IMF bails out Ukraine, UN rejects Crimea annex

2014-03-28 08:40
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Kiev - The IMF announced a $14-$18bn bailout for Ukraine on Thursday as the UN General Assembly refused to recognise Russia's annexation of the Crimea peninsula.

The vital economic breakthrough was reached just as Ukraine's presidential campaign heated up, with the announcement by opposition icon Yulia Tymoshenko that she would contest the race to replace the ousted pro-Russian government that sent her to jail.

Washington and its EU allies hope the rescue and a mounting diplomatic offensive against Russia should keep Ukraine on a stable enough footing to conduct snap polls on 25 May that could help unite the culturally splintered country of 46 million.

But the pledge of Western assistance comes amid growing worries about a rapid Russian build-up at Ukraine's eastern border that one Kiev official said had now reached 100 000 troops.

In New York, the non-binding UN General Assembly measure passed with a comfortable majority in the 193-member body, with 100 votes in favour and 11 votes against. But 58 abstained and more than 20 did not vote.

Ukraine, which drafted the resolution, welcomed its adoption and called for a "stronger and more concrete" united, international front against Russian aggression.

However Moscow's UN envoy Vitaly Churkin claimed the vote was a "moral victory" for Russian diplomacy, saying that "almost half" the UN membership refused to support the resolution.

UN Secretary General Ban Ki-moon was due on Friday to brief the Security Council on his recent mediation visits to Moscow and Kiev.

German Chancellor Angela Merkel said on Thursday she hoped the threat of further sanctions would keep Russia's expansionist ambitions in check following its annexation of Crimea - an incursion that has left the Kremlin more isolated from the West than at any stage since the 1989 fall of the Berlin Wall.

$27bn in world aid

Kiev's International Monetary Fund agreement - worth the equivalent of €10.8 to €13.1bn - imposes tough economic conditions that will alter the lives Ukrainians who have grown accustomed to the comforts of Soviet-era subsidies and welfare benefits.

But it also appears to herald a fundamental shift from a reliance in Kiev on Russian help to save a crumbling system, to a commitment to the types of free-market efficiencies that could one day bring Ukraine far closer to the West.

"This significant support will help stabilise the economy and meet the needs of Ukrainian people over the long term because it provides the prospect for true growth," US President Barack Obama said in Rome.

The Fund's "standby arrangement" will form the heart of a broader package released by other governments and agencies amounting to €19.6bn over the next two years.

Western support became essential for Ukraine once Russia froze payments on a €10.9bn loan it awarded ousted president Viktor Yanukovych for his decision to ditch a historic EU trade and political relations pact.

Prime Minister Arseniy Yatsenyuk has now made sure that Ukraine will be getting even more money from the West after earlier signing the political portion of the EU deal ditched by Yanukovych - moves that are likely to further unsettle the Kremlin.

Return of the 'iron lady'

Many of the interim leaders - from Yatsenyuk to acting President Oleksandr Turchynov - are either close allies or political proteges of former prime minister and opposition veteran Tymoshenko.

The 53-year-old has remained one of Ukraine's most powerful but also divisive figures since the day she helped organise the 2004 pro-democracy Orange Revolution that first tried to shake Kiev's powerful links to the Kremlin.

The woman known at home as "the iron lady" moved centre stage by announcing plans to run for the presidency she lost to Yanukovych by a razor-thin margin in 2010.

Her downfall after that vote was rapid and seemingly fatal.

Tymoshenko was convicted in October 2011 for abuse of power and sentenced to a seven-year jail term that Western nations denounced as a brazen show of selective justice.

Central to the charges against her was a 2009 gas contract with Russia that many Ukrainians thought came at too high a price.

But she emerged triumphantly from the state hospital in which she had spent most of her sentence under guard on 22 February - the day parliament ousted Yanukovych for his role in the deaths of nearly 100 protesters that month.

Polls suggest that Tymoshenko may now have a tough time beating Petro Poroshenko - a billionaire also known as the "chocolate baron" who stood at the barricades during three months of deadly Kiev protests against Yanukovych's rule.

"Her support has slipped significantly since 2010," said Valeriy Chaly of the Razumov political research centre.

Meanwhile hundreds of Ukrainian far-right nationalists rallied outside the parliament building in Kiev on Thursday night, smashing windows and demanding the interior minister's resignation, days after police shot dead one of their leaders, Oleksandr Muzytchko.

100 000 Russian soldiers

Ukraine's efforts to resolve its worst post-Soviet political crisis through elections are coming against the backdrop of worries Russia may yet set its sights on more of its western neighbour's land.

The United States in particular has been uneasy about the steadily growing presence of Russian soldiers at Ukraine's eastern border.

The US is quietly blocking exports of sensitive dual-use materials and technologies to Russia.

US Defence Secretary Chuck Hagel noted on Wednesday that "they continue to build up their forces" despite Russian Defence Minister Sergei Shoigu's assurance that no broader invasion of Ukraine was planned.

Ukraine's National Security and Defence Council chief Andriy Parubiy on Thursday put the figure of Russian soldiers around Ukraine at "almost 100 000".

"Russian troops are not in Crimea only, they are along all Ukrainian borders. They're in the south, they're in the east and in the north," Parubiy said.

There was no initial response to Parubiy's comments from Russia.

Read more on:    un  |  imf  |  eu  |  oleksandr turchynov  |  chuck hagel  |  viktor yanukovych  |  arseniy yatsenyuk  |  ukraine  |  ukraine protests
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