EU Urges Fair Elections to End Stalemate in Ukraine

The European Union is pushing for “fair” elections in Ukraine and will discuss the country with the head of the IMF the stalemate between the government and protesters manning street barricades.

EU foreign-policy chief Catherine Ashton, who yesterday called for President Viktor Yanukovych and opposition leaders to engage in more dialogue after the 28-member bloc, said today she will hold talks with International Monetary Fund Managing Director Christine Lagarde on Feb. 13 in Washington. The EU is also working with civil-society leaders in the ex-Soviet republic to help end demonstrations that have blocked parts of Kiev since November.

The EU stresses “the importance of stopping any form of violence, bringing to justice those who have perpetrated that violence and moving forward to the work of the parliament on constitutional reform, which is a key part of trying to solve this crisis, and onward to free and fair elections,” said Ashton after foreign ministers met in Brussels yesterday.

Ukraine has been rocked by a crisis triggered Nov. 21 when Yanukovych snubbed an offer to forge closer ties with the EU over a $15 billion deal with Russia. Opposition leaders are struggling to force a change in the constitution back to its pre-2004 version that would shift some powers from the president to the prime minister. They argue Yanukovych has abused his power and is marching the country closer to default.

The presidential election is scheduled for March 15, 2015.

Death Toll

Seven demonstrators and two policemen have died since the protests began, crippling Ukraine’s ability to raise funds. The authorities are grappling to stabilize the economy and have imposed capital controls to stem a slide in the hryvnia.

Meanwhile, some foreign ministers sought sanctions against Ukraine while others proposed boosting incentives to steer the Ukrainian government back toward the west.

“We are primarily in the carrots business, not the sticks business,” said Swedish Foreign Minister Carl Bildt yesterday. “There won’t be any funds for an un-reformed Ukraine,” added his Polish counterpart, Radoslaw Sikorski.

“No options are being taken off the table,” Ashton said today in Brussels. “We want positive action to be the way forward if we can possibly do that.”

The cost of insuring Ukraine’s debt against non-payment for five years using credit-default swaps rose 16 basis points to 1,065 at 5:04 p.m., CMA data showed.

The yield on the Ukrainian government’s dollar bond due 2023 fell 3 basis points to 9.958 percent, data compiled by Bloomberg show. The hryvnia weakened to 8.6300 from 8.4350 yesterday.

Constitutional Debate

Talks between opposition and Yanukovych have ended with no solution as the president seeks to delay changes in the constitution. Opposition leaders, who are also not in agreement on what to change in the constitution, want a vote on curbing presidential rights, including picking the prime minister, as soon as this week. Yanukovych insists up to six months is needed to make constitutional changes.

Opposition called supporters to rally as soon parliament meets to vote on the change. No date has been set for such an emergency meeting, which was originally supposed to be scheduled for this week.

Opposition Pressure

Thousands of people gathered on Feb. 9 in Kiev’s Independence Square to demand snap elections and curbs on presidential powers. Opposition leader Arseniy Yatsenyuk told the crowds that the U.S. and the EU are ready to step in with financial aid.

The EU-offered association agreement, which includes closer trade ties, is still on the table for Ukraine, though it is not the “final goal,” said Lithuanian Foreign Minister Linas Linkevicius in a statement on the ministry’s website.

Attempts to reduce tensions in the wake of deadly clashes between protesters and police, including Premier Mykola Azarov’s Jan. 28 resignation, have failed to clear the streets. Demonstrators have erected barricades and are holding out in a tent camp near the main square. They’ve also seized government buildings in Kiev and in other cities.

“The current atmosphere of impunity which allows for such acts to take place must be addressed,” the EU said in the statement yesterday. “The EU will remain actively engaged with Ukraine and maintain its high-level presence.”

The EU also offered Ukraine “expert support” in helping put the country “back on a sustainable path of reforms.”

“The EU remains committed to supporting Ukraine’s reform course,” it said. “On the basis of a new Ukrainian government pursuing economic and political reforms, the EU is ready to further pursue its efforts with the international community and international financial institutions to assist Ukraine, in line with well-established conditions, to find a sustainable way out of its difficult economic situation.”

(Updates with Ashton’s IMF comments in second paragraph.)
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