Ukraine’s Warring Factions Sign Pact to End Deadly Crisis

Ukrainian opposition leaders joined President Viktor Yanukovych in signing a peace accord to halt a deadly three-month political crisis.

The pact, brokered in all-night talks in Kiev with European Union foreign ministers, envisages early presidential elections and a national unity government within 10 days. Lawmakers backed a return to the 2004 constitution, which would curb Yanukovych’s powers, and voted to free jailed ex-Prime Minister Yulia Tymoshenko. The president still needs to sign the bills.

After the worst violence since the start of the unrest killed at least 77 protesters and police this week, EU governments imposed sanctions on some Ukrainian officials and sent envoys to hammer out a peace deal. The fate of the accord hinges on the most radical activists and the official opposition’s ability to control them.

“The guys with the petrol bombs and the guns aren’t accountable to the opposition leaders who signed this agreement,” Andrew Weiss, vice president for studies at the Carnegie Endowment for International Peace, said today on a conference call from Washington. “Whether they can drive events on the ground back into the kind of awful clashes we’ve seen this week is really the big question mark at this point.”

Ukrainian stocks and bonds rebounded on the prospects of a resolution to the crisis, which began when Yanukovych rejected an EU integration pact.

‘Key Victory’

The yield on the Ukrainian government’s dollar bonds due 2023 fell 96 basis points to 10.136 percent, having reached a record-high 11.42 percent two days ago, data compiled by Bloomberg showed. The UX Index of equities gained for a second day.

Speaking by phone, Oleksiy Haran, a member of the demonstrators’ Maidan Council, emphasized the constitutional change and new government as “the key victory.” Even so, opposition leader Arseniy Yatsenyuk, who heads Tymoshenko’s party, pointed to further tensions.

Protesters will remain at the Independence Square camp they built in November, according to Yatsenyuk, who said Yanukovych would be given no assurances on his fate. Vitali Klitschko, the former world boxing champion who heads the UDAR party, said those responsible for bloodshed would be held to account.

Pravyi Sektor, the radical nationalist group that’s advocated violence and supplied activists to man the front lines of the protesters’ defenses, said any peace deal must include a removal of the current regime.

‘Revolution Continues’

“The national revolution continues,” the group said in a statement on the Vkontakte social website.

In parliament, dozens of deputies from the president’s ruling Party of Regions defected. More than 300 of the legislature’s 450 lawmakers voted to revert to the 2004 constitution, fire acting Interior Minister Vitaliy Zakharchenko and free Tymoshenko from her seven-year sentence. There’s no timeline for her release.

Presidential elections, which had been scheduled for March 2015, must be held by December. The EU welcomed the deal as the only peaceful and democratic way out of the crisis.

“It is now the responsibility of all parties to be courageous and turn words into deeds for the sake of Ukraine’s future,” EU President Herman Van Rompuy said in a statement.

Polish Foreign Minister Radek Sikorski, who joined his German and French counterparts in Kiev, told the opposition that martial law would be imposed if the peace offer was spurned.

‘All Dead’

“You’ll have the army,” he said. “You’ll all be dead.”

The ministers arrived in Ukraine 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.

The U.S. said today’s pact is consistent with what it had been advocating and called for “immediate implementation” of the initial steps.

“Now the focus must be on concrete action to implement this agreement, which we will be monitoring closely,” White House Press Secretary Jay Carney said in a statement.

Russia blames the EU and the U.S. for emboldening protesters to take up arms against the government and Foreign Minister Sergei Lavrov told reporters in Baghdad yesterday that extremists were trying to provoke a civil war.

Today, his ministry urged a referendum on the constitutional switch.

Referendum Call

“Such a momentous process for Ukraine as constitutional reform should be carried out with the involvement of all of the political powers and regions,” it said on its website.

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.

The crisis is taking its toll on the economy in Ukraine, whose gas pipelines are a key east-west transit route for energy. The country has endured three recessions since 2008.

Standard & Poor’s warned today that Ukraine risks default without “significantly favorable changes” in its political crisis and cut its credit rating to CCC, eight levels below investment grade. OAO Sberbank is seeing run on its automated teller machines in Ukraine, German Gref, the head of Russia’s No. 1 lender, told reporters today in Moscow.

Russian Bailout

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.

Today’s agreement includes provisions for protesters to unblock streets and squares and relinquish control of public buildings seized across the country as the anti-government sentiment spread, according to a copy of the pact published on the president’s website.

On Independence Square, Vladimir Zvadyuk, a police colonel who’d traveled with about 40 colleagues from the the western region of Lviv to protect the protesters, showed no signs these conditions would be met by all.

“If Yanukovych had announced early presidential elections a month ago it would have been a compromise,” 40-year-old Zvadyuk said. “It’s not enough anymore.”