Wednesday, February 19, 2014

Ukraine Plunges Deep Into Crisis as Western Region Balks

http://finance.yahoo.com/news/ukraine-fighting-kills-least-25-075039627.html

Ukraine Plunges Deep Into Crisis as Western Region Balks

Bloomberg

By Aliaksandr Kudrytski and Kateryna Choursina
1 hour ago




Ukraine's crisis deepened as a western region declared independence from the central government, while neighboring Poland's prime minister warned of civil war and European Union leaders threatened sanctions.
In the wake of the deadliest clashes of a three-month standoff between protesters and Russia-backed President Viktor Yanukovych, lawmakers in the Lviv region said they'll no longer take orders from the Yanukovych administration. Protesters seized government or security service headquarters in at least four other regions. The army said it has no plans to move troops to dissolve protests and stepped up security at its arsenals.
"We may be witnessing the first hour of a civil war," Polish Prime Minister Donald Tusk told lawmakers in Warsaw today. "We are dealing with an ongoing destruction of the country. If people are dying and being injured during protests, it's the authorities who are responsible. There are no doubts about that in Kiev."
Yanukovych yesterday moved to end the crisis that has destabilized the country of 45 million, a key route for Russian gas. At least 25 people died and hundreds were injured yesterday and last night as activists last night repelled a police attempt to clear their main protest camp in central Kiev.
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The opposition "has crossed the line when they called people to arms," Yanukovych said on his website today. "This is an outrageous violation of the law. My advisers happen to be trying to talk me into a tough scenario, the use of force. But I have always considered the use of force a false route."
Record Yield
Ukrainian bonds and stocks slumped. The yield on the government's $1 billion of notes maturing in June jumped a record 5.06 percentage points to an all-time high of 27.99 percent by 1:33 p.m. in Kiev. The Ukrainian Equities Index fell for a second day, losing 4.2 percent. The cost of insuring Ukraine's debt for five years against non-payment using credit default swaps rose to the highest since July 2009.
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Unrest in Ukraine
Hundreds remained on Independence Square today, including reinforcements from the western city of Lviv, with squadrons of police ringing their burning barricades. The violence drew a sharp reaction from global leaders.
The European Union moved toward freezing the assets of Ukraine's most powerful officials. The bloc's foreign ministers will meet tomorrow to weigh "all possible options," including "restrictive measures against those responsible for repression," EU foreign policy chief Catherine Ashton said in an e-mailed statement from Brussels.
U.S. Vice President Joe Biden called Yanukovych to express "grave concern" over the violence and urge the government to exercise restraint.
Putin Call
Russia blames "extremists" and "radical elements" for the escalation of violence, President Vladimir Putin's spokesman, Dmitry Peskov, said on a conference call with reporters today. While Putin had a phone conversation with Yanukovych last night, he never gave advice on how to handle the crisis, Peskov said.
Nine security officers and a journalist were among the fatalities since yesterday as security forces moved to clear out the main protest camp in Kiev. Twenty protesters died and many were missing, Hromadske TV reported, citing the activists.
The violence has spread throughout Ukraine. Protesters stormed police offices in Ternopil and Ivano-Frankivsk, both in western Ukraine. In Lutsk, activists burned the offices of the ruling parties, Hromadske TV reported.
‘No Way'
In Kiev, protesters fed flames ringing their camp to maintain a barrier against government forces throughout the night. A burnt-out trade union building protesters had seized and used as their headquarters towered over the square, sending flames into the morning sky.
"There's no way we leave, because we have nothing to lose anymore," said Mykola, who declined to give his last name for fear of reprisal. "Everyone who spent the night here can already count on a dozen years in prison."
The government closed the subway system, set up checkpoints to limit access to the city of 3 million people and took the opposition's Channel 5 off the air. Schools and kindergartens in central Kiev will remain closed today, as will the subway, the city administration said. Lights went out over Independence Square after midnight.
"I am calling on everyone who committed crimes to put down their arms and avoid severe punishment," Andriy Portnov, deputy chief of staff of Yanukovych's administration, said on the presidential website today. "We demand a stop to all illegal action, surrender to law enforcement, free all seized premises."
Injuries, Detentions
As of 6 a.m., 351 people sought medical help in Kiev, and 241 were hospitalized, the Health Ministry said on its website. Police said 371 officers were injured, many with gunshots. As many as 20 activists died and 400 were hurt, Channel 5 reported on its website, citing the head of the protest camp's medical center.
Fifty-nine people were detained as of 10 a.m., the Interfax news service reported, citing the Interior Ministry. The ministry said police didn't use live ammunition and blamed the protesters for the deaths.
Russia, which said this week it would renew funding for Ukraine, blamed the U.S. and the EU for the violence.
"Western politicians and European structures" and their "policy of connivance" are guilty for the escalation of the violence, the Foreign Ministry in Moscow said yesterday.
Protest Demands
The opposition is seeking to overturn constitutional changes that strengthened Yanukovych's powers and to put Ukraine on a path toward EU membership. The standoff began on Nov. 21, when Yanukovych pulled out of a free-trade deal with the EU, opting instead for President Vladimir Putin's offer of $15 billion of aid and cheaper gas.
Russia, which stopped buying bonds from Ukraine's cash-strapped government after Yanukovych's Russian-born prime minister, Mykola Azarov, resigned last month, said Feb. 17 it would resume purchases, including $2 billion this week. Russian Finance Minister Anton Siluanov made the announcement just as Klitschko and Yatsenyuk were meeting with German Chancellor Angela Merkel in Berlin to seek financial and political backing to form a new government.
Yanukovych, 63, will propose a candidate for prime minister this week, Speaker Volodymyr Rybak told reporters Feb. 17. Yatsenyuk rejected Yanukovych's offer to become premier on Jan. 25.
"Russia is playing hardball," Alexander Valchyshen, head of research at Investment Capital in Kiev, said by phone. "Russia gave a clear signal that it knows who'll be the next prime minister, that it's ready to financially support him, and that no other players are acceptable here."
To contact the reporters on this story: Aliaksandr Kudrytski in Kiev at akudrytski@bloomberg.net; Kateryna Choursina in Kiev at kchoursina@bloomberg.net
To contact the editor responsible for this story: Hellmuth Tromm at htromm@bloomberg.net

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Ukraine's crisis deepened as a western region declared independence from the central government, while neighboring Poland's prime minister warned of civil war and European Union leaders threatened sanctions. 

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