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Russia reaches $15bln deal with Ukraine

Tuesday, Dec 17, 2013 - 01:58

Dec. 17 - Russia throws Ukraine an economic lifeline, agreeing to buy $15 billion of Ukrainian debt and to reduce the price its cash-strapped neighbour pays for Russian gas supplies. But it comes as anti-government protests continue in Kiev. Ciara Sutton reports.

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Financial relief for Viktor Yanukovich. Russia has agreed to resume oil supplies to Ukraine after a three-year break and slash the price of gas. It's Moscow's reward to the Ukrainian President for spurning a trade deal with Europe. It will also buy 15 billion dollars of government bonds. (SOUNDBITE) (Russian) RUSSIAN PRESIDENT, VLADIMIR PUTIN, SAYING: "I very much hope that we will be able to move forward in solving the most sensitive issues for us. Without any doubt, Ukraine is our strategic partner and ally in every sense of this word." Yanukovich is in Russia hoping to avoid an economic crisis. But closer ties with the country's former Soviet master come at a price. Pro-European protests in the freezing Ukrainian capital, Kiev are growing daily. Demonstrators now want Yanukovich to resign. The government is caught in the middle and investors are concerned about what could happen next. (SOUNDBITE) SENIOR ADVISOR, CREDIT SUISSE, ROBERT PARKER, SAYING: "Trying to play the European Union against Russia, frankly is a very dangerous political game. My central case is that you are seeing a shift back towards the Russian government and that's driven partly because of financial support that Russia is giving Ukraine. But that is not going to lead to a decline in social unrest. So I think we're in for a very difficult two to three months at least." Some protesters fear greater influence from the Kremlin, their memories of the Soviet era are still fresh. (SOUNDBITE) (Ukrainian) UKRAINIAN PROTESTER, JOSIP, SAYING: "He expects Putin to give him money because he couldn't take for himself the money from the European Union. EU money would be controlled where as Russian money has no control." Many believe the EU alternative will offer greater freedom and prosperity. But that would be a longer term benefit. Ukraine needs to cover a 17 billion dollar funding gap next year.

Russia reaches $15bln deal with Ukraine

Tuesday, Dec 17, 2013 - 01:58

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