Stop infighting, Biden tells Ukraine's leaders

KIEV (Reuters) - U.S. Vice President Joe Biden chided Ukraine's political leaders on Wednesday, telling them they had to stop "posturing" if the country was to seal its post-Soviet independence and economic development.

In a speech marked by a sharper tone that contrasted with previous expressions of unflinching support from Washington, Biden said Ukraine stood at a historic moment in building on the gains of the 2004 pro-Western "Orange Revolution."

"Literally, you are standing in a moment in history that you have never stood at before, literally," Biden said. "Frankly, your success will bear on the successes or failures of many people in this part of the world."

Infighting has pitched Ukraine into non-stop political turmoil since a heady week of street protests in 2004 against electoral fraud swept President Viktor Yushchenko to office.

The protests -- and a re-run of a rigged election -- caught the world by surprise and opened the way for Yushchenko to move Ukraine away from its former Soviet master, Russia.

Initial euphoria and pledges to secure membership of the European Union and NATO, staunchly supported by the administration of former U.S. president George W. Bush, gave way to bickering and stalled reforms as Ukraine plunged into recession.

"Ukraine, in my humble opinion, must heed the lesson of history. Effective, accountable government is the only way to provide a stable, predictable and transparent environment that attracts investments ... the economic engine of development," he said.

Biden suggested 19th century poet Taras Shevchenko, a national hero who opposed centuries of Russian dominance, would be critical of rows pitting Yushchenko against Prime Minister Yulia Tymoshenko, his estranged ally from the revolution.

"I think he would also be wondering why the government is not exhibiting the same political maturity as the people," he told the gathering of prominent Ukrainians.

"Why communications among leaders have broken down to such an extent that political posturing appears to prevent progress, especially now, especially in difficult economic times.

COMPROMISE TO REFORM Biden's sharper tone is part of a changed U.S. policy since President Barack Obama took over from Bush, who aggravated ties with Russia by his push for NATO expansion to Russian borders.

Biden said Washington would support any decision Ukraine might make on membership of NATO, which is vehemently opposed by Moscow. Most Ukrainians remain opposed to joining NATO, despite Yushchenko's drive to seek membership.

Biden encouraged Yushchenko, Tymoshenko and other leaders to resolve differences ahead of a January 17 presidential election. "In a democracy, compromise is not a sign of weakness, it is evidence of strength," he said.

Disputes have exasperated the IMF, which has delayed the release of some of the $16.4 billion it has agreed to loan Ukraine to withstand the economic crisis.

"The path to renewed prosperity runs through the International Monetary Fund which is offering a way out of the current crisis," Biden said. A senior U.S. official said late on Tuesday that Washington would not offer Ukraine any extra loans.

The IMF wants authorities to raise domestic gas prices to right the finances of state energy firm Naftogaz, often at the center of rows with Russia, including a three-week New Year cutoff of flows. But that would be unpopular before an election.

Many analysts say Russia has used its vast gas resources to keep control over its Western-leaning ex-Soviet neighbors.

But Biden suggested Ukraine could cut Russia out of national security concerns by moving to reduce energy consumption, now three times less efficient than in European countries.

"If you lift Ukraine to the European standards, your need for energy imports will dramatically decline, dramatically," he said. "That would be a boom to the economy and an immeasurable benefit, I respectfully suggest, to your national security."

(Editing by Richard Balmforth)