The former Soviet republic has been gripped by mass street unrest
since President Viktor Yanukovich walked away from a trade pact with
the European Union last November, opting for closer economic ties
with Russia which has brought it a $15 billion bailout package.
With Yanukovich and loyalist deputies in parliament now making
concessions to defuse the crisis and with the resignation of Prime
Minister Mykola Azarov, there had been speculation that Russia might
slow or even halt the stream of aid.
But, following a pledge on Tuesday by Russian President Vladimir
Putin that Moscow would honor its promise to extend $15 billion in
credits and cheaper gas, Ukraine's acting prime minister Serhiy
Arbuzov expressed confidence a second tranche of $2 billion would be
"We have already received the first tranche of $3 billion and expect
to receive the second tranche of $2 billion very soon," said
Arbuzov, chairing his first cabinet meeting as interim premier. The
Russian credits are coming on stream via Ukrainian government-issued
Though the unrest began because of Yanukovich's U-turn on policy
towards Europe, it has since turned into a mass demonstration,
punctuated by violent clashes between radical protesters and police,
against perceived misrule and corruption under Yanukovich's
Several hundred people camp round-the-clock on Kiev's Independence
Square and along an adjoining thoroughfare, while more radical
activists confront police lines at Dynamo football stadium less than
half a kilometer away.
Anti-Yanukovich activists have also stormed into municipal buildings
in many other cities across the sprawling country of 46 million.
Hundreds of protesters in Kiev have occupied City Hall and the main
agricultural ministry building.
In a big concession to the opposition and the protest movement,
pro-Yanukovich deputies on Tuesday back-tracked and voted to repeal
a series of sweeping anti-protest laws which they brought in hastily
on January 16 in response to increasingly violent clashes.
But opposition leaders, who include boxer-turned-politician Vitaly
Klitschko, have won a mandate from protesters on the streets to
continue to press for further gains from Yanukovich.
Opposition deputies and his loyalists at a crisis session of
parliament were locked in back-room talks on Wednesday over the
wording of a draft law under which protesters detained so far by
police would be amnestied.
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The opposition also wants a return to the previous constitution
which would represent another significant concession since it would
reduce Yanukovich's powers.
Speculation that Russia might cut the financial lifeline it has
offered caused ratings agency Standard & Poors to downpeg Ukraine to
CCC+ on Tuesday.
Arbuzov said the central bank was ensuring stability on the
financial markets and he made no mention of any changes to his
predecessor's policy of keeping the hryvnia pegged close to the
dollar and maintaining subsidies for domestic gas — both criticized
by the International Monetary Fund.
Referring to concessions made on Tuesday by Yanukovich and his
loyalists in parliament, Arbuzov said: "During this search for a
compromise and solution in society, the most important thing is to
minimize the negative impact of this situation on economic
"We must shun aggression ... the only path is dialogue," he said
referring to talks between opposition leaders and the Yanukovich
The tense situation and talk by some of Yanukovich ministers of a
possible state of emergency being declared has sparked alarm in the
West and Western governments have urged Yanukovich to take all
measures to de-escalate the situation.
The EU's foreign policy chief, Catherine Ashton, was in Kiev on
Wednesday and was scheduled to meet Yanukovich and opposition
U.S. Vice President Joe Biden, in a telephone conversation with
Yanukovich on Tuesday night, welcomed concessions made so far and
encouraged him to look for more ways to compromise with the
opposition, the White House said.
(Additional reporting by Pavel Polityuk;
writing by Richard Balmforth and Jack Stubbs; editing by Elizabeth Piper)
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