the buildings from pro-Russian protesters to “supporters of federalization.”

Valves of gas pipe-line are seen not far from Kiev on March 4. AFP Photo

Protesters continued to occupy the headquarters of Ukraine’s Security Service in the eastern city of Luhansk, with hundreds of supporters camped outside and shouting “Putin! Putin!” overnight.

The security agency had said the separatists inside the building, armed with explosives and other weapons, were threatening hostages inside. The hostages — 56 in all —were allowed to leave the building overnight, it said. Local police disputed that claim, however, saying there had been no hostages.

Serhiy Tyhipko, a Ukrainian lawmaker associated with Yanukovych’s ousted government, urged the new authorities in Kiev not to storm the building in Luhansk but rather negotiate a peaceful resolution. He said the protesters wanted Ukraine to turn into a federal state with broad regional autonomy, not for their region to secede.

“The people are not bringing up the issue of breaking off from Ukraine and are not calling for the help of foreign countries,” Tyhipko said on his Facebook page.

But turning Ukraine into a federation is Russia’s key demand — one Ukraine’s new government has refused to discuss, calling it a precursor to a break-up.

In the eastern Ukrainian city of Donetsk, where protesters were still occupying another government building, regional governor Serhiy Taruta met with key activists to try to find a solution to the crisis.

The Donetsk activists sounded optimistic after the talks, with leading figure Denis Bulishin hailing the opportunity for dialogue but stopping short of talking about any tangible results.

The Ukrainian government and the U.S. have accused Moscow of fomenting the unrest as a pretext for another Russian military incursion similar to last month’s takeover of Crimea. Up to 40,000 Russian troops are massed along the Ukrainian border, according to NATO.

The Russian Foreign Ministry hit back at the West on Wednesday, calling for the U.S. to stop using international organizations as a means of “exacerbating tensions surrounding Ukraine.”

“The daily activity of Russian troops on national territory does not threaten the security of the U.S. or other member states of the OSCE,” it said. “Attempts to accuse Russia of a buildup of troops are unfounded.”

Poland’s Prime Minister Donald Tusk on Wednesday called on Moscow to ease tensions, saying that it is “beyond any doubt, that the country that has contributed to this conflict — Russia — is responsible for the de-escalation.”

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Maria Danilova in Kiev, Laura Mills in Moscow and Monika Scislowska in Warsaw, Poland, contributed to this report.

Ukraine Bail Out Sends Money To Russian State Banks

March 28, 2014

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Arseny Yatseniuk

Ukraine’s premier said his country was “on the edge of economic and financial bankruptcy”, but will comply with demands for drastic austerity

By

Ukraine has secured an emergency bail-out of up to $18bn (£10.9bn) from the International Monetary Fund to stave off imminent default but will see no debt relief and will be forced to slash spending amid dangerous civil conflict.

Critics say the package may be too small to stabilise the country as it spirals into depression with wafer-thin foreign reserves, and braces for a fuel shock as Russia’s Gazprom doubles the cost of energy in a move described by Washington as political harassment.

Arseny Yatseniuk, Ukraine’s premier, said his country was “on the edge of economic and financial bankruptcy”, yet vowed to comply with demands for drastic austerity – including a 50pc rise in fuel prices – even if this proved a “kamikaze” mission.

There will be no haircuts for creditors under the deal, unlike the EU-IMF formula in Greece and Cyprus. This amounts to a bail-out for Russian state banks and Western funds accused of propping up the previous regime and for vulture funds that bought Ukrainian debt cheaply for quick gain.

Tim Ash, from Standard Bank, said: “Ukraine has been the ultimate moral hazard play and it’s cavalier to expect taxpayers to cover this.”

Mr Ash said it has been obvious since 2011 that Ukraine was heading for the rocks, yet funds continued to snap up its bonds, betting that the country was “too big and geopolitically important to fail” and would always be bailed out in the end by Russia or the West.

Franklin Templeton, the global asset group, held $7.3bn of Ukrainian bonds at the end of 2013. Mark Mobius, the group’s chief, said last month: “Our belief is that Ukraine is in somewhat of a sweet spot… We believe they are going to keep friendly/good relations with Russia.”

Ashoka Mody, a former IMF negotiator, said the country screams out for debt relief, given external debt of 75pc of GDP and a collapse in exports. “It is truly staggering if they don’t push through debt restructuring, and the question is why not. I would go for very deep relief.”

The deal requires the backing of the IMF board in Washington, where Asian and Latin American members may balk at coddling creditors. Leaked transcripts of a board meeting of Greece’s rescue reveal mounting anger at the way the IMF has been used to bolster European banks. Sources close to the IMF say Ukraine’s public debt will peak at around 50pc at the end of this year, far below the danger level. “This is not high,” said one expert. “It would take a catastrophic shock to make it unsustainable.”

The IMF said the package will “unlock” up to $27bn in international aid from all quarters over the next two years. Dmitri Petrov, from Nomura, said the tough terms risk stoking the political fires as clashes continue between Ukrainian nationalists and Russian-speakers. Former premier Yulia Tymoshenko has re-entered the fray with plans to run for the presidency days after she was caught in a leaked tape saying the 8m Russians in Ukraine “must be killed with nuclear weapons”.

The economic outlook is dire. The currency has crashed 30pc since Ukraine abandoned its fixed-peg in February. While this helps to regain competitiveness – an option denied to Greece in the euro – it makes it much harder for the government and companies to cover closely-bunched loan repayments on $145bn of dollar debt this year. The current account deficit has ballooned to 9pc of GDP. The IMF said the budget deficit will hit soon 10pc of GDP (with fuel subsidies) unless action is taken.

The government is already scrambling to comply with IMF demands to halt corruption in the state energy group Naftogaz. Investigators found 42kg of gold and $4.8m of cash at the home of former energy minister Eduard Stavytsky. They are investigating $4bn of alleged corruption by the old regime in the energy industry.

The country has failed to comply with the terms of two previous IMF rescues, reflexively playing off Russia against the West to gain maximum advantage. The circumstances are entirely different after Russia’s annexation of Ukraine and its seizure of the Ukrainian navy.

The new leadership has tied its fate intimately to the Western camp, signing an association agreement and military accord with the EU last week. The bridges with Russia have been burned.

http://www.telegraph.co.uk/finance/financialcrisis/10728149/Windfall-for-hedge-funds-and-Russian-banks-as-IMF-rescues-Ukraine.html

European Union imposes initial sanctions on Russia — Lithuanian President Says Russia is Dangerous — “After Ukraine it will be Moldova”

March 7, 2014

By Associated Press

March 6, 2014 | 6:35pm

BRUSSELS — The European Union suspended talks with Russia on a wide-ranging economic pact and a visa agreement Thursday in response to its military incursion into Ukraine’s Crimean Peninsula, threatening tougher sanctions unless Moscow swiftly defuses the crisis.

The moves at an emergency EU summit came on the heels of visa and financial sanctions the Obama administration imposed on Russians and Ukrainians over the military incursion into Crimea.

EU President Herman Van Rompuy said further measures could include travel bans, asset freezes and the cancellation of an EU-Russia summit if Moscow does not quickly end its aggression and joins meaningful, multilateral talks within days to halt the crisis.

“We are in close coordination with the United States on this,” German Chancellor Angela Merkel said. “We cannot go back to business as usual” with Russia, she added.

However, the EU’s latest sanctions appeared weak compared to the U.S. ones and to what some more hawkish EU countries wanted, particularly those bordering Russia. Poland’s leader noted the resistance to penalizing Moscow remains fairly high among some members of the 28-nation bloc because of Europe’s close proximity, energy dependence and trade ties to Russia.

As the EU leaders met, the U.S. also sent six F-15 fighter jets to Lithuania to bolster air patrols over the Baltics, and a U.S. warship is now in the Black Sea to participate in long-planned exercises.

The sanctions on both sides of the Atlantic aimed to rein in Europe’s gravest geopolitical crisis in a generation, which developed swiftly again Thursday with Crimean lawmakers declaring their intention to split from Ukraine and join Russia instead and scheduling a referendum in 10 days for voters to decide the fate of the disputed peninsula.

Visiting the summit, Ukraine’s Prime Minister Arseniy Yatsenyuk branded the referendum illegitimate. “Crimea was, is, and will be an integral part of Ukraine,” he told reporters.

In Washington, President Barack Obama said the referendum would violate international law.

The EU put on ice talks on a wide-ranging economic agreement and on granting Russian citizens visa-free travel within the 28-nation bloc, a goal that Moscow has been pursuing for years.

The decision followed tough negotiations among member states divided over how to react to the Russian aggression.

“Not everyone will be satisfied with the decision, but I should say that we did much more together than one could have expected several hours ago,” said Polish Prime Minister Donald Tusk.

Tusk said there was “no enthusiasm” in Europe for sanctioning Russia, but he called the moves inevitable, given the country’s blatant violation of international rights by its actions in Crimea.

British Prime Minister David Cameron agreed, while acknowledging that stiffer sanctions would not only hurt Russia.

“Of course there are consequences for Britain if you look at financial services. Of course there are consequences for France if you look at defense. Of course there are consequences for some European countries if you look at energy,” he said.

But he said the EU had to take tough action to counter what he called “the most serious crisis in Europe this century.”

“If you are going to stand for something, if you’re going to stand up to aggression, you have to look at, you have to consider, all and every one of those areas.”

Merkel said if Russia fails to stop its destabilizing measures in Ukraine, “then we will see a far-reaching change in our relationship with Russia, which can also include a broad array of economic measures.”

“We don’t wish for that to happen,” she added.

Russia is Europe’s third-largest trading partner and its biggest gas and oil supplier. EU exports to Russia in 2012 totaled 123 billion euros ($170 billion), and European banks have about 200 billion euros in outstanding loans to Russia.

The Obama administration restrictions target a number of unidentified people and entities accused of threatening Ukraine’s sovereignty and borders.

And like the raft of EU measures, the U.S. sanctions are flexible: The penalties will increase if Russia continues its aggressive policies but also could be ratcheted down if Moscow pulls back its troops in Crimea and recognizes Ukraine’s new government.

The United States had already suspended talks on an investment treaty and threatened further steps. NATO on Wednesday suspended most of its meetings with Russian officials, halting military cooperation and deciding to review all aspects of its relationship with Moscow.

In a symbolic victory in the tussle over Ukraine’s future allegiances, the EU leaders agreed to swiftly sign a wide-ranging political association agreement as hoped for by Kiev’s new government, cementing closer ties with Europe.

Merkel said the agreement will now be signed “very fast,” and Cameron called it a “significant decision.” Leaders hope to sign the deal even before the Ukrainian elections planned for May.

Ukraine’s ousted President Viktor Yanukovych in November walked away from signing that agreement and chose a bailout loan package from Russia instead, which fuelled the protests that eventually led to the ouster of his government.

A free-trade part of the agreement won’t be signed yet, but the EU decided to unilaterally grant Ukraine the financial advantages deriving from it to help boost its ailing economy until the full deal can be signed.

The EU proposed a $15 billion aid package for Ukraine on Wednesday. The U.S. has pledged $1 billion and is working on a more comprehensive package, in coordination with the EU and the International Monetary Fund as Kiev is running out of cash.

Lithuanian President Dalia Grybauskaite underscored fears among Moscow’s closest neighbors as she entered the summit.

“Russia today is dangerous,” she insisted. “After Ukraine will be Moldova, and after Moldova will be different countries.”

 

U.S. and Russia Discuss Ukraine Crisis as Europe Offers Kiev $15 Billion, U.S. Pledges at Least $1 Billion.

March 5, 2014

By and MARCH

John Kerry and Hollande in Paris

French president Francois Hollande and John Kerry talk together in Paris. Photograph: Alain Jocard/AP

PARIS — An effort by the United States to broker the first face-to-face diplomatic meeting between Russia and Ukraine over the Crimea confrontation failed on Wednesday, but both Secretary of State John Kerry and his Russian counterpart said there would be more discussions in the days ahead. Their remarks left open the possibility of progress toward a solution to de-escalate an East-West crisis reminiscent of the Cold War.

The Russian foreign minister, Sergey V. Lavrov, spoke to reporters at France’s Foreign Ministry after conferring with Mr. Kerry in what Mr. Lavrov called “a long day of discussions on Ukraine.” But American efforts to arrange a direct meeting between Mr. Lavrov and the acting Ukrainian foreign minister, Andrii Deshchytsia — who was in the same building but not the same room — did not happen.

That non-meeting reflected the tensions over Russia’s refusal to recognize the interim government in Kiev. Asked if he had met his Ukrainian counterpart, Mr. Lavrov said: “Who is it? I didn’t see anyone.” Mr. Deshchytsia, asked by reporters why he and Mr. Lavrov had not met, said: “Ask Lavrov.”

 Later at a news conference, Mr. Kerry said that he had “zero expectation” that the Russian and Ukrainian foreign ministers would meet but described his discussions with Mr. Lavrov as thorough and extensive. He reiterated the Obama administration’s view that Russia’s military seizure of the Crimea Peninsula was beyond the bounds of international law.

“We initiated a process today that we hope will eventually lead to de-escalation,” Mr. Kerry said.

He told reporters that he and Mr. Lavrov would meet again in Rome on Thursday and that they “both have thoughts to take back to our capitals and respective bosses.”

The swirl of frenetic diplomacy came as the European Union added a significant financial underpinning to the struggling Ukraine government on Wednesday in the midst of the crisis with Russia over Ukraine’s future, offering aid worth as much as $15 billion over the next two years.

The offer came atop $1 billion in American loan guarantees to ease Ukraine’s economic transition, announced by Mr. Kerry on Tuesday in Kiev, where he was visiting to reassure the interim Ukraine government and challenge Russia. Mr. Kerry and Mr. Deschchytsia then flew to Paris together.

Russia regards the the interim government in Kiev, which took power after President Viktor F. Yanukovych fled last month, as illegitimate.

Mr. Lavrov told reporters that he and Mr. Kerry had agreed to continue discussions in the coming days to come “to see how best we can help stabilize, normalize the situation and overcome the crisis. The discussions will continue and that’s it.”

Mr. Lavrov insisted earlier Wednesday that Russia had no control over “self-defense forces” in Crimea, which Russian troops have effectively occupied, surrounding and neutralizing the thin Ukrainian military presence there.

The standoff in Crimea, and the larger struggle over Ukraine, the former Soviet republic that is deeply intertwined with Russia economically, are at the heart of these diplomatic and financial maneuvers.

The Russians have defended their actions in Crimea as a response to a request for aid from local citizens and from the ousted president, Viktor F. Yanukovych. The Russians say that Mr. Yanukovych, for all his faults, remains the legitimate president of Ukraine, while the Americans say that Mr. Yanukovych, by fleeing to Russia, lost his legitimacy and opened the way to a new interim government ratified by Parliament.

The offers of loans are crucial, because Ukraine is in dire economic shape, with a promised Russian loan of $15 billion in abeyance since the ouster of Mr. Yanukovych and Russia’s decision on Tuesday to cancel a large discount on natural gas supplies to Ukraine starting on April 1.

Ukrainian officials have said that they need $35 billion in new loans and credits over the next two years to avoid default.

A team from the International Monetary Fund is in Kiev to study the books and consider a stabilization loan. The fund is expected to demand difficult changes, including the reduction of lavish subsidies on gas prices, so the American and European money is intended in part to help cushion the blow to Ukrainian voters before new elections in May.

The American and European offers are also intended to answer political criticism in Washington and some European countries that the West is not doing enough to support Ukraine in the face of Russian aggression.

European Union leaders will meet on Thursday in Brussels to consider sanctions against Russia for its actions in Ukraine. The loan announcement on Wednesday came from José Manuel Barroso, the president of the European Commission, the union’s executive arm. He said that the offer of 11 billion euros “over the next couple of years” included 1.6 billion euros, or about $2.2 billion, in loans and 1.4 billion euros in grants, as well as 3 billion euros in new credit from the European Investment Bank through 2016.

He also promised efforts with the European Bank for Reconstruction and Development, where the European Union is a majority shareholder, to free up another 5 billion euros and said the European Commission would mobilize 250 million euros to leverage as much as 3.5 billion euros in loans from investment projects.

But Mr. Barroso was vague on the details, indicating a rapid effort to come up with an offer that could come close to matching the original Russian one. He said he would discuss details on Thursday with Ukraine’s interim prime minister, Arseniy P. Yatsenyuk, who will be attending the emergency summit of leaders.

The European Union also announced in a statement that it is freezing the financial assets in Europe of 18 people held responsible of misusing state funds in Ukraine. The identity of those targeted was withheld pending the official publication in the EU’s legal journal Thursday, at which point the sanctions will be effective for the coming 12 months.

In Kiev, Mr. Yatsenyuk said that Russia’s deployment of forces is having an “extremely negative” impact on the country’s already shaky economy.

“The Russian aggression on Ukraine’s territory is having political and economic consequences,” he said in remarks broadcast on television at the start of a government meeting. “The presence of the Russian military on Ukraine’s territory is having an extremely negative effect on Ukraine’s economy.”

But there is no indication that Russia has any intention of releasing its grip on Crimea, the headquarters of the Russian Black Sea Fleet and an important southern port for the Russian military. Russian troops in Crimea, still in uniforms without insignia, continue to surround all key Ukrainian military facilities. Most of the Ukrainians have resisted calls to hand over their weapons and leave their bases, where they are effectively imprisoned.

In Crimea on Wednesday, 10 to 15 unidentified armed men threatened the United Nations special envoy, Robert Serry, as he departed a meeting at a naval facility, ordering him to go to the airport and leave the peninsula, the deputy secretary-general, Jan Eliasson, told reporters by telephone. Mr. Serry later left by plane.

There were other reports on Wednesday that Russian troops had seized part of a Ukrainian missile defense unit in Yevpatoria, on the western coast of Crimea, but a local spokesman for Ukraine’s Defense Ministry told news agencies that the command post and control center of the base remain under Ukrainian control.

In the north of the Crimean Peninsula on the isthmus near the Ukrainian mainland, northwest of Armyansk, Russian troops with 10 large trucks have set up a roadblock and are checking documents and cars. Two Russian flags fly over the roadblock and journalists are being told to keep away.

In Donetsk, in the east of the country, where Russian speakers predominate, pro-Kremlin demonstrators calling for greater independence from Kiev overcame riot police and poured into the regional administration building on Wednesday evening, retaking the building for a second time this week in a persistent tug-of-war with local police. Later in the evening, rival demonstrations in Donetsk between pro-Moscow and pro-Kiev groups erupted into brawls that left several people injured.

The confrontation in Donetsk came after Sergey Taruta, a billionaire businessman from the region who was recently appointed as the new governor, arrived Tuesday evening. Mr. Taruta signaled that the police and the local government would resist pro-Russian activists calling for Donetsk to secede from Ukraine.

Donetsk is one of several cities in eastern Ukraine where pro-Russian protests erupted on Saturday. Demonstrators led by Pavel Gubarev, founder of the People’s Militia of Donbass, who declared himself “people’s governor,” have been ensconced in the regional administration building, demanding that relations with Kiev be severed and that control over the police and security forces be placed in their hands.

Mr. Lavrov, the Russian foreign minister, did not attend a meeting in Paris on Ukraine’s security called by signatories to the Budapest Memorandum, a treaty that was signed after Ukraine agreed in 1994 to give up the nuclear weapons it inherited from the Soviet Union. The accord, formed by the United States, United Kingdom and Russia, was designed to provide Ukraine a kind of reassurance about security, but no guarantee.

Mr. Lavrov’s attendance would have provided an opportunity for the Ukrainian and Russian foreign ministers to talk directly, a dialogue that the Ukrainian side said on Wednesday it is now ready for and which Britain and the United States had been trying to facilitate.

As the session began, Mr. Kerry sat at a U-shaped table along with the British foreign secretary, William Hague, and Andrii Deshchytsia, the acting Ukrainian foreign minister, who flew to Paris Tuesday night on Mr. Kerry’s plane. There was not an empty chair set aside for Mr. Lavrov, but there might as well have been. “Regrettably,” Mr. Kerry said at the start of the session, the group was “missing one member.”

“We will make every diplomatic effort today to bring Russia and Ukraine in direct contact at the ministerial level,” Mr. Hague added. “We will try to create other opportunities later today.”

Significantly, Mr. Deshchytsia said he was prepared to have “consultations with Russia, bilaterally and multilaterally.”

Driving his point home, Mr. Kerry then spoke again and read two paragraphs from the Budapest memorandum that noted that the signatories agreed to “refrain from the threat or use of force against the territorial integrity or political independence of Ukraine” and also agreed not to engage in “economic coercion.”

“So there are very clear legal obligations that are at risk in this,” Mr. Kerry added.

The French foreign minister, Laurent Fabius, said that European Union leaders holding a crisis meeting on Ukraine on Thursday could impose sanctions on Russia if there was no “de-escalation” by then, echoing earlier comments on Tuesday by the Polish foreign minister, Radoslaw Sikorski. Mr. Fabius told French television that measures could include restrictions on visas, on the assets of individuals and a review of existing discussions on economic ties with Russia.

Germany has been pressing for dialogue, both directly with Russia and through the Organization for Security and Cooperation in Europe, the 57-member group of which both Ukraine and Russia are members. Mr. Fabius said that France had jointly elaborated a “crisis exit” plan with Germany. Chancellor Angela Merkel has been more reticent than French officials in publicly raising the threat of sanctions on Russia.

The O.S.C.E. announced that at Ukraine’s request it had sent a team of 35 unarmed military personnel to Crimea to investigate and assess the situation there. “They will not be contented with assurances that these people are volunteers, who bought their uniforms in a shop,” Polish Defense Minister Tomasz Siemoniak said. The hope is to learn “who is in power there and conclusions the O.S.C.E. should draw from that.”

In an awkward bit of timing, just as European leaders are considering sanctions on Russia, a French shipbuilder announced the test sail of a military ship France agreed to sell Russia in 2011. The sale was controversial at the time and involves a transport warship that would improve Russia’s ability to deploy troops, tanks and helicopters. France says it has no intention of scrapping existing defense contracts.

Michael R. Gordon reported from Paris, and Steven Erlanger from Kiev, Ukraine. Reporting was contributed by Dan Bilefsky from Paris; Andrew Roth from Donetsk, Ukraine; Alison Smale and Patrick Reevell  from Armyansk, Ukraine, and Somini Sengupta and Rick Gladstone from New York.

E.U. to Offer Aid to Ukraine as Russia and U.S. Set to Meet

March 5, 2014

By 
The New York Times

KIEV, Ukraine — In the continuing Western effort to support the new government in Ukraine, the European Union said on Wednesday that it would offer an aid package to Ukraine worth as much as $15 billion over the next two years.

The offer comes on top of the $1 billion in American loan guarantees to ease Ukraine’s economic transition announced here on Tuesday by Secretary of State John Kerry.

Mr. Kerry is scheduled to meet later on Wednesday in Paris with his Russian counterpart, Sergey V. Lavrov, who insisted earlier in Madrid that Russia had no control over “self-defense forces” in Crimea, which Russian troops have effectively occupied, surrounding and neutralizing the thin Ukrainian military presence there.

The standoff in Crimea, and the larger struggle over the future of Ukraine, are at the heart of these diplomatic and financial maneuvers.

In Crimea, Russian troops, still in uniforms without insignia, continue to surround all key Ukrainian military facilities. Credit Zurab Kurtsikidze/European Pressphoto Agency

The Russians regard the Western-leaning government in Kiev as illegitimate, while the Americans have embraced it. The Russians defend their actions in Crimea as a response to a request for aid from local citizens and from the ousted president, Viktor F. Yanukovych. The Russians say that Mr. Yanukovych, for all his faults, remains the legitimate president of Ukraine, while the Americans say that Mr. Yanukovych, by fleeing to Russia, lost his legitimacy and opened the way to a new interim government ratified by Parliament.

The offers of loans are crucial, because Ukraine is in dire economic shape, with a promised Russian loan of $15 billion in abeyance since the ouster of Mr. Yanukovych and Russia’s decision on Tuesday to cancel a large discount on natural gas supplies to Ukraine starting on April 1.

Ukrainian officials have said that they need $35 billion in new loans and credits over the next two years to avoid default.

A team from the International Monetary Fund is in Kiev to study the books and consider a stabilization loan. The fund is expected to demand difficult changes, including the reduction of lavish subsidies on gas prices, so the American and European money is intended in part to help cushion the blow to Ukrainian voters before new elections in May.

The American and European offers are also intended to answer political criticism in Washington and some European countries that the West is not doing enough to support Ukraine in the face of Russian aggression.

European Union leaders will meet on Thursday in Brussels to consider sanctions against Russia for its actions in Ukraine. The loan announcement on Wednesday came from José Manuel Barroso, the president of the European Commission, the union’s executive arm. He said that the offer of 11 billion euros “over the next couple of years” included 1.6 billion euros, or about $2.2 billion, in loans and 1.4 billion euros in grants, as well as 3 billion euros in new credit from the European Investment Bank through 2016.

He also promised efforts with the European Bank for Reconstruction and Development, where the European Union is a majority shareholder, to free up another 5 billion euros and said the European Commission would mobilize 250 million euros to leverage as much as 3.5 billion euros in loans from investment projects.

But Mr. Barroso was vague on the details, indicating a rapid effort to come up with an offer that could come close to matching the original Russian one. He said he would discuss details on Thursday with Ukraine’s interim prime minister, Arseniy P. Yatsenyuk, who will be attending the emergency summit of leaders.

The European Union also announced in a statement that it is freezing the financial assets in Europe of 18 people held responsible of misusing state funds in Ukraine. The identity of those targeted was withheld pending the official publication in the EU’s legal journal Thursday, at which point the sanctions will be effective for the coming 12 months.

In Kiev, Mr. Yatsenyuk said that Russia’s deployment of forces is having an “extremely negative” impact on the country’s already shaky economy.

“The Russian aggression on Ukraine’s territory is having political and economic consequences,” he said in remarks broadcast on television at the start of a government meeting. “The presence of the Russian military on Ukraine’s territory is having an extremely negative effect on Ukraine’s economy.”

With more diplomatic wrangling in the cards, the Americans are pressing for international observers from the Organization for Security and Cooperation in Europe, of which Russia is a member, to be sent to Crimea. The idea is to investigate whether threats to Russian-speaking citizens there are significant and to provide a reason for Russian troops to return to their barracks.

But there is no indication that Russia has any intention of releasing its grip on Crimea, the headquarters of the Russian Black Sea Fleet and an important southern port for the Russian military. Russian troops in Crimea, still in uniforms without insignia, continue to surround all key Ukrainian military facilities. Most of the Ukrainians have resisted calls to hand over their weapons and leave their bases, where they are effectively imprisoned.

There were reports on Wednesday that Russian troops had seized part of a Ukrainian missile defense unit in Yevpatoria, on the western coast of Crimea, but a local spokesman for Ukraine’s Defense Ministry told news agencies that the command post and control center of the base remain under Ukrainian control.

In the north of the Crimean Peninsula on the isthmus near the Ukrainian mainland, northwest of Armyansk, Russian troops with 10 large trucks have set up a roadblock and are checking documents and cars. Two Russian flags fly over the roadblock and journalists are being told to keep away.

In Donetsk, in the east of the country, where Russian speakers predominate, police officers citing a bomb threat evicted hundreds of pro-Russian protesters from a regional Parliament building, returning it to Ukrainian police control for the first time since it was seized on Monday. Shortly after the protesters were evicted from the building, the Ukrainian flag was hoisted and a Russian flag that had flown there since the building’s seizure was removed.

A police official denied that officers had removed the flag, saying that the police “stay out of politics,” and adding that officers had found an antipersonnel mine in the building but did not know who had put it there.

The eviction came as Sergey Taruta, a billionaire businessman from the region who was recently appointed as the new governor, arrived in Donetsk Tuesday evening, and appeared to signal that the police and the local government had begun to actively resist pro-Russian activists calling for Donetsk to secede from Ukraine.

Donetsk is one of several cities in eastern Ukraine where pro-Russian protests erupted on Saturday. Demonstrators led by Pavel Gubarev, founder of the People’s Militia of Donbass, who declared himself “people’s governor,” have been ensconced in the regional administration building, demanding that relations with Kiev be severed and that control over the police and security forces be placed in their hands.

Mr. Lavrov, the Russian foreign minister, did not attend a meeting in Paris on Ukraine’s security called by signatories to the Budapest Memorandum, a treaty that was signed after Ukraine agreed in 1994 to give up the nuclear weapons it inherited from the Soviet Union. The accord, formed by the United States, United Kingdom and Russia, was designed to provide Ukraine a kind of reassurance about security, but no guarantee.

Mr. Lavrov’s attendance would have provided an opportunity for the Ukrainian and Russian foreign ministers to talk directly, a dialogue that the Ukrainian side said on Wednesday it is now ready for and which Britain and the United States are trying to facilitate.

As the session began, Mr. Kerry sat at a U-shaped table along with the British foreign secretary, William Hague, and Andrii Deshchytsia, the acting Ukrainian foreign minister, who flew to Paris Tuesday night on Mr. Kerry’s plane. There was not an empty chair set aside for Mr. Lavrov, but there might as well have been. “Regrettably,” Mr. Kerry said at the start of the session, the group was “missing one member.”

“We will make every diplomatic effort today to bring Russia and Ukraine in direct contact at the ministerial level,” Mr. Hague added. “We will try to create other opportunities later today.”

Significantly, Mr. Deshchytsia said he was prepared to have “consultations with Russia, bilaterally and multilaterally.”

Driving his point home, Mr. Kerry then spoke again and read two paragraphs from the Budapest memorandum that noted that the signatories agreed to “refrain from the threat or use of force against the territorial integrity or political independence of Ukraine” and also agreed not to engage in “economic coercion.”

“So there are very clear legal obligations that are at risk in this,” Mr. Kerry added.

The French foreign minister, Laurent Fabius, said that European Union leaders holding a crisis meeting on Ukraine on Thursday could impose sanctions on Russia if there was no “de-escalation” by then, echoing earlier comments on Tuesday by the Polish foreign minister, Radoslaw Sikorski. Mr. Fabius told French television that measures could include restrictions on visas, on the assets of individuals and a review of existing discussions on economic ties with Russia.

Germany has been pressing for dialogue, both directly with Russia and through the Organization for Security and Cooperation in Europe. Mr. Fabius said that France had jointly elaborated a “crisis exit” plan with Germany. Chancellor Angela Merkel has been more reticent than French officials in publicly raising the threat of sanctions on Russia.

The O.S.C.E. announced that at Ukraine’s request it had sent a team of 35 unarmed military personnel to Crimea to investigate and assess the situation there. “They will not be contented with assurances that these people are volunteers, who bought their uniforms in a shop,” Polish Defense Minister Tomasz Siemoniak said. The hope is to learn “who is in power there and conclusions the OSCE should draw from that.”

In an ironic bit of timing, just as European leaders are considering sanctions on Russia, a French shipbuilder announced the test sail of a military ship France agreed to sell Russia in 2011. The sale was controversial at the time and involves a transport warship that would improve Russia’s ability to deploy troops, tanks and helicopters. France says it has no intention of scrapping existing defense contracts.

Michael R. Gordon and Dan Bilefsky contributed from Paris; Andrew Roth from Donetsk, Ukraine; and Alison Smale and Patrick Reevell  from Armyansk

U.S., Europe Threaten to Punish Putin — Foreign Ministers Go To Kiev — Russian Military Now In “Occupation” of Crimea

March 3, 2014

By Jay Solomon, Carol E. Lee and Stephen Fidler
The Wall Street Journal

The U.S. and its European allies vowed Sunday to isolate Russian President Vladimir Putin and punish his nation’s economy, demanding he withdraw what they called an occupation force from Ukraine’s Crimean region.

Washington began canceling joint economic and trade initiatives with Moscow, including preparations for the summit of the Group of Eight leading nations scheduled to be held in Sochi, Russia, in June.

Senior U.S. officials said the administration was also beginning discussions with Congress on implementing targeted economic and financial sanctions on Russian companies and leaders if the Kremlin didn’t begin pulling back from Crimea.

“Russian forces now have complete operational control of the Crimean peninsula, some 6,000-plus airborne and naval forces, with considerable materiel,” a senior official said. “There is no question that they are in an occupation position in Crimea, that they are flying in reinforcements, and they are settling in.”

Officials in Washington and around Europe were searching for penalties to impose on Moscow, while acknowledging military intervention wasn’t among the possibilities.

Still, the officials contended that the weakening of Russia’s economy and the sagging value of its currency, the ruble, were Mr. Putin’s Achilles’ heel.

“We are looking at a broad menu of options to curtail our trade and economic relationship” with Russia, said a senior U.S. official Sunday night. “This will have an enormous cost for the Russian economy.”

Late Sunday, members of the Group of Seven leading nations issued a joint statement condemning Russia’s “clear violation of the sovereignty and territorial integrity of Ukraine” and said they would suspend their participation in activities associated with the preparation of the G-8 summit, “until the environment comes back where the G-8 is able to have meaningful discussion.”

G-7 finance ministers, meanwhile, stressed their commitment to providing strong financial backing to Ukraine.

In Moscow, there was skepticism that the Western reaction would amount to much.

“They talk and talk, and then they’ll stop,” Oleg Panteleyev,  a member of Russia’s upper house of parliament, said Saturday, noting that the West had made threats that came to little when Russia waged wars in the past in Chechnya in the early 2000s and Georgia in 2008.

The State Department said Secretary of State John Kerry  would visit the Ukrainian capital of Kiev on Tuesday to show support for the interim government and help devise ways to quickly bolster its dwindling finances.

On Sunday, U.K. Foreign Secretary William Hague arrived in Kiev to meet the new Ukrainian authorities, make clear Britain’s support and urge continued restraint. The European Union’s foreign-policy chief, Catherine Ashton, heads to Kiev on Wednesday as the EU continues to work to put together an assistance package.

Ukrainian soldiers guarded the gate of an infantry base in Perevalnoe in Crimea on Sunday after Russia’s military intervention in Ukraine.  Darko Vojinovic/Associated Press

The U.S. is fashioning a short-term financial bailout for Ukraine that could include $1 billion in loan guarantees from Washington and broader support for an International Monetary Fund package, said senior U.S. officials.

American and European officials, despite the growing confrontation with Moscow, also offered the Kremlin a strategy that would allow Mr. Putin to pull back some 6,000 troops from Ukraine while also safeguarding Russia’s military assets in the country and the large population of Russian speakers.

U.S. officials said they were particularly discussing with Russia and European governments the possibility of observers from the United Nations and Organization for Security and Cooperation in Europe being deployed in eastern Ukraine and Crimea.

Ukrainians protested at the Russian Embassy in London on Sunday.  Associated Press

These monitors would make sure the rights of ethnic Russians and Russian speakers were protected as Kiev forms a new government following the overthrow of pro-Russian President Viktor Yanukovych   in late February.

President Barack Obama specifically raised this issue in the 90-minute phone call he had with Mr. Putin on Saturday, senior U.S. officials said.

“Putin wouldn’t shut the door on this option,” said one American diplomat briefed on the call.

U.S. diplomats and defense officials said there were no plans for Washington to intervene militarily in Ukraine.

“We are looking to de-escalate this,” said the senior U.S. official.

The U.S. and Europe will face challenges in seeking to use diplomacy and financial pressure to rein in Mr. Putin, U.S. and European officials said.

American trade with Russia accounts for just 1% of total U.S. trade, and many European governments, particularly Germany, appeared reluctant over the weekend to impose any broad economic sanctions on Moscow.

Senior U.S. officials on Sunday said Mr. Obama was committed to employing a campaign of targeted financial sanctions against Russian energy companies, banks and government leaders if Mr. Putin doesn’t reverse course.

These measures, which ban the designated parties from using the U.S. financial system, have been enormously successful in weakening Iran’s economy over the past five years.

A second senior U.S. official said the White House has already been discussing such measures with Congress to gain certain legislative powers.

“Part of it depends on how things go, how events unfold in the next few days,” said the official. “In other words, the more it escalates the more our response will escalate.”

Markets in Asia fell in early trading Monday amid the crisis, with Japan down 2%. In the U.S., stock futures fell 1%.

Many members of Congress expressed outrage over the weekend about the Russian invasion and demanded a harsh American response.

“In hindsight…it’s important to learn from the errors of the past few years,” Sen. Marco Rubio (R., Fla.) told NBC News. “[The Russians] aren’t interested in building an international norm…This is a government that lies as a matter of course.”

Russia joined the World Trade Organization in August 2012, a move that triggered the U.S. to pass legislation conveying permanent normal trade relations. But Congress passed the trade-relations bill in combination with a law that allows the U.S. to punish suspected human-rights violators in Russia, a move that angered Moscow and led to a ban on U.S. citizens adopting Russian children.

The Obama administration hasn’t expanded the Magnitsky list of human-rights suspects since its debut in 2013, leading to criticism from U.S. senators who sponsored the bill. State Department officials have said this year that the administration is considering expanding the list.

Many European governments, however, appeared split over how to react to Moscow’s military intervention in what could be the worst breach in East-West relations since the Cold War.

German Foreign Minister Frank-Walter Steinmeier said the answer lay in Ukraine and Russia coming together to discuss their differences diplomatically. But governments that were formerly in the Soviet orbit were more anxious and demanded tougher action.

Rolf Mützenich, a senior parliamentary figure of the Social Democrats, junior partners in Chancellor Angela Merkel‘s coalition, said: “Sanctions are currently not the right option. We must keep all channels of communications open.”

He said Ukraine’s proposed restrictions on the use of the Russian language had “of course contributed to an escalation of the situation. This has not been a one-sided process.”

Polish Prime Minister Donald Tusk said Sunday that the conflict between Russia and Ukraine could spark a war, which the global community should prevent by putting “hard pressure” on Moscow.

“It’s a difficult moment in our history,” he said. “It’s not just a dramatic situation that might be solved with this or that initiative. This is a serious crisis that can weigh on the history of Poland, Ukraine and Europe.”

An early casualty is likely to be the G-8 summit in Sochi, the site of Mr. Putin’s $52 billion investment in the Winter Olympics. Mr. Obama said Saturday that U.S. officials would stop work on the meeting and other countries followed suit.

That meeting seems unlikely to go ahead—though the other seven leaders might pointedly meet without their Russian counterpart. But there are divisions over whether, as Mr. Kerry hinted in a U.S. television talk show Sunday, Russia should be ousted from the grouping.

Germany’s Mr. Steinmeier told ARD television: “I’m really with those who say that the G-8 is the only format in which we from the West can still directly speak with Russia.”

The chill in relations is likely to linger longer than the frisson that followed Russia’s invasion of Georgia in August 2008. Ukraine, larger and more important, borders directly on the North Atlantic Treaty Organization and the European Union. Russia’s actions in Ukraine are also widely seen as unprovoked—whereas many governments believe Georgian leader Mikheil Saakashvili was at least partly to blame in 2008.

On the security front, NATO is likely to suspend some cooperation with Russia, Western officials said. Regular meetings of the NATO-Russia Council, and other areas of cooperation, such as land-mine clearance, might be halted. Some symbolic shifts of military personnel and equipment, for example to an air base in Romania, might ensue, along with movement of U.S. ships into the Black Sea. NATO air patrols near the Russian border could be stepped up. But no such measures were announced after NATO’s meeting on Sunday, which called for international observers to be sent to Crimea.

Less likely, allies also have the option of poking Mr. Putin by offering Georgia a Membership Action Plan—a next step toward membership. But that would likely meet resistance in Berlin and elsewhere.

EU foreign ministers are set to meet in emergency session Monday to discuss Ukraine. They could combine financial and visa restrictions on Russians, with aid for Ukraine. But it was unclear Sunday over what issues the 28 nations could agree—and there was caution among Germany and others about pumping large sums into Kiev, given the current uncertainty.

Write to Jay Solomon at jay.solomon@wsj.com, Carol E. Lee at carol.lee@wsj.com and Stephen Fidler at stephen.fidler@wsj.com

International Monetary Fund Fact Finding Team To Go To Ukraine Next Week To Assess Needs

February 27, 2014

.

Christine Lagarde.

Ms. Christine Lagarde, Managing Director of the International Monetary Fund (IMF)

By Anna Yukhananov

WASHINGTON (Reuters) – The International Monetary Fund on Thursday said it would send a fact-finding team to Ukraine next week in response to Kiev’s request for support after the ouster of President Viktor Yanukovich.

IMF Managing Director Christine Lagarde said the IMF and its international partners were discussing how to help Ukraine, which says it needs $35 billion over two years to avoid bankruptcy.

German Foreign Minister Frank-Walter Steinmeier will visit the Washington-based IMF on Friday to discuss Ukraine, IMF spokesman Gerry Rice said.

The IMF team being sent to Kiev will have preliminary talks with authorities there, Lagarde said.

“This will enable the IMF to make its usual technical, independent assessment of the economic situation in Ukraine and, at the same time, begin to discuss with the authorities the policy reforms that could form the basis of a Fund-supported program,” Lagarde said in a statement.

Rice said it would be premature to specify what conditions Ukraine would be required to follow in order to get an IMF bailout, or how much money the IMF would be prepared to give.

“Broadly, we would expect that the main elements of that Article 4 would remain valid,” he told reporters, referring to the IMF’s last analysis of Ukraine’s economy in October.

In that analysis, the Fund urged Ukraine to raise gas prices for domestic consumers and introduce a flexible exchange rate for the hryvnia currency – both unpopular steps previously rejected by the Kiev government.

The key question is whether Ukraine’s new leaders are more likely to agree to difficult economic changes than the former leaders. Rice declined to comment on how Ukraine’s political situation may affect the IMF’s conditions.

“Obviously that’s a question for the Ukrainian authorities I think, more than for me,” he said. “Of course the ownership of the program, the commitment to the program, the capacity to implement the program, are all considerations that we take into account.”

The IMF’s team next week will be led by Nikolay Gueorguiev, the deputy head of the Fund’s European Department. The head of that department, Reza Moghadam, will also join at some point, Rice said.

(Reporting by Anna Yukhananov; Editing by Chizu Nomiyama)

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Looming economic disaster, infighting among Ukrainians — Lawmakers now face huge task of rebuilding their collapsed government

February 25, 2014

By  
The New York Times

KIEV, Ukraine — Struggling to reach a deal to form a new majority coalition in Parliament, and under excruciating pressure because of a looming economic disaster, the Ukrainian lawmakers temporarily running the country on Tuesday delayed until Thursday the naming of an acting prime minister and a provisional government.

The delay underscored the extreme difficulty that lawmakers now face in rebuilding the collapsed government left behind when President Viktor F. Yanukovych fled Kiev on Saturday and was removed from power in a vote supported by some members of his own party.

The three main opposition parties, which share little in common politically, have been in fierce negotiations, not just among themselves, but also with civic activists and other groups representing the many constituencies involved in Ukraine’s three months of civic uprising.

Arseniy P. Yatsenyuk, the leader in Parliament of the Fatherland Party and a leading contender to serve as acting prime minister, pleaded with colleagues to swiftly reach an agreement on the designation of an interim government, which is needed to formally request emergency economic assistance from the International Monetary Fund.

Ukrainians in Kiev on Monday lit candles and placed flowers in memory of antigovernment demonstrators who were killed last week in clashes with the police. Credit Uriel Sinai for The New York Times

 

“The deadline is Thursday, and I urge all democratic parties and all democratic persons and all democratic M.P.’s urgently to finalize the deal on the coalition,” Mr. Yatsenyuk told reporters outside the Parliament chamber. “We need urgently to hammer out this deal and to form the new government who is to be in charge of the country.”

“It’s not about the personalities,” Mr. Yatsenyuk added. “This is about the responsibility. You know to be in this government is to commit political suicide, and we need to be very frank and open.”

A $15 billion bailout package secured by Mr. Yanukovych from Russia in December has been suspended, and Ukraine is now hurtling toward default. The value of the currency, the hryvnia, has fallen sharply, and the country’s bond rating has been downgraded so steeply by ratings agencies that the country effectively can no longer borrow on the international markets.

People in Kiev’s Independence Square on Monday mourned those killed in recent demonstrations.  Credit Sergey Ponomarev for The New York Times

Foreign reserves have plummeted, and the Ukrainian government will soon be unable to pay public salaries or pensions. In a statement on Monday, the acting finance minister said the country would need a staggering $35 billion in assistance between now and the end of next year.

As a manhunt continued for Mr. Yanukovych, who is now wanted in Kiev on charges of mass murder, a Ukrainian news agency reported that his chief of staff, who was believed to be traveling with the fugitive former president, had been shot in the leg.

The news agency, Interfax-Ukraine, quoted a spokesman, Artyom Petrenko, as saying that the chief of staff, Andriy Klyuyev, had been wounded, but, “as far as I know, there is no threat to his life.” Mr. Petrenko was quoted as saying that Mr. Klyuyev had resigned on Sunday. The spokesman gave no details on Mr. Klyuyev’s whereabouts.

Riot police guarded the Donetsk region governor’s building in the eastern Ukrainian city of Donetsk on Monday. Credit Uriel Sinai for The New York Times

 

In Kiev, the new speaker of Parliament, Oleksandr V. Turchynov, who is a veteran lawmaker and a former acting prime minister, has been designated to carry out the duties of president. On Tuesday, Parliament voted, 316 to 0, to authorize Mr. Turchynov to sign legislation adopted by Parliament.

In other legislative developments on Tuesday, Parliament voted 331 to 0 to schedule elections for mayor of Kiev and the Kiev City Council on May 25, the same day as the presidential voting. Parliament also voted to give the International Criminal Court in The Hague jurisdiction to handle cases related to the deadly violence by the police against antigovernment demonstrators last week.

The Ukrainian authorities have already said that dozens of officials are now wanted on charges connected to the deaths last week. It was not immediately clear how the vote on the International Criminal Court might affect the local investigations or change any legal proceedings against former officials.

People gathered in Independence Square in Kiev on Monday to mourn those killed in recent demonstrations. Credit Sergey Ponomarev for The New York Times

Underscoring the breakneck pace at which political events have been unfolding here in the capital, campaigning officially began on Tuesday for the emergency presidential election that is now scheduled for May 25.

Vitali Klitschko, the former champion boxer and a leader of one of the main parties in Parliament, the Ukrainian Democratic Alliance for Reform, immediately declared his candidacy for president. Mr. Klitschko had long said that he would run, but his announcement made clear that his presidential ambitions have not been diminished by the release from prison on Saturday of former Prime Minister Yulia V. Tymoshenko, who is also expected to run.

While Ukraine desperately needs economic aid, which has been promised repeatedly by Brussels and Washington, it was unclear how quickly help would arrive. The International Monetary Fund has made clear that it will demand austerity measures and other long-stalled economic changes in exchange for any assistance package.

People sang Ukraine’s national anthem at Independence Square in Kiev on Monday. Credit Marko Drobnjakovic/Associated Press

At a news conference in Kiev on Tuesday, Catherine Ashton, the European Union’s foreign policy chief, urged the Ukrainian Parliament to form a government that was inclusive and representative of all views, and called for peace and calm. But on her visit, her fourth to Ukraine since the recent crisis started, she brought nothing in the way of concrete help.

Ms. Ashton met with leaders of all the major parties, including Mr. Yanukovych’s Party of Regions, which had controlled the majority until several of its members defected in response to the killing by the authorities of dozens of antigovernment demonstrators last week. And she praised Parliament for filling the power vacuum left when Mr. Yanukovych fled.

“It was interesting for me to see the Parliament, the Rada, functioning,” Ms. Ashton said. “It’s very, very important, in my view, that citizens all across the country can see that the institutions are working and they are working to deliver for the people.”

People gathered in Independence Square in Kiev, on Monday, to mourn people killed in recent days. Credit Sergey Ponomarev for The New York Times


In her meetings with politicians and civic activists, she said, “my message to all of them has been: You need to work together.” She added, “You need to work together, and you need to recognize the importance of public accountability for everything you do and to build into your thinking how you will ensure that you are open and transparent and responsive to what the people want.”

 

Ms. Ashton said she had been in contact with the Russian foreign minister, Sergey V. Lavrov, about the situation in Ukraine, and had stressed the importance of preventing violence and safeguarding the territorial integrity of Ukraine.

The Kremlin has said that it views the ousting of Mr. Yanukovych and other actions by the Ukrainian Parliament as illegal, and on Tuesday the Russian Foreign Ministry said it opposed the plans for a presidential election in May because that violated an agreement brokered with Mr. Yanukovych on Friday that had called for elections in December.

Russia’s representative at those talks had declined to sign the document, and the agreement seems to have been rendered virtually meaningless by subsequent events.

Correction: February 25, 2014 Because of an editing error, an earlier version of this article mistranslated a statement by Parliament’s new speaker, Oleksandr V. Turchynov. He said a coalition of “national trust” needed to be elected, not a coalition of “national faith.”

Andrew Higgins and Oksana Lyachynska contributed reporting.

Ukraine demands a criminal case into the “mass murder” of civilians; Makes ready for an international “donor” conference

February 24, 2014

By  Lukas I. Alpert
The Wall Street Journal

Ukraine’s Interior Ministry on Monday declared ousted President Viktor Yanukovych a fugitive and said it was opening a criminal case into the “mass murder” of civilians stemming from violent clashes in the capital last week that left dozens dead.

The Interior Ministry’s acting head, Arsen Avakov, page that Mr. Yanukovych is believed to be in Crimea, a southern region dominated by ethnic Russians that serves as home to Russia’s Black Sea naval fleet.

“As of this morning, a criminal case has been opened based on the mass murder of civilians. Yanukovych and some other officials have been put on the wanted persons list,” Mr. Avakov wrote.

He said that it is believed that Mr. Yanukovych left his native Donetsk late Saturday and arrived in Crimea on Sunday, where he stayed in a privately run sanitarium, avoiding state-run facilities and his presidential dacha in the region.

Upon learning that the acting parliament had ousted him from the presidency, Mr. Yanukovych hastily left the sanitarium and headed to a regional airport but never arrived there, Mr. Avakov said.

Instead, he decided to stay at a private home with his security detail. He then asked his guards who wanted to leave and who wanted to remain with him and some left with their weapons. With his remaining guards, Mr. Yanukovych then piled into three cars and drove away, switching off all forms of communication. His current whereabouts is unknown, Mr. Avakov said.

Ukraine’s Finance Ministry on Monday said the country will seek a loan from the U.S. and Poland in the next two months, hoping to raise around $35 billion by the end of 2015.

U.K. Treasury chief George Osborne  said earlier on Monday that the European Union stands ready to provide vital financial aid to Ukraine as the crisis-hit country moved to appoint a pro-Western interim leadership.

The ministry suggested holding an international “donor” conference on the bailout with the U.S., the EU and other International Monetary Fund members. The ministry said that the financial aid will be used to revamp the economy, carry out reforms and fulfill an agreement with the EU.

Ukraine walked away from talks over a trade agreement with Europe in late November, triggering a wave of street rallies that later erupted into violent clashes between protesters and law enforcers and resulted in a political crisis.

Concerns that Ukraine’s indebted economy could face default have recently sparked panic on markets, pushing Ukrainian bond yields higher and battering the hryvnia to all-time lows.

“I’m asking all the Ukraine citizens and representatives of the financial market to ensure stable activity of financial institutions,” Mr. Kolobov said.

 

Write to Lukas I. Alpert at lukas.alpert@wsj.com and Andrey Ostroukh at andrey.ostroukh@wsj.com


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