Yanukovych Rules Out Early Vote Amid Ukraine Protests

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Ukrainian President Viktor Yanukovych said the street demonstrations that have taken over central Kiev risk damaging the economy. Close

Ukrainian President Viktor Yanukovych said the street demonstrations that have taken... Read More

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Photographer: Sergei Karpukhin/AFP via Getty Images

Ukrainian President Viktor Yanukovych said the street demonstrations that have taken over central Kiev risk damaging the economy.

Ukrainian President Viktor Yanukovych ruled out early elections, rejected Western “interference” and warned anti-government protesters to control their “ambitions” after clinching a $15 billion Russian bailout and natural-gas price cut.

There are “no strings attached” to Russian aid and the gas-price reduction will make Ukrainian products more competitive, Yanukovych said in a television interview today after returning to Kiev from Moscow where he signed agreements bypassing a deal with the International Monetary Fund and the European Union.

“I am strongly against anyone coming to our country to teach us how we should live,” Yanukovych said in answer to a question about Western politicians visiting protesters in Kiev. “It is very important that other countries don’t interfere with our domestic issues.”

Ukrainians are continuing the biggest protests in almost a decade after Yanukovych rejected an EU integration accord last month and instead chose deeper ties with its former Soviet master. Russian President Vladimir Putin accuses the EU of meddling in Ukrainian politics and U.S. Senators John McCain and Chris Murphy addressed demonstrators in Kiev on Dec. 15. The country of 45 million people, a key Russian gas pipeline transit nation to the West, is struggling with its third recession since 2008 and dwindling foreign reserves.

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Ukrainian students march during an opposition protest rally at Independence Square in Kiev on Dec. 19, 2013. Close

Ukrainian students march during an opposition protest rally at Independence Square in... Read More

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Photographer: Yuriy Dyachyshyn/AFP via Getty Images

Ukrainian students march during an opposition protest rally at Independence Square in Kiev on Dec. 19, 2013.

Roundtable Talks

Yanukovych said the country is overcoming the political crisis he called for new roundtable talks in Kiev on the crisis to be held tomorrow and for three-way talks with the EU and Russia. He said his security forces weren’t involved in street violence aimed at protesters.

Meanwhile, parliament, which is dominated by Yanukovych’s party, the Party of Regions, passed an amnesty law to free protesters who have been arrested since violence broke out earlier in the month. The law also prevents any more arrests during the series of protests.

Protesters who gathered today at the main square, the Maidan, for another evening of political speeches and singing, criticized Yanukovych’s midday comments and said they don’t trust his motives.

“The political crisis isn’t coming to its end,” said Roman Chigur, 25, who stood on the plaza, also called Independence Square. “Opposition ambitions are very bright and and clear, and that helps and keeps people at Maidan.”

Rejecting opposition calls for early elections, Yanukovych said will only seek re-election in a March 2015 presidential vote if he has enough pre-campaign support.

Yanukovych would currently lose to any of the opposition candidates if a vote was held now, according to a recent poll. His worst result would be against Vitali Klitschko, a former boxing champion, who polled 46.9 percent, compared with 28.6 percent for Yanukovych, in a Nov. 28-Dec. 7 survey of 2,013 people by Perspektyva for Tyzhden magazine. It had a 2.2 percentage-point margin of error.

Bond Yields

“I don’t believe a word Yanukovych says,” said 60-year-old Vera Ovcharuk, who was standing at Maidan, the epicenter of demonstrations. “That’s why I even don’t want to think about his words.”

The yield on Ukraine’s dollar denominated bonds due 2023 rose to 9.2 percent, the highest level since Dec. 16, as of 5:17 p.m. in Kiev today. The cost to insure Ukraine’s debt against non-payment with five-year credit default swaps dropped 107.7 basis points to 789.95, the lowest level since August, according to data compiled by Bloomberg.

In Moscow, Putin told reporters that historic ties between the two former Soviet states make them “like close relatives.”

‘Long-Term Relationship’

Putin said today that a 33 percent gas price cut announced for Ukraine was a temporary measure “but it can be extended by a decision of both partners.” He said he hoped “a long-term relationship” could be agreed between Russia and Ukraine.

“No one was choking anyone,” Putin said. “From the very start, it was said, including in Ukraine, and this is entirely fair, if we want to be independent, we have to pay for it.”

Fredrik Erixon, director of the European Centre for International Political Economy in Brussels, said the idea of Putin giving anything away “without a big payout is out of the question.”

“This is a very strong message from Putin to Ukraine not to even think about doing some kind of side deal with the European Union,” Erixon said in a phone interview. “It’s the stance of a bully strong-arming Ukraine by reminding them of the very high opportunity cost.”

Eurobonds

Under the Russian accord, Ukraine will issue $15 billion of Eurobonds for Russia to buy, with a $3 billion tranche of two-year debt possible in 2013, according to Russian Finance Minister Anton Siluanov. It will also get a one-third cut in the price it pays its neighbor for natural gas, Putin announced.

The bonds will mature on Dec. 20, 2015 and pay a coupon every six months, according to a decree printed on the Ukrainian government’s website.

Yanukovych said Ukrainian state assets won’t be provided as collateral for bonds bought by Russia.

Ukraine’s opposition vowed to keep up street protests against Yanukovych after he sought to calm anger at the Russian bailout by pledging to raise public employee wages three times next year before his 2015 re-election bid. About 3,000 demonstrators were at the main square in central Kiev at 12:45 p.m., according to the RBC news service.

“My crisis just began,” said Alexander Ulitskiy, 59, who was with protesters. “I’ll never accept him as a president, under no circumstances.”

Thousands of pro-European Union demonstrators have been urged to continue on and lend support by showing up every evening at Maidan Barricades on the streets leading to the square have been fortified to prevent a repeat police crackdown. Klitschko called for a massive New Year’s Eve celebration to be held on the square.

EU Summit

“We should not leave Maidan,” said Arseniy Yatsenyuk, the head of jailed ex-Prime Minister Yulia Tymoshenko’s party. “He wants us to leave badly. Victory will not happen soon. But we will have victory because we are following the right path.”

Leaders of the 28-nation EU are meeting today in Brussels for summit that includes defense issues.

EU leaders will give support to “European hopes” of Ukrainian people without giving promises about membership possibilities, according to Russian newswire Itar-Tass, which didn’t say where it got the information. They will also demand freedom for “all opposition supporters” and offer to mediate talks between the government and opposition, it said.

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

To contact the editors responsible for this story: James M. Gomez at jagomez@bloomberg.net; Balazs Penz at bpenz@bloomberg.net

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