Feb. 24 (Bloomberg) -- As President Vladimir Putin presided over the end of the Sochi Olympics, triumphing over early concerns and ridicule, unrest smoldering on the western border dimmed the glow.
The $43 billion Winter Games Putin used to showcase Russia, and the host country’s rise to the top of the medals table, were overshadowed as Ukraine’s Kremlin-backed president fled after the nation’s worst violence since World War II. Before the games started, protests had quieted and Putin’s $15 billion aid package to Ukraine looked like it had all but guaranteed Viktor Yanukovych would remain in power.
The fragile peace wrought with the help of European officials curbed Putin’s influence in Russia’s western neighbor, a major trade partner and key route for natural gas exports to Europe. The setback marred the Russian leader’s string of victories in global diplomacy, including his role in peace efforts in Syria and talks over Iran’s use of nuclear power.
“Ukraine broke an almost continuous trend, a rally in Putin’s successes that ran for the whole second half of last year,” Gleb Pavlovsky, a former Kremlin adviser who worked for Yanukovych in 2004. “Even the agreement with Yanukovych was seen as strengthening Putin, a victory. And then Maidan was a huge failure,” he said, referring to Independence Square in Kiev, the focus of the main anti-government demonstrations.
Ukraine spiraled into crisis in November when protesters took to the streets to oppose Yanukovych’s rejection of the European Union pact. Violence erupted after Yanukovych pushed through anti-protest laws in January and crested last week in fighting in central Kiev, killing at least 82 people before a peace deal brokered by European Union foreign ministers and triggered Yanukovych’s flight from Kiev.
Russian Foreign Minister Sergey Lavrov in a Feb. 22 statement said the opposition is following the lead of “armed extremists and thugs whose actions pose a direct threat to the sovereignty and constitutional order in Ukraine.” The Kremlin called its ambassador to Kiev back for consultations.
Moscow has also failed to slow the transition to a new leader. Yanukovych’s offer to hold an early presidential election in December was upended when parliament voted to remove him Feb. 22 and approved a vote May 25.
Reverting to financial diplomacy, Russia has delayed the remainder of the $15 billion bailout Yanukovych agreed to in December. Further payments will be on hold until the situation stabilizes and Russia has “many questions” about Ukraine’s ability to repay debt, Finance Minister Anton Siluanov said Feb. 21 in an interview in Hong Kong.
Even so, Yanukovych wasn’t a true ally to Putin and his loss isn’t a blow to Russia, former Moscow mayoral candidate Alexey Navalny, an opponent of the Russian president, wrote on his blog yesterday. He accused Ukraine’s former leader of corruption after the president fled and the gates to his sprawling residence were opened to the public.
“Yanukovych isn’t a pro-Russian politician,” Navalny said. “He’s a pro-cash politician.”
Ukrainian lawmakers agreed to transfer ownership of the estate in Kiev’s northern outskirts to the state. Thousands of people rode bicycles and strolled the grounds, which feature a man-made lake as big as several football fields with a life-sized galleon, and a zoo including deer, ostriches and peacocks. Next to the mansion, a garage housed antique cars, motorcycles and at least seven limousines, according to images on website Censor.net.
Closer to home, the uprising in Ukraine may spur Putin to crack down further on opponents and imprison to prevent the fire from spreading to Russia, Boris Akunin, an author and opponent of Putin, said on his Facebook Inc. page.
“It explains all his actions,” Akunin wrote. “But they’re not intelligent actions. Why tease an already angry public? The leader needs to grow up immediately.”
Domestically, Putin may derive more satisfaction from Sochi, Pavlovsky said. The Olympics will probably come to Russia only once in his presidency, while Russia’s ties with Ukraine, the most populous of its former Soviet neighbors, are like the tide, he said.
In Sochi itself, athletes and fans focused on the competitions. While Ukrainian skier Bohdana Matsotska withdrew from the slalom because of the violence in Kiev, the remaining 43 members of the nation’s team finished their events, according to the team website.
Ukrainian athletes and coaches held a moment of silence and put black ribbons on their country’s flags at Sochi’s Olympic village, according to the Ukrainian Olympic Committee.
The day the peace agreement was signed between Yanukovych and the opposition’s three main leaders, Ukraine won its only gold medal of the games, taking the women’s biathlon relay 26.4 seconds ahead of Russia to cheers for the athletes and their fans. Sergey Bubka, head of the national Olympic committee, said after the victory that it was dedicated “to the Ukrainian nation.”
With Yanukovych denouncing his removal as a coup d’etat from an undisclosed position after fleeing to the eastern city of Kharkiv, the peace in Kiev remains tremulous. Parliament Speaker Oleksandr Turchynov, who received temporary presidential powers, warned the economic situation is “catastrophic,” with no money in the treasury.
In southern regions of Ukraine, including Odessa and Kerch, people marched in support of closer ties with Russia, according to the Unian news service. More than 2,000 people gathered in Odessa carrying Russian flags, and in Kerch, marchers replaced a Ukrainian flag at the mayor’s office with Russian and Crimean flags, Unian reported.
“I appeal to everybody implicated in confrontation, oppression or violence: act on this Olympic message of dialog and peace,” International Olympic Committee President Thomas Bach said during closing ceremony.
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