Yanukovych to Explain U-Turn on EU as Premier Denies Russia Deal

November 26, 2013 JRL Russia List Europe, EU, Ukraine, Russo-Ukrainian War

(Bloomberg – bloomberg.com – Daryna Krasnolutska – November 26, 2013) Ukraine’s president vowed to explain his snub of a European Union trade pact as Prime Minister Mykola Azarov denied a financing package had been completed with Russia, which opposed the accord.

Viktor Yanukovych, who hasn’t spoken publicly since Ukraine decided last week to abandon plans to sign an EU association agreement at a Nov. 28-29 summit, said yesterday that he’d answer any questions on the subject through a TV appearance “in the nearest future.”

“There is no agreement on any Russian loan, nor about its size or term,” Azarov said today in a statement. Russia and Ukraine will meet “at the beginning of December, where we plan to agree on a so-called road map to resolve all those problems and disputes we have.”

The collapse of the EU deal has sparked the biggest street protests since the 2004 Orange Revolution that helped overturn Yanukovych’s initial election victory, with more than 100,000 marching through Kiev on Nov. 24. Ukraine wants to normalize ties with Russia, which had threatened trade sanctions if it signed the EU accord. Ukrainian assets have rallied on speculation Russia will assist the shrinking economy.

Five-year credit-default swaps, contracts insuring the Ukraine’s debt against non-payment, declined to 926 basis points yesterday, the lowest on a closing basis since Oct. 24, before rising to as high as 949 basis points today, data compiled by Bloomberg show. Yields on government bonds due 2023 rose to 9.5 percent from 9.55 percent.

Chocolate Exports

Russia tightened customs checks on Ukrainian exports in August after banning products from chocolate producer Roshen. Trade between the two neighbors plunged by a quarter this year, contributing to Ukraine’s third recession since 2008.

In a sign that tensions are easing, Russia said today that it may let Roshen gradually resume shipments after its consumer watchdog discussed quality control with Ukrainian officials.

While Russian President Vladimir Putin said last week that he doesn’t oppose Ukraine’s EU plans, he suggested trilateral talks with Ukraine and the 28-member trading bloc, which has rejected the proposal.

In the Ukrainian capital, Kiev, demonstrations at Yanukovych’s about-face continued.

Students from two universities said they’ll boycott classes until Dec. 2, with others joining protesters at Independence Square, the scene of the Orange Revolution nine years ago, Radio Liberty reported today. Students in the cities of Lviv and Ivano-Frankivsk announced strikes yesterday.

Opposition leaders have urged Ukrainians to gather every evening at 6 p.m. in Kiev until the authorities agree to sign the EU deal. Jailed ex-Premier Yulia Tymoshenko, whose release for treatment abroad had been sought by European officials, said yesterday she’d begun a hunger strike.

Yanukovych says he’ll attend this week’s EU Eastern Partnership summit in Lithuania, where the association accord was scheduled for signature.