Ukraine president rejected EU attempts at compromise, news reports said

The EU was ready to offer financial aid to sign the Ukraine-EU Association Agreement at the Ukraine-EU summit in late February-early March, the Kommersant-Ukraine newspaper reported on December 2. European Commission President Jose Manuel Barroso and EU Council Chair Herman von Rompuy personally explained to Yanukovych the finance mechanisms. Meanwhile, First Deputy Prime Minister Serhiy Arbuzov presented the EU leadership with a memorandum to form a bilateral working group to form a road map to implement the agreement, assess the economic damage and relax IMF loan conditions.

The EU agreed to the memorandum, but also insisted that the working group not create a permanent trilateral consulting mechanism involving the Russian Federation, limiting its involvement to “an irregular basis, when necessary.” That proposal was raised by the November 21 Cabinet of Ministers resolution and advocated by Yanukovych since. Ukrainian President Viktor Yanuokvych declined to authorize the memorandum without the presence of Russian diplomats in the working group, a demand rejected by the EU. Two anonymous sources in the European Commission and a source in a top EU nation told Kommersant they don’t believe in the possibility of signing the Association Agreement with Yanukovych as president.

Yanukovych told EU leaders that he couldn’t sign the Association Agreement because of pressure from the Russian government, according to a video recorded by Grybauskaite’s personal cameraman, Kommersant reported. The video was recorded at a closed meeting involving Grybauskaite, German Chancellor Angela Merkel and European Commission President Jose Manuel Barroso, the contents of which Yanukovych expected would be kept confidential yet Grybauskaite saw the need to break that understanding, the newspaper reported. For the November 29 signing ceremony, Yanukovych was seated in a back corner, further from the center than Belarus’s foreign minister.

Prime Minister of Ukraine Mykola Azarov told the Inter television network on December 1 that the Russian and Ukrainian governments will hold consultations during the next two weeks that will “enable Ukraine to establish budgetary parameters for 2014,” the Interfax-Ukrayina news agency reported. When asked by a journalist whether the government knows the price for natural gas next year and what price to base the 2014 budget on, Azarov responded, “No, that’s why there still isn’t a budget.”

Zenon Zawada: Such information adds further evidence that the Russian and Ukrainian governments reached a tentative agreement ahead of the Vilnius summit. It’s hard to see the wisdom of that considering the Ukrainians will now have to negotiate further with a Russian side that has the clear upper hand, given that the majority of Ukrainians oppose the current government and the West has given up on dealing with Yanukovych. With this negotiating position, it’s hard to imagine what concessions the Azarov government can gain from their Russian counterparts in terms of loans or improved gas prices (that haven’t been secured so far, as we can conclude from Azarov’s statements). So we expect the political crisis will be made more acute by the government’s economic woes, particularly in dealing with Russia.