Oct. 12 (Bloomberg) -- Ukraine’s effort to win closer ties with the European Union was set back by a judge’s decision yesterday to sentence former Prime Minister Yulia Tymoshenko to seven years in prison for abuse of power.
Tymoshenko must also pay a 1.5 billion hryvnia ($187.3 million) fine to NAK Naftogaz Ukrainy for damages that she caused by signing 10-year gas supply and transit agreements with Russia, Judge Rodion Kiryeev said in reading his verdict.
Thousands of supporters of the 50 year-old ex-premier gathered amid a heavy police presence outside the court.
The EU is “deeply disappointed” by the verdict, which may have “profound implications” for the bloc’s relationship with Ukraine, European Commission spokeswoman Maja Kocijancic told reporters in Brussels yesterday. The U.S. criticized the “politically motivated prosecution” in a statement issued by White House press secretary Jay Carney.
President Viktor Yanukovych, the former premier’s rival, wants to sign an Association Agreement this year with the EU in an effort to steer the former Soviet state toward deeper economic integration with the bloc. Ukraine’s economy, dependent on steel and chemicals exports, is recovering after shrinking 15 percent in 2009, forcing the country to turn to the International Monetary Fund for a $15.6 billion bailout loan.
“This is disappointing from a market perspective, as this threatens Ukraine’s efforts to integrate Westwards, and in particular the trade agreement currently being negotiated with the EU,” Tim Ash, head of emerging-market research at Royal Bank of Scotland Group Plc in London, said in an e-mail. “Ukraine faces a difficult balance of payments position and debt financing outlook and this decision hardly helps the tone from an investor perspective.”
Tymoshenko signed the gas supply and transit agreements with her Russian counterpart, Vladimir Putin, in January 2009 after a price dispute between the two countries disrupted deliveries to at least 20 nations for two weeks amid freezing temperatures.
She has been in police detention since being arrested on Aug. 5 and claims Yanukovych, 61, engineered the case to silence the opposition before parliamentary elections next year. Yanukovych has denied any involvement in the trial, saying it was up to the court to decide what happened.
“Tymoshenko used the power she had for criminal acts,” Kiryeev said in the court ruling. “The decision she took herself violated laws and were damaging for Ukraine.”
Tymoshenko told reporters at the court that “everything that Kiryeev said is false, and it will be disproved, though not in Ukrainian courts.”
The two political leaders have been at odds since 2004, when she helped lead the Orange Revolution that led to Viktor Yushchenko’s victory over Yanukovych in presidential elections.
Yanukovych beat Tymoshenko in a 2010 presidential vote while promising to balance the influence of Russia with the weight of integrating Ukraine more closely with Europe.
The conviction appears politically motivated and has an “anti-Russian” flavor, the Foreign Ministry in Moscow said in a statement on its website. The gas contracts at the center of the case against Tymoshenko are valid and must be honored, according to the statement.
The charges against Mrs. Tymoshenko and the conduct of her trial, as well as the prosecution of other opposition leaders and members of the preceding government, have raised serious concerns about the Government of Ukraine’s commitment to democracy and rule of law,’’ Carney said the White House statement.
“The United States urges the release of Mrs. Tymoshenko and the other political leaders and former government officials, and believes that they should have an unrestricted ability to participate fully in political life, including next year’s parliamentary elections,” he said in the e-mailed statement.
Yanukovych “understands very well that the main risks for him are in domestic policy and not in relations with the European Union and not even in relations with Russia,” said Andrey Ryabov, an analyst at the Carnegie Endowment for International Peace in Moscow.
“People have kept quiet, people have been waiting, but Ukrainians, as Catherine the Second once said, are unstoppable when they are really angry,” Shvets Vasyl, a 61-year-old retired police colonel, said outside the courthouse yesterday. “For now, there is patience, but patience may run out.”
--With assistance from Agnes Lovasz and Andrew Langley in London. Editors: Terry Atlas, Steven Komarow
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