Ukraine Crackdown Builds Tension as EU Envoy Arrives

The European Union’s foreign policy chief is heading to Ukraine after police raided the main opposition party headquarters and tore down barricades erected by protesters calling for President Viktor Yanukovych to quit.

About 1,000 demonstrators held out for a 20th day in the city center amid snow showers and freezing temperatures, with an overnight low of minus 7 Celsius (18 Fahrenheit). Emotions flared after hundreds of officers pushed activists away from their make-shift blockades and tent encampments in Kiev and stormed the offices of jailed former Prime Minister Yulia Tymoshenko’s party yesterday and early this morning.

European Commission Vice-President Catherine Ashton arrives for a two-day visit in a country ravaged by political crisis and economic uncertainty. Demonstrations erupted after the government pulled out of an EU trade deal on Nov. 21 in favor of closer ties with Russia. Subsequent clashes and the raid on Tymoshenko’s party have drawn calls for a calm solution from the EU and U.S.

“I follow with concern the reports that police forces forcibly entered the office of the biggest opposition party,” Ashton, who was due to meet Yanukovych at 3 p.m., said in a statement last night. “I call on the Ukrainian authorities to exercise utmost restraint and refrain from any further use of force, in order to give space for a negotiated solution out of the current political stalemate.”

$10 Billion

The yield of Ukraine’s dollar-denominated bonds due 2023 slipped to 10.868 percent at 11:10 a.m. today, compared with yesterday’s record-high 10.883 percent, according to data compiled by Bloomberg. The cost of insuring Ukrainian debt against non-payment for five years with credit-default swaps rose 29 basis points today in Kiev to an almost four-year high of 1,155, showing investors see the country as the world’s least credit-worthy after Argentina and Venezuela.

The demonstrations underscore the diverging paths Russia and the 28-member EU are offering Ukraine. The economy shrank 1.3 percent in the third quarter compared with a year earlier, the statistics office said today, extending Ukraine’s third recession since the global economic crisis started in 2008.

An essential transit route for Russian gas toward Europe, the Black Sea country is seeking $10 billion to keep its economy afloat. It has used up half of its foreign exchange reserves since mid-2011 to prop up its currency.

Prosecutor’s Warning

Yanukovych’s government has repeatedly rejected International Monetary Fund bailout terms. He met Russian Vladimir Putin last week, galvanizing pro-European opposition forces in Kiev occupying the central Independence Square, the epicenter of the 2004 Orange Revolution.

A day after youths toppled a statue of Vladimir Lenin, the prosecutor general warned activists not to “test the patience of authorities.”

More than 200 policemen in riot gear tore down barriers near government offices yesterday and pushed protesters toward Independence Square. Hundreds more police marched with metal riot shields to drive activists away from barricades near the president’s office, injuring three, at about 4 a.m. this morning, according to a Bloomberg reporter on the scene.

The pressure on demonstrators raised fears of a repeat of clashes that injured 400 people on Dec. 1, when riot police broke up a protest encampment. Anger over that crackdown helped draw hundreds of thousands of Ukrainians to Kiev on Dec. 8 for the country’s biggest rally in almost a decade.

More Stand-Offs

U.S. Vice President Joe Biden expressed his “deep concern” about the situation in Ukraine during a telephone call with Yanukovych on Sunday, the White House said in a statement yesterday.

“We now have left this post, I think we will be back,” Opposition Svoboda party leader Oleh Tyahnybok told Bloomberg after the police push this morning. More force by authorities will “lead to more stand-offs,” he said.

Officers also broke down the doors of Tymoshenko’s headquarters, making workers lay on the floor as they took computers, said Natalia Lysova, a party spokeswoman.

Yanukovych met three former presidents of Ukraine, all of whom favor closer ties with the EU today. Opposition parties did not take part, and world heavyweight boxing champion and protest leader Vitali Klitschko said the government must be dismissed before any talks begin. Arseniy Yatsenyuk, the head of Tymoshenko’s party, said the raid on his party’s offices had not helped calm the situation.

‘Yanukovych Order’

“It was a Yanukovych order,” he said yesterday. “That’s how he invites us for round-table talks.”

Russian Economy Minister Alexei Ulyukayev said yesterday that Ukraine couldn’t join his country’s customs union with Kazakhstan and Belarus -- the prospect of which has been the main driver of the demonstrations -- anytime soon.

“Putin believes that time is on his side and Russia will benefit in the end,” Sergei Markov, a political adviser to Putin’s staff and vice rector of the Plekhanov Russian University of Economics, said by phone from Moscow yesterday.

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