How Will Ukrainian Protests Affect Russia’s Loan?

Ukraine Protest

The Ukrainian Prime Minister, Mykola Azarov, resigned earlier this week in an attempt to quiet the continuing protests of citizens in Kiev, which began in response to the January 16 anti-democratic legislation pushed through the Rada that placed limitations on important freedoms — including freedom of speech, freedom to protest, and freedom of the press.

Following Ukrainian President Viktor Yanukovych’s acceptance of Azarov’s resignation, which will lead to the eventual removal of his Cabinet of Ministers when time allows, Azarov introduced the new acting Prime Minister, Serhiy Arbuzov. Until Wednesday, Arbuzov was the First Vice Prime Minister. Azarov spoke in government press release to express his confidence that with Arbuzov in place, “the Cabinet of Ministers will cope with the duties laid on him by the President at this important period.” With Arbuzov stepping in, Azarov said farewell to his part in the governance. “I’d like to thank you for these four years you have worked hard and kept very arduous work of the Government aimed at the modernization of our country. I wish you health, success, and all the best,” he said.

The protests, which have already resulted in the death of three people and injury of many, have many concerned over allegations of torture and missing persons. While many protestors were pleased with Azarov’s departure from office, others are calling for further changes to governance before they will be satisfied. One opposition group leader, Vitali Klitschko — head of UDAR, the Ukrainian Democratic Alliance for Reform — insisted Wednesday that President Yanukovych to step down for protestors goals to be reached, saying that, “Authorities’ demands in the amnesty bill are unacceptable.”

A logical step in current situation would be resignation of Yanukovych,” said Klitschko in a UDAR press release. “Maidan will disperse only [when] authorities fulfill society demands, which is a complete change of state power.” This marks one of UDAR’s biggest demands in negotiations over amnesty for protestors, while the government in turn is asking that government buildings be relinquished in order for amnesty to be granted. “We do not agree to this!” said Klitschko, saying that, “a major step will be a complete change of government and presidential elections.”

Acting Prime Minister Arbuzov noted that with the poor weather upcoming it will be even more important that government functions be allowed to manage items such as road cleaning, power repair, and housing and communal services. “The necessary prerequisite for that appears [to be] unblocking of the administrative buildings, so that the authorities in the regions could perform their functions properly,” he said, according to the Press Service of the First Vice Prime Minister.

Meanwhile, Arbuzov has been looking beyond protest concerns to some of the financial issues of governance — specifically the loaned funds he’s still expecting to receive from Russia. He notes that the agreement between President Yanukovych and President Vladimir Putin of Russia is “a significant factor of financial stability” for Ukraine. “We have received the first tranche in the amount of USD 3 billion and are expecting for the second tranche within nearest time in the amount of USD 2 billion,” said Arbuzov in a statement.

Still, some question whether or not the stability of the Ukrainian government could have an adverse affect on the international loan agreement. In a Russia and European Union summit meeting, Putin answered questions regarding his plans with Ukraine going forward. He emphasized that Russia’s decision on whether or not to continue this economic aid is not hinged on any desired interference into Ukraine’s sovereignty, but rather a consideration on how Ukraine’s decisions — especially regarding their remaining within a free trade zone — would affect Russia’s industries.

This is not political manoeuvrings; this is about pragmatic interests,” said Putin at the summit. Having said that, he emphasized clearly that Russia has every intention of going forward with the loan. He noted that the loan had not be outlined in writing, but that Russia had worked to come to the agreement with the now resigned former Prime Minister Azarov so that the money could go towards economic improvement and development as well as budgetary support.

“Just ask the former Prime Minister, I doubt that he will hide from the press after retirement. We had such an agreement with Mr. Azarov’s Cabinet. Naturally, we are not indifferent to the economic policy that the future Cabinet will conduct,” said Putin. “Granted, we do not yet know who will head it and how this economic policy will be built. But we intend to fulfill our obligations.” He said that regardless of which political faction comes to power — including presently protesting opposition forces — he would not feel a need to change the present loan and energy agreements.

He did mention Russia’s displeasure at energy prices in Ukraine and debt deferment requested for last year and for 2014, noting that some of the debt from the Ukrainian state-owned Naftogaz was meant to be dealt with through the loan in question. The company’s request that the debt be deferred with an exchange of cheaper gas prices for Russia did not please President Putin, but he said that discussion of these problems with Russia’s Ukrainian partners would continue “regardless of who is heading the Ukrainian Government.”

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