Bloomberg News

Ukrainians Blockade Government Buildings as Clashes Escalate (2)

December 02, 2013

Demonstrators

Protesters shout slogans as thousands gather for a pro-EU opposition rally in the center of western Ukrainian city of Lviv on Dec. 1, 2013. Photographer: Yuriy Dyachyshyn/AFP/Getty Images

Opponents of Ukrainian President Viktor Yanukovych are trying to shut down government buildings after he refused to sign a European Union trade agreement and the authorities violently dispersed a protest.

Clashes in the Ukrainian capital last night have left at least 109 people hospitalized, with 165 requesting medical assistance, according to a statement by the city government. A throng estimated by the opposition at about half a million, angered by an earlier police crackdown, converged on central Kiev yesterday to hear boxing champion Vitali Klitschko demand a new government, followed by calls for a nationwide strike today.

In an echo of the Orange Revolution in 2004, emotions are flaring in the debate whether Ukraine should tie its future to Russia or the EU, which each buy a quarter of its exports. The protests gripping the country from Lviv to Kharkiv are the biggest political crisis since the events nine years ago, when a group including jailed ex-Premier Yulia Tymoshenko’s overturned a presidential election initially won by Yanukovych.

“Our first and main political demand: the government’s resignation,” Arseniy Yatsenyuk, a lawmaker from Tymoshenko’s party, said yesterday. “Our main task is Yanukovych’s resignation. But the first step is the resignation of Azarov’s government.”

The opposition yesterday announced plans for an “all-Ukrainian” strike, urging people to come to Kiev and take part in the protests. Outdoor markets in Kiev are joining the work stoppage, Tymoshenko’s party said on its website.

‘Important’ Changes

“Political developments in Ukraine took on an unexpected character and escalated into an apparent political crisis,” Alexander Morozov, Moscow-based chief economist for Russia, the Commonwealth of Independent States and Baltic countries at HSBC Holdings Plc, said in an e-mailed note today. “The president and the government risk losing control over the situation and we expect important political changes to follow shortly.”

The yield on Ukraine’s 2023 government bonds was unchanged at 9.97 percent as of 9:36 a.m. in Kiev, data compiled by Bloomberg show. The cost to insure the country’s debt against non-payment using credit-default swaps was unchanged at 987 basis points on Nov. 28, leaving the Black Sea state the world’s fourth-riskiest nation behind Argentina, Venezuela and Cyprus.

‘Good Morning’

Demonstrators who camped out on the streets all night blocking the streets arrived at the cabinet’s building before 6:30 a.m. in Kiev, chanting “Good morning,” according to a broadcast on Channel 5 television. Protesters also blocked the central bank’s entrance, Channel 5 reported. The mayor’s office was seized yesterday and a group stormed the headquarters of the presidential administration.

The outpouring on the streets came in defiance of a Kiev court’s ruling two nights ago to ban all rallies in the capital’s downtown and near government buildings.

Eleven of Ukraine’s 24 regional legislatures will hold special sessions today, while the chamber in the western region of Lviv announced it will go on strike in protest.

Demonstrations began on Nov. 21 when Yanukovych suspended progress toward an association agreement with the EU, opting instead to strengthen ties with Russia, which supplies 60 percent of Ukraine’s gas. The protests grew over the weekend after the president failed to reconsider the deal at an Nov. 28-29 EU summit in Vilnius and the first clashes broke out.

‘Unpredictable Consequences’

“As any political crisis, the one in Ukraine carries a lot of uncertainty and this increases sovereign credit risks,” Morozov said. “At this point, we keep thinking that the authorities still have resources to remain current on the debt obligations. Yet, if the political crisis is not resolved soon, this would entail unpredictable consequences for Ukraine’s economy and public finance.”

Russian President Vladimir Putin said last month he doesn’t oppose the EU deal and suggested three-way negotiations. European Commission President Jose Barroso reiterated that the idea of such talks is unacceptable. The two sides accused each other of pressuring the Ukrainian government.

Putin’s government may have offered Ukraine $15 billion in loans, debt restructuring and asset purchases to persuade it not to proceed with the EU deal, the Ukrainian magazine Zerkalo Nedeli said. Azarov also said yesterday on Inter television he wanted to agree a new price of gas in two weeks.

Cheaper Gas

Russia will offer cheaper natural gas to Ukraine if the government in Kiev opts to join the Moscow-led economic bloc, First Deputy Prime Minister Igor Shuvalov said in an interview.

“A gas agreement could help relieve Ukraine of a huge problem,” Shuvalov said in comments cleared for publication Nov. 30. “We can also give them a loan, but we will not help them without commitments on their part.”

Western leaders stepped up calls for calm as the confrontation intensified last night. NATO Secretary General Anders Fogh Rasmussen urged protesters and police to remain peaceful, according to a statement on the military alliance’s website. U.S. and EU ambassadors to Ukraine did the same.

In a joint statement, Radek Sikorski and Carl Bildt, the foreign ministers of Poland and Sweden, repeated that the EU remains prepared to sign the accord and said Ukraine itself must press ahead with transforming its economy to grow closer to the 28-member bloc.

“In the absence of any evidence of economic reform, we will not be drawn into a meaningless bidding war over Ukraine’s future,” they said in the statement yesterday.

Toward EU

Ukrainian parliamentary speaker Volodymyr Rybak called on politicians to hold talks today. Yanukovych said yesterday he still favors “moving toward the EU,” as long as that doesn’t hurt the country economically.

“Our country should integrate with the European nations as an equal partner,” Yanukovych said in yesterday’s speech to mark the 22nd anniversary of a referendum that clinched Ukraine’s independence after the Soviet Union collapsed in 1991. “I will not allow any serious economic losses and decline of living standards.”

Violence started on the night of Nov. 29. About 40 people were injured when Ukrainian police broke up a rally on Independence Square after midnight on Nov. 30. In the 24 hours to midnight, 165 people sought urgent medical aid and 109 of them were admitted to hospital care, the city government said in a statement. Crowds dwindled to a few thousand by 9:30 p.m.

Criminal Proceedings

Authorities want protesters to leave public buildings and have threatened to begin criminal proceedings against those occupying the mayor’s office and a trade union headquarters in central Kiev, the Interfax news service reported, citing a police statement.

Police spokeswoman Olha Bilyk, who declined to estimate the crowd size, said 100 police officers were injured when they clashed with the group that stormed the presidential administration building.

Those leading the demonstrations urged people to keep rallies peaceful and believe that violence yesterday was orchestrated by the government to justify a crackdown, Yatsenyuk said on television.

Some protesters forced their way inside the mayor’s office in Kiev after requests for a meeting were ignored. They set up temporary headquarters for the demonstrations at the trade union building, television channel 1+1 reported.

Interior Minister Vitaliy Zakharchenko said the police won’t allow Ukraine to become another Libya or Tunisia, where uprisings toppled governments in recent years.

“If there is call for public disorder, we will react,” the minister said in televised comments yesterday.

Oleksandr Sidorov, 56, an entrepreneur from the eastern Ukrainian city of Zaporizhzhya who’s been protesting in Kiev for eight days, said Yanukovych promised to take Ukraine closer to the EU, then “outrageously cheated” the nation.

“His place is to be hanged on a Christmas tree,” he said.

To contact the reporters on this story: Daryna Krasnolutska in Kiev at dkrasnolutsk@bloomberg.net; Kateryna Choursina in Kiev at kchoursina@bloomberg.net

To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net; James M. Gomez at jagomez@bloomberg.net


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