Bloomberg News

Ukrainian Constitution Talks Stall Amid Opposition Anger

February 05, 2014

UDAR Party Head Vitali Klitschko

Vitali Klitschko, head of the opposition UDAR party (Ukrainian Democratic Alliance for Reform), right, addresses members of parliament during a parliamentary session in Kiev on Feb. 4, 2014. Photographer: Sergei Supinsky/AFP/Getty Images

Talks over constitutional changes in Ukraine failed to ease the country’s political crisis as the opposition said President Viktor Yanukovych was stalling.

The lack of progress risks inciting “radical actions,” Vitali Klitschko, the head of the opposition UDAR party, said after he met Yanukovych yesterday. Catherine Ashton, the European Union’s foreign policy chief, is in the Ukrainian capital, Kiev, and will meet with both sides, as well as non-government organizations.

Yanukovych, who’s jettisoned a prime minister and offered to share power with the opposition, is struggling to stem the demonstrations in the country of 45 million, a key transit route for Russian energy toward Europe. The opposition, which has seized government buildings in central Kiev and across the nation, rejected the overtures. It’s seeking to limit the president’s power and wants early elections.

The Cause of Unrest in Ukraine

“Yanukovych is likely to reiterate his power-sharing proposal, putting the pressure on the opposition,” Lilit Gevorgyan, a senior economist at IHS Global Insight in London, said by e-mail. “The opposition is aware that holding the squares and administrative buildings is the only way to eject the president. Any deal of compromise will break the momentum.”

Lawmakers will today continue a discussion over the constitution, parliamentary speaker Volodymyr Rybak said at the conclusion of yesterday’s session. The opposition wants to return to the 2004 version of the charter, which shifts authority from the president to the legislature.

Western Aid

The opposition is forcing the issue as it seeks to build international support. The EU and the U.S. are discussing potential aid if Ukraine forms a new government, U.S. State Department spokeswoman Jen Psaki said Feb. 3 in Washington.

In a phone call yesterday, U.S. Vice President Joe Biden urged Yanukovych to find ways to defuse the crisis and to take advantage of international offers of support, according to a White House statement.

The prospect of Western assistance is boosting Ukraine’s bonds, with the yield on dollar-denominated notes due in June dropping 56 basis points, or 0.56 percentage point, to 12.98 percent yesterday, according to data compiled by Bloomberg. Even so, the hryvnia weakened 1.4 percent against the dollar amid speculation the central bank is scaling back currency-market interventions to help counter a record current-account deficit.

‘President Escalates’

Opposition leaders are calling for sweeping political changes amid the biggest anti-government rallies since Ukraine gained independence in 1991. Seven demonstrators died amid clashes last month as protesters braved freezing temperatures to camp out on a central Kiev square following Yanukovych’s decision to snub an EU association pact. Police say three officers died, including a victim of a cardiac arrest.

“I met Yanukovych and he started to tell me that it will take months, up to half a year, to work out constitutional changes,” Klitschko told parliament yesterday. “It can be done very quickly but neither the president nor the Party of Regions wants to solve the problem. The president escalates the situation.”

Klitschko is urging foreign mediation for the talks with Yanukovych because the authorities’ interpretation of agreements is “surprising,” he said on UDAR’s website after meeting Ashton last night.

‘Clear Vision’

While violence receded after parliament repealed anti-protest laws and the premier resigned last week, street rallies continue. The two sides also clashed over an amnesty law, passed over opposition objections, that requires activists to relinquish seized buildings before their detained comrades are freed.

Yanukovych repeated a pledge not to use force to resolve the conflict on the streets and said that he’s open to early elections, Yurii Miroshnychenko, a lawmaker and the president’s official representative in parliament, said on Channel 5 TV.

“Talks won’t stop,” Miroshnychenko said. “The authorities have a clear vision. We should prevent confrontation. On early elections, they may happen after the constitution is changed.”

Jailed former Prime Minister Yulia Tymoshenko urged lawmakers from her Batkivshchyna party not to vote for constitutional changes and stop all talks with Yanukovych, the Kommersant-Ukraine newspaper reported today, without citing anyone.

Russia agreed in December to lend Ukraine $15 billion and to reduce the price for natural gas deliveries after Yanukovych rejected the EU pact. After buying $3 billion of Ukrainian bonds in December, further aid may be on hold until a new cabinet is formed, President Vladimir Putin said Jan. 29.

“The weaker Yanukovych’s position, the less likely the Russians are to disburse the rest of the package,” Charles Seville, director of Fitch Ratings’ sovereign group in London, said in a phone interview. Fitch rates Ukraine at B-, six levels below investment grade.

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

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


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