Yanukovych Hails Pact to End Crisis as Rivals Demand More

Ukrainian leader Viktor Yanukovych agreed to a plan to resolve the nation’s deadly political crisis as his opponents demanded the deal go further, including a call for presidential elections to be held as soon as possible.

The accord, the result of all-night talks with European officials, was due to be signed at noon local time in Kiev, the presidential administration said in a statement. French Foreign Minister Laurent Fabius said on Europe 1 radio that it’s premature to say an agreement has been reached, even as calm returned to the streets of the capital.

Ukrainian authorities reported 77 protesters and police have been killed and hundreds hospitalized in violence this week. European Union governments imposed sanctions on some Ukrainian officials, and diplomatic efforts in Kiev and Brussels left Yanukovych to consider mounting calls to step aside. Ukrainian bonds rebounded as investors anticipated a resolution after three months of anti-government demonstrations.

“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.”

While there was no violence during the night at the Independence Square protest camp, shots were fired at security forces this morning, the Interfax news service reported.

Early Elections

The foreign ministers of Germany, France and Poland helped broker an EU plan calling for a vote in September on changing Ukraine’s constitution and for parliamentary and presidential elections in December, Interfax reported, citing Oleksandr Yefremov, the ruling party’s parliamentary head.

Parliament Speaker Volodymyr Rybak said lawmakers “must adopt” a reversion to the 2004 constitution, which would empower the prime minister at the expense of the president. Early presidential elections, are also needed, opposition leader Oleg Tyahnybok said.

Russian President Vladimir Putin sent his human-rights ombudsman, Vladimir Lukin, to Kiev for talks with the opposition, Kremlin spokesman Dmitry Peskov said yesterday.

EU foreign ministers decided to freeze assets belonging to Ukrainian officials, deny them travel visas, suspend export licenses for equipment such as riot gear used to quash the protests. The U.S. also is considering targeted sanctions, after President Barack Obama threatened to penalize Ukrainian leaders if the violence escalated.

‘Strongly Condemned’

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.

Biden “strongly condemned the violence against civilians” in Kiev and urged Yanukovych to immediately pull back all security forces and take “tangible” steps to negotiate with the opposition, the White House said.

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.

Truce Shattered

A truce agreed to Feb. 19 crumbled yesterday in the deadliest day of protests as skirmishes erupted at the protest camp. 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. Parliament was evacuated and the meeting between Yanukovych and the foreign ministers was switched to the presidential palace.

Violence in the country of 45 million, a key east-west energy route, has snowballed this week amid frustration among protesters that demands for snap elections and governance changes were being ignored.

Russian-backed Yanukovych ordered a nationwide anti-terrorism sweep to end the uprising, with Russia and Western nations blaming one another for the escalation. Parliament rejected the move yesterday and voted to send troops to their barracks and release detained protesters.

‘Unpredictable Risks’

Standard & Poor’s cut Ukraine to CCC, eight levels below an investment rating, from CCC+ and kept its outlook negative, after the political situation “deteriorated substantially.” The government risks failing to service its debt unless the situation improves, the S&P’s said today in a statement.

Ukrainian bonds rebounded from a record low as the EU’s sanctions added to pressure on Yanukovych to find an end to the crisis. The yield on the government’s $1 billion of notes due in June tumbled 9.4 percentage points to 25.4 percent today even as the purchase of $2 billion in debt by Russia, part of a $15 billion bailout plan, was halted.

The unrest isn’t limited to Ukraine’s capital. Lawmakers in Lviv on the Polish border on Feb. 19 ousted their Yanukovych-appointed governor, set up an autonomous government and declared allegiance to the opposition. Protesters have seized government and security headquarters in at least four other regions.

Before it's here, it's on the Bloomberg Terminal.