Russian President Vladimir Putin has opened his wallet in the battle with the European Union over Ukraine’s future, saying Moscow will buy $15bn dollars (€10.9bn) worth of Ukrainian government bonds and sharply cut the price of natural gas for its economically struggling neighbour.
The announcements came after Mr Putin held 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 favour of closer ties with Moscow.
Russia’s bailout package angered protesters, who immediately accused Mr Yanukovych of selling the country out to the Kremlin and pressed demands for his ouster.
Washington said the Kremlin agreements would not address concerns of the demonstrators in Kiev and German Chancellor Angela Merkel dismissed what she described as a “bidding competition” over Ukraine.
Mr Putin’s move came as Ukraine said it desperately needs to get at least $10bn (€7.26bn) in the coming months to avoid bankruptcy. The Fitch ratings agency has given Ukraine’s bonds a B-minus rating, which puts them in “junk bond” territory.
Mr Putin sought to calm protesters in Kiev by saying he and Mr Yanukovych didn’t discuss the prospect of Ukraine joining a Moscow-dominated economic bloc they fear will pull their country closer into Russia’s orbit.
Mr Yanukovych has manoeuvered between Russia and the EU in an apparent search for the best possible deal. He has insisted Ukraine intends to sign the EU agreement but wants to negotiate better conditions.
Mr Putin said the Russian state-controlled gas monopoly, Gazprom, will cut the price that Ukraine must pay for Russian gas deliveries by about one-third.
Ukraine serves as a key conduit for Russian natural gas exports to Europe, and fierce gas pricing disputes between the neighbors have repeatedly resulted in supply cuts to EU customers.
Mr Yanukovych explained last month’s decision to spike the EU agreement as necessary to improve ties with Russia, which has banned or halted imports of some Ukrainian goods and threatened more sanctions if Ukraine signs the EU pact. The EU has been cool about Ukraine’s pleas for a bailout.
Ukrainian opposition leaders, speaking to protesters who have camped on Kiev’s main Independence Square for nearly a month, quickly denounced the Kremlin agreements and accused Mr Yanukovych of treason.
Vitali Klitschko, a world heavyweight boxing champion who quit boxing to concentrate on politics, accused Mr Yanukovych of making Ukrainian assets collateral for the Russian bailout.
“The only way out for the country is early elections,” he told a crowd of over 10,000 protesters. “We are all staying here and will fight for the right to live in a free country.”
The opposition leaders vowed to continue their protests, if necessary through New Year and Orthodox Christmas, celebrated on January 7, calling for the ousting of Cabinet and demanding early presidential and parliamentary elections.