Russia to slash gasoline price, buy bonds to assist Ukraine
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Russian President Vladimir Putin yesterday announced a plan to buy US$15 billion of Ukrainian bonds and slash Kiev’s bill for Russian gasoline imports, in a boost for President Viktor Yanukovych as he faces monster protests over a rejected EU pact.
Russia also agreed to remove trade barriers it put up at the start of the year when it seemed Kiev was on the verge of signing a trade and political association agreement with Brussels.
The help from Russia may allow Kiev to stave off the threat of an imminent balance of payments crisis and possible default amid a recession that has seen the economy shrink since the first half of last year.
“The Russian government made a decision to invest part of the National Welfare fund to the amount of US$15 billion in Ukrainian government securities,” Putin said after holding lengthy talks with Yanukovych.
Russia’s Finance Minister Anton Siluanov said Moscow would invest the US$15 billion into Ukrainian eurobonds Kiev intends to issue at a later date.
Putin also said Russian gas giant Gazprom would now sell gas to Ukraine at a price of US$268.50 for 1,000 cubic meters, down from the current level of around US$400.
But the Russian leader crucially stressed the two sides did not discuss Ukraine’s membership in a Russian-led Customs Union that Putin hopes to build into a rival to the 28-nation bloc but which the opposition in Kiev fears could ruin their EU integration dreams.
“I would like to calm everyone down, today we have not discussed the issue of Ukraine joining the Customs Union at all,” Putin said.
The ex-Soviet nation of 46 million has been at the heart of a furious diplomatic tug of war since Yanukovych’s shock decision last month to ditch a landmark EU partnership agreement and seek closer ties with Russia.
Yesterday’s talks came two days after frustrated EU officials suspended months of partnership negotiations with Ukraine.
The Ukrainian leader stressed the importance of Kiev’s ties to Moscow during a signing ceremony that saw him exchange smiles and private whispers with Putin.
Yanukovych said the agreement on the removal of trade restriction in particular represented “a road map that will help us substantially” boost trade.
“The implementation of this action plan will substantially deepen our strategic cooperation in many areas,” the Ukrainian leader said.
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