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Yanukovych Offers Early Presidential Vote to End Crisis

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Feb. 21 (Bloomberg) -- Ukraine’s leader agreed to an early presidential ballot and called for a national unity government to halt a deadly three-month political crisis. The opposition is seeking approval for the offer from protesters in Kiev.

Viktor Yanukovych, commenting on his website, also urged a return to the 2004 constitution, a move that would shift powers to parliament from the office of president. Speaking after the European Union drew up a peace deal in all-night talks in Kiev, Polish Prime Minister Donald Tusk said the constitutional switch should happen in the next 48 hours.

“We see a cautious chance, maybe a last chance, to get into a political process that might point the way out of the deep crisis in Ukraine,” German Chancellor Angela Merkel’s chief spokesman Steffen Seibert said today in Berlin.

After the worst violence since the start of the unrest killed at least 77 protesters and police this week, European Union governments imposed sanctions on some Ukrainian officials and sent envoys to negotiate a peace deal. Ukrainian bonds rebounded as investors anticipated a resolution to the crisis, which began when Yanukovych rejected an EU integration pact.

Yanukovych said earlier today that he’d agreed to an EU-brokered peace plan. French Foreign Minister Laurent Fabius told Europe 1 radio it’s premature to say an agreement has been reached, even as calm returned to the streets of the capital. Fabius returned to talks with Yanukovych, along with foreign ministers from Germany and Poland.

‘Highly Questionable’

Vitali Klitschko, who heads the UDAR party, said the opposition would do everything to ensure a peaceful solution, Germany’s Bild-Zeitung reported, citing an interview with the former world boxing champion. Klitschko said he’d asked German Foreign Minister Frank-Walter Steinmeier to lobby demonstrators at the Independence Square tent camp, according to Bild.

“The biggest challenge is to sell the deal to the opposition, especially to its more radical segments,” Lilit Gevorgyan, a senior analyst at IHS Global Insight in London, said by e-mail. “Yanukovych’s political survival remains highly questionable because his presidency is significantly tainted as his assault tactics on opposition failed, leaving dozens dead.”

The yield on Ukrainian government’s dollar bonds due 2023 fell 72 basis points to 10.375 percent, having reached an all-time high of 11.42 percent two days ago, according to data compiled by Bloomberg.

Truce Shattered

The EU foreign ministers arrived in Kiev yesterday after a Feb. 19 truce between activists and riot police crumbled. Security forces were given the green light to fire live rounds, as sniper shots felled protesters and police officers and each side accused the other of escalating the clashes.

U.S. Vice President Joe Biden warned Yanukovych in a phone call yesterday that the Obama administration is prepared to impose sanctions on officials responsible for the violence, the White House said in a statement that didn’t detail what the penalties would be or when they might be announced.

Russia blames the EU and the U.S. for emboldening protesters to take up arms against the government. The threat of sanctions encouraged the opposition to take an intractable position and is similar to “blackmail,” Russian Foreign Minister Sergei Lavrov told reporters in Baghdad yesterday. Ukrainian extremists are trying to provoke a civil war, he said.

Putin Envoy

Russian President Vladimir Putin sent Russia’s human-rights ombudsman, Vladimir Lukin, to Kiev for talks with the opposition, Kremlin spokesman Dmitry Peskov said yesterday. Lukin left without signing the EU offer, Interfax said today.

Russia has halted a $15 billion bailout for its neighbor because of the unrest. Finance Minister Anton Siluanov said today in an interview in Hong Kong that Russia has “many questions” on how Ukraine can repay the aid.

While EU officials were hopeful their deal may bring about an end to the crisis in Ukraine, uncertainty remained over whether all parties would agree to it and whether it would be honored, according to Poland’s Tusk.

“To be honest, I don’t know anyone on this planet who could say he trusts Yanukovych now,” he said in Warsaw.

To contact the reporter on this story: Kateryna Choursina in Kiev at kchoursina@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net