Ukraine Gets EU Extension After Tymoshenko Vote Postponed

The European Union gave Ukraine until a Nov. 28-29 summit to meet conditions for closer ties after the country’s lawmakers failed to vote on a bill to allow jailed ex-Premier Yulia Tymoshenko to get medical care abroad.

Ex-Polish President Aleksander Kwasniewski and former European Parliament head Pat Cox will continue their monitoring mission until the summit in Vilnius, Lithuania, pegged as the venue for signing the deal, the European Parliament said in a statement yesterday. Kwasniewski and Cox will return to Ukraine next week, it said.

Ukraine wants to sign an association agreement and free-trade pact with the EU at the summit in Vilnius, Lithuania. The deal would cement a westward shift and snub Russia’s offer to join its customs union with Belarus and Kazakhstan. The accord has been delayed since 2011, when Tymoshenko was convicted in an abuse-of-office trial that she and the 28-member EU deem selective justice.

“Time is running out to achieve compliance with the conditions required for the signature of the Association Agreement on 29 November 2013,” Cox and Kwasniewski said yesterday in Brussels after returning from Kiev. “The mission urges all parties involved to constructively use the short time available to reach an historic consensus that could result in a successful summit in Vilnius.”

Yield Rises

The yield on 10-year government debt fell 7 basis points to 10.086 percent as of 3:19 p.m. in Kiev, compared with 7.491 percent on April 12, when it started trading, data compiled by Bloomberg show. The cost to insure the country’s debt against non-payment for five years using credit-default swaps dropped 20 basis points to 1,055, the world’s third-highest level.

“While it is difficult to find a more vulnerable emerging market country now, and a more speculative bet, we think the Tymoshenko case will be resolved last-minute,” Commerzbank AG said today in an e-mailed note. “It is possible that the bond market would reverse losses on the eventual Tymoshenko solution.”

Ukrainian lawmakers failed to vote yesterday as they didn’t have a reconciled draft at a special session, parliament Speaker Volodymyr Rybak said. They’ll reconvene Nov. 19, he said. The EU in February gave the country until early May to show “concrete progress” on selective justice as well as electoral and political changes.

‘Selective Justice’

The EU mission suggested the partial pardoning of Tymoshenko “as the most viable way to resolve the remaining problem of selective justice,” Cox and Kwasniewski said. Ukrainian President Viktor Yanukovych has “indicated a preference for the alternative path of a special law that would permit treatment abroad of convicted persons on health and humanitarian grounds,” according to the statement.

While President Viktor Yanukovych has underscored his desire to sign the EU accord at the Vilnius summit, lawmakers have squabbled over the legislation sought by the bloc to get Tymoshenko treatment in Germany for back pain. Compounding the impasse, Tymoshenko’s lawyer Serhiy Vlasenko was detained by prosecutors Nov. 11.

Yanukovych said today that Tymoshenko won’t get an “exclusive approach,” with all Ukrainian citizens receiving equal treatment under the law, the Unian news service reported. He pledged to sign a bill allowing prisoners get medical treatment abroad once parliament supports one of five possible drafts, Unian said.

‘Mental Blocks’

The Swedish and Polish foreign ministers said Oct. 22 that Ukraine’s EU deal will hinge on the conclusions drawn by Kwasniewski and Cox in a report. Speaking in Warsaw, Polish Prime Minister Donald Tusk said the EU deal is facing “mental blocks” from Ukraine’s readership.

On the “outstanding issue of Yulia Tymoshenko, there must now be a decisive move,” EU Enlargement Commissioner Stefan Fule’s spokesman, Peter Stano, told reporters in Brussels yesterday.

Tymoshenko first became prime minister in 2005 after the Orange Revolution helped overturn Yanukovych’s presidential victory, clearing the way for Viktor Yushchenko. Yanukovych defeated her to become Ukraine’s leader in a 2010 vote.

Tymoshenko is also accused of tax evasion and involvement in organizing a murder, charges she denies, and faces further court cases.

The planned EU deal has caused friction with Russia, which disrupted the passage of Ukrainian goods across its border in August and has banned imports from its neighbor’s biggest confectionery producer. Yanukovych suggested Oct. 25 that the customs union and the EU set up a body to work out further cooperation between Ukraine and former Soviet states.

Normalizing relations with Russia is a priority for Ukraine, Prime Minister Mykola Azarov told a weekly government meeting yesterday. Ukraine can’t permit a decline in output and job cuts as result of falling exports to Russia, he said.

To contact the reporters on this story: Daryna Krasnolutska in Kiev at dkrasnolutsk@bloomberg.net; Kateryna Choursina in Kiev at kchoursina@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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