Merkel to Host Ukraine Opposition as New Rally Planned

German Chancellor Angela Merkel will host Ukrainian opposition leaders next week as protesters try to raise pressure on the government to step down and Russia accuses the U.S. and European Union of meddling in its backyard.

Merkel will meet opposition leaders Arseniy Yatsenyuk and Vitali Klitschko, a former world heavyweight boxing champion, on Feb. 17 in Berlin, her chief spokesman Steffen Seibert said at a news conference today. Yesterday, opposition leaders said they would consider taking part in government if the former Soviet republic’s parliament changes the constitution to limit powers now enjoyed by President Viktor Yanukovych.

“The talks are hardly going to produce a breakthrough but will probably increase pressure on the opposition to seek a compromise,” Lilit Gevorgyan, a senior analyst at IHS Global Insight in London, wrote in an e-mail. “Perhaps to the disappointment of the opposition,” the EU’s efforts are “not aimed at removal of the current president, but rather striking a compromise,” she said.

The Black Sea state tumbled into crisis in November after Yanukovych rejected an agreement to deepen ties with the EU in favor of an aid package offered by Russia. Following a violent police crackdown on protesters that triggered deadly clashes last month, the government and opposition are in stalemate, with protesters occupying Kiev’s central Independence Square and regional government offices in western and central Ukraine.

Rally Planned

Yatsenyuk’s Batkivshchyna party called people for a Feb. 16 rally to discuss ways to “achieve the people’s demands” peacefully, it said on its website. It also asked supporters to block the street where parliament and the government’s offices are located on Feb. 18, when the chamber is scheduled to debate potential constitutional changes.

The conflict has hurt Ukraine’s bonds. The yield on debt due this June dropped 70 basis points, or 0.70 percentage point, to 22.05 percent by 2:22 p.m. in Kiev, sliding from a record and paring weekly gains to 526 basis points, according to data compiled by Bloomberg. The cost of insuring the nation’s debt against non-payment for five years using credit-default swaps fell three basis points to 1,196 after touching the highest since 2009 yesterday, CMA data showed.

Acting Prime Minister Serhiy Arbuzov wants the country’s streets and administrative buildings clear of anti-government demonstrators by Feb. 16, he said earlier this week. After taking the reins of government after Mykola Azarov stepped down Jan. 28, Arbuzov said the “political situation” should be stabilizing and urged demonstrators to back down.

Activists Released

Authorities said they had released activists detained during violent clashes with police.

“If buildings and streets are freed, courts will start dropping criminal charges against them on Feb. 18,” Prosecutor General Viktor Pshonka said in remarks broadcast by tv5.

Oleksandr Turchynov, an ally of former Prime Minister Yulia Tymoshenko, said yesterday the opposition was ready to form a cabinet if lawmakers return the constitution back to its 2004 state, which curbs the president’s powers. If parliament refuses to vote on the amendment, protesters will return to the streets, he said.

Russia and the U.S. and EU remained divided on what level of involvement each should have in Ukraine. Russian Foreign Minister Sergei Lavrov criticized Western powers for sending representatives “uninvited” to Kiev to ask the Ukrainian government to choose path they favor. They want to forge a “sphere of influence,” he said in televised remarks in a news conference with his German counterpart Frank-Walter Steinmeier in Moscow today.

Aid Plans

“Russia can make a constructive contribution here as well,” Steinmeier said in an earlier interview with Kommersant newspaper today. “We need each other” to tackle global crises such as Syria, Iran, and Afghanistan, Steinmeier said.

While Russia has said it will put its $15 billion financing offer on hold until a new government is formed, the EU is ready to provide financial aid to a new Ukrainian cabinet, provided leaders are committed to rule of law and measures to strengthen the economy, Enlargement Commissioner Stefan Fule said yesterday after meeting Yanukovych in Kiev. The aid may be in the form of grants and loans, with a central role provided by the International Monetary Fund, he said.

“There are conditions,” Fule said yesterday. “I would call them reforms, reforms, reforms.”

To contact the reporter on this story: Daryna Krasnolutska in Kiev at dkrasnolutsk@bloomberg.net

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

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