Ukrainian Life on Hold as Fight for Europe Grips Kiev

Photographer: Voktor Drachev/AFP via Getty Images

Protesters guard a barricade on Independence Square in Kiev late on Dec. 12, 2013. Close

Protesters guard a barricade on Independence Square in Kiev late on Dec. 12, 2013.

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Photographer: Voktor Drachev/AFP via Getty Images

Protesters guard a barricade on Independence Square in Kiev late on Dec. 12, 2013.

For much of the past three weeks, Sergei Veklenko hasn’t given much thought to his clients or the 150 employees of his office supply company. Instead, he’s been out on the frozen streets of Kiev -- protesting to help bring about what he sees as a better future for Ukraine.

“Of course I’m sacrificing some of my business interests by being here,” he said at Kiev’s City Hall, where demonstrators sheltered as the temperature hit an overnight low of minus 12 degrees Celsius (10 Fahrenheit). “But any investment is a risk. This is one big and very powerful investment in the future.”

Like Veklenko, thousands of protesters are skipping work to demand the government’s ouster and steer Ukraine toward closer ties with the European Union. The continuing protests, now in their fourth week, spell further trouble for an economy going through its third recession since 2008, where foreign currency reserves are at a seven-year low.

Huddling by a fire on the square, Mikhailo Buldei, 28, has skipped out on his job as a builder in a town three hours by car from Kiev. Alexiy Levinets, a lawyer wearing a protest group’s red-black insignia on his winter coat, told a potential U.S. business partner to leave town for safety reasons while he delivers warm clothing for protesters.

‘My Honeymoon’

And 40-year-old surgeon Yuri Kovalchuk, who married on Nov. 24, has been treating injured or sick demonstrators in a makeshift clinic in Kiev’s City Hall, which the protesters have occupied since Dec. 1.

“Everybody is laughing at me, saying I’m spending my honeymoon here,” he said in a dark corridor of City Hall, where the power was cut off Tuesday night as police raised pressure on protesters by dismantling barricades. “I want to have kids, and I want them to be happy in my country, not abroad.”

Hundreds, and sometimes thousands, of people have camped out on the square, and the crowds swell to more than 20,000 during the day and as many as half-million on weekends, according to local media.

With so many on the streets, life in the center of the city of 3 million has come to a halt -- and so has much of Ukraine’s business and economy.

Default Risk

The yield on Ukraine’s 2023 dollar bonds has jumped 25 basis points, or a quarter percentage point, in the past month to 10.23 percent yesterday. President Viktor Yanukovych last week traveled to China and Russia in search of financial support, and on Dec. 7 the government said it needed at least $10 billion in loans to stave off a possible default.

The demonstrations were sparked when Yanukovych snubbed a European integration pact in favor of closer Russian ties and police violence has swelled numbers in the streets and widened activists’ goals.

Opposition party leader Vitali Klitschko -- the World Boxing Council heavyweight champion, and for the past year a member of Ukraine’s parliament -- now says the president should call snap elections, punish those responsible for clashes, and release detained protesters.

Police raids on Dec. 11 did little to change such attitudes. They were “political suicide for Yanukovych,” said Andrei Grechin, 27, who’s been spending nights on the square and less time at his job at a small investment firm during the past three weeks. “Russian and European businesses have been afraid to invest in Ukraine because of the constant instability.”

Political Disruptions

The government counters that protesters have grown unruly, disrupting official business by blocking parliament and the offices of the president and the prime minister.

Premier Mykola Azarov maintains that Ukraine had no choice but to reject the EU accord because it would have damaged trade relations with Russia, which buys about a quarter of Ukrainian exports and supplies 60 percent of the country’s natural gas.

On Dec. 10, Yanukovych indicated he would sign the European Union association agreement in March, at a planned EU-Ukraine summit. He said the government is seeking to change the deal’s conditions, adding that “of course, it depends not only on us, it will depend on the European Commission as well.” The 28-nation bloc’s offer “is still on the table,” EU Enlargement Commissioner Stefan Fule said yesterday.

Rival Protests

In terms of its ability to bring demonstrators to the street, the government has lagged far behind the opposition. On Dec. 8, about 3,000 supporters of Yanukovych, whose 2004 election victory was annulled amid the Orange Revolution that centered on the same Kiev square, congregated in a nearby park. An opposition rally the same day attracted 500,000 protesters, according to local media, though the government estimated the crowd at closer to 100,000.

The opposition in Kiev is mobilizing demonstrators for another weekend rally Dec. 15, with supporters of the authorities planning to gather nearby.

Many demonstrators acknowledge that in the short-term, there’s no guarantee the protests will actually help improve Ukraine’s flagging economy, which has deteriorated because of falling prices for steel, its key export. Gross domestic product fell 0.3 percent from the previous quarter between July and September, confirming the economy is again in recession.

Not Economics

“It is not an economic confrontation, it’s a confrontation between eastern and western civilizations,” said Maxim Schipov, 25, a student at Kiev’s Theater institute who hasn’t showed up at his job as an event manager in two weeks. While Russia can offer cheap energy, that has little value if it preserves the status quo, instead of providing incentives for the country’s leaders to improve Ukraine. “We’ve had enough of gas for peanuts,” Schipov said.

Some protesters even allow that their personal interests might be harmed, but remain convinced that their movement will take Ukraine in the right direction. Yuriy Muzychuk, a director at a small technology consultancy in Lviv, says his company is at risk of losing several deals with Russian partners and Ukrainian state-owned companies because of the political crisis.

Yet he’s spent recent days patrolling Bankova Street, ensuring that violent agitators don’t mix with the peaceful demonstrators and provoke police to attack. He says he’s less concerned about his own prosperity than that of his country, and that a westward-looking future has greater appeal than one tied to Vladimir Putin’s Russia.

“Any instability has an impact on business,” said Muzychuk, who cut short a holiday to join the protests. “But we can’t lose this chance to put our country on a path to civilized development.”

To contact the reporters on this story: Ilya Arkhipov in Kiev at iarkhipov@bloomberg.net; Andrew Langley in London at alangley1@bloomberg.net; Daryna Krasnolutska in Kiev at dkrasnolutsk@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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