MOSCOW – Russia has agreed to provide $15 billion bailout for Ukraine and slashed the price of gas exports by about one-third to its economically struggling neighbour.
Russian President Vladimir Putin announced the offer after talks in Moscow with Ukrainian President Viktor Yanukovych, who is facing massive protests at home for his decision to shelve a pact with the EU in favor of closer ties with Moscow.
Putin said Russia would convert $15 billion worth of its National Welfare Fund – a rainy day fund – into Ukrainian securities to help it stave off a financial crisis.
Russia’s bailout package angered protesters, who have accused Yanukovych of selling the country to the Kremlin and pressed for his ouster.
Tens of thousands of protesters gathered within hours of the deal in Kiev and accused Yanukovich of selling his country to the highest bidder after walking away from a trade deal with Europe.
“He has given up Ukraine’s national interests, given up independence and prospects for a better life for every Ukrainian,” Vitaly Klitschko, a protest leader and heavyweight boxing champion, told crowds on Kiev’s Independence Square.
The United States said any agreement between Ukraine and Russia would not address the concerns of the protesters.
Ukraine’s Naftogaz energy company will pay Russia’s Gazprom $268.5 per 1,000 cubic meters of natural gas. The previous price had been about $400 per 1,000 cubic meters.
“Ukraine is our strategic partner and ally in every sense of the word,” Putin said after the talks, with Yanukovich sitting beside him in a gilded Kremlin hall.
“I want to draw your attention to the fact that this (assistance) is not tied to any conditions … I want to calm you down – we have not discussed the issue of Ukraine’s accession to the customs union at all today.”
The protesters are pushing for the resignation of Yanukovych and snap elections. Opposition leader and boxing champion Vitail Klitschko condemned the new measures at a rally in the Ukrainian capital Kiev.
Yanukovych had “given up national interests, independence and prospects for a better life for Ukrainians”, Klitschko said, adding that he wanted early elections and to meet Yanukovych “in the ring”.
The gas agreement signed between Russia’s Gazprom and Ukraine’s Naftogaz amends a controversial 2009 deal signed by former Ukrainian Prime Minister Yulia Tymoshenko, for which she was jailed two years ago.
Ukraine relies on imports of Russian gas – and heavy energy-intensive industries in eastern Ukraine are especially anxious to keep the price of gas down. Some 75% of Ukraine’s engineering exports go to Russia.
Yanukovych said Ukraine would work with Russia and other ex-Soviet states to implement the free trade deal they signed two years ago.
With talks on resuming credit from the International Monetary Fund stalled, Ukraine requires urgent financial assistance in the coming months to keep the economy afloat.
Kiev also needs to find about $17billion next year to pay its outstanding gas bill to Russia.
Moscow wants Kiev to join the customs union instead of signing the EU pact.
The Russian-led union now also includes Belarus and Kazakhstan.