As President Yanukovich travels to the Kremlin to talk trade deals, Kiev is awash with protesters calling for him loosen the country’s ties with Russia. Channel 4 News asks key questions on Ukraine.
On 22 November, Ukraine’s President Viktor Yanukovych surprised everyone when he backed out of signing an association agreement with the European Union.
The deal was seen as the first step towards Ukraine eventually joining the EU. Instead, a government decree was issued by Mykola Azarov, the prime minister, saying that the EU talks were to be halted, and Ukraine would “renew active dialogue” with Russia.
The protests swelled in size, with as many as 300,000 taking to the streets and calling for the the resignation of the prime minister. For the pro-European protesters, the battle was over the future of the political soul of Ukraine: free, fair and democratic under the EU, or back to the USSR and under the yoke of Russian influence.
The government in turn bussed in its own protesters, though numbers were not nearly as large.
Although some anti-government protesters have attempted to portray the battle as overwhelmingly political, economics plays at least as large a part.
At a meeting with President Vladimir Putin at the Kremlin on 17 December, President Yanukovych secured a reduction in the cost of Russian gas imports from more than $400 (£245) per 1,000 cubic metres to $268.5.
Russia also agreed to buy $15bn worth of Ukranian government bonds.
As Ukraine faces bankruptcy, the offers would be very hard to refuse. Investors fear that without international aid, Ukraine will struggle to repay $7bn of hard currency debt. It has a current account deficit, of about $10.2bn in the year to September, and already owes Russia and Russian banks $30bn. And it is looking at 0 per cent growth.
The International Monetary Fund has told Ukraine that it must raise domestic gas prices in 2014 if it is to receive financial credit.
The EU is not prepared, if able, to meet Ukraine’s economic needs in the way Russia has. It refused Kiev’s demands for a $20bn injection into the Ukraine economy upfront, and at the weekend said agreements were “on hold”.
Russia has been pushing for a new customs union between itself and eastern and central European nations since 2009. It has already brought Belarus and Kazakhstan into a customs union, due to be inaugurated as the Eurasian Economic Union in 2015, and has said that it wants Ukraine to be a part of it.
That leaves Ukraine at the centre of a tug of war between Russia and the EU. Europe is vying for its own slice of the Ukranian pie – it wants the nation to be a part of its union, alongside Belarus and Moldova.
Russia’s ambitions are to build a powerhouse worthy of competing against the US, the EU and China. Ukraine would be integral to the union’s success: it is the region’s second largest economy, has rich mineral resources and a population of 46 million – a sizeable market.
I want to draw your attention to the fact that this is not tied to any conditions. President Putin on the latest deal between Russia and Ukraine
According to President Putin, the customs union was not even discussed at the Kremlin at today’s meeting, though it may simply have been delayed for strategic reasons, given the groundswell of opposition in Kiev.
He said at the Kremlin, with President Yanukovych beside him: “The Russian government has made the decision to convert part of its reserves from the national welfare fund into Ukrainian securities. The volume is $15bn.
“I want to draw your attention to the fact that this 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.”
Since it became clear that Ukraine intended to turn towards Russia, Catherine Ashton, the EU foreign policy chief has said that she believed she the bloc could work with President Yanukovych to address “short-term economic issues… that have prevented him from signing [the European agreement]”.
She added: “I feel that we can work with him to resolve those. Some of them can be done through the support of the European Union, others through financial institutions, some of them through the private sector. All of them are possible.”
It may well be too little to late in a high stakes game of catch-up, however. President Yanukovych will return from Russia with a number of concessions, and may have already given his tenure as leader the breathing space it needs to survive, for the time being at least.
Unlikely. They have been at it for four weeks, now braving sub-zero temperatures night after night and refusing to go away, even after being brutally repelled by the police and some apparent concessions from a government saying it wanted “to talk”.
President Putin may well have been attempting to calm their nerves by saying that no discussions about the customs union took place, but with the raft of economic concessions offered by Russia, any promises are likely to seem hollow.
Critics of the deal also say that the history of Ukranian-Russian relations has previously been hit by broken promises. In 2010, Moscow promised to lower gas prices in exchance for a renewal of its lease on naval facilities in China, signing the Kharkiv pact a few months later. Apparently, though, Moscow did not see it as binding, with President Putin later declaring: “No military base in the world is worth that much money.” Gas prices have continued to rise.
And with heavyweight boxing champion Vitali Klitschko – a key figure in the recent anti-government protests – announcing that he is formally leaving the sport to concentrate on Ukranian politics and his role as an opposition leader, the gloves may only just be coming off.