Kremlin Concern Rises Amid Ukraine Turmoil
KYIV, Ukraine–Ukraine’s president tried to placate demonstrators on Tuesday by accepting his prime minister’s
resignation and repealing new antidissent laws, but the heat remained on him as Moscow signaled it could review a
massive bailout deal.
Moscow approved a $15 billion bailout last year when President Viktor Yanukovych agreed to drop a planned deal with
the European Union that Russia bitterly opposed. But the Kremlin has viewed his weakening political position with
growing alarm, and is watching to see if Kyiv strays too far from its pro-Moscow course.
Pressure from financial markets is also mounting. Standard Poor’s cut its long- and short-term foreign-currency
sovereign-credit ratings on Ukraine to triple-C-plus/single-C from single-B-minus/single-B, with a negative outlook,
saying it now assesses Ukraine as exhibiting characteristics of a “distressed civil society with weakened political
institutions,” diminishing the government’s capacity to maintain timely debt service.
President Vladimir Putin signaled that Russia may need to reassess its financial aid to Ukraine late Tuesday, hours
after Mr. Yanukovych accepted his prime minister’s resignation.
Speaking at a European Union-Russia summit in Brussels, Mr. Putin denied that Russia would review its loans in
response to a simple change of power in Kyiv.
But he said Russia was concerned about Ukraine’s ability to repay its loans, which he said were conditional on
structural changes that had been agreed upon with the departing prime minister, Mykola Azarov. Mr. Putin said the
overhauls, which he had never mentioned before, weren’t written down, but agreed upon orally.
Minutes later, Mr. Putin’s first deputy prime minister, Igor Shuvalov, said the country may indeed revise its
agreements with Ukraine if the new government changes policy and priorities, Interfax news agency reported.
Mr. Yanukovych’s opponents are demanding snap elections that would almost certainly end in his departure.
When protests erupted in Ukraine in recent months, Russia’s state-controlled media chastised Mr. Yanukovych for not
cracking down hard enough. Kremlin officials blamed right-wing Ukrainian nationalist groups for the violence, and on
Tuesday Mr. Putin criticized the West for meddling in Ukraine’s affairs.
Vice President Joe Biden’s office on Tuesday said Mr. Yanukovych had called him to update him on the situation in
Ukraine. “The vice president welcomed the progress made today,” his office said. “He strongly encouraged President
Yanukovych to continue to work with the opposition to find compromises critical to a peaceful solution.”
Canada’s Conservative government on Tuesday said it would restrict entry into the country of key Ukrainian government
officials, calling their attempts to silence protesters unacceptable.
Mr. Yanukovych’s hold on power has been slipping even in predominantly Russian-speaking eastern Ukraine, where he
usually enjoys support.
In addition to firing his cabinet Tuesday, Mr. Yanukovych’s allies in Parliament repealed laws that were passed to
crack down on protests and stiffen penalties for creating disorder.
But the measures appear to be insufficient, as his opponents have seized control of some regions and continue to man
barricades in the capital.
Mr. Azarov, a Russia-born hard-liner who has lately called protesters terrorists, has wielded limited actual power in
the post under Mr. Yanukovych. His resignation was widely expected, since Mr. Yanukovych has lately used the prime
minister’s job as a bargaining chip in negotiations with opposition leaders. On Saturday, he offered the position to
Arseniy Yatsenyuk, which the opposition figure turned down.
“Azarov offered his resignation this morning in order to save face,” said opposition leader Vitali Klitschko.
This week, Parliament is expected to consider extending amnesty to protesters jailed during the unrest of recent
weeks. But Mr. Yanukovych has called for his opponents to clear the streets and leave government buildings they have
seized, a condition they have largely refused to accept.
Mr. Klitschko, a former world boxing champion, said authorities continue to attempt to suppress protests by detaining
activists. He hailed a wave of protests in Mr. Yanukovych’s stronghold in eastern Ukraine in recent days as “a big step
toward victory.”
Still, “the main idea of the protest was not a new cabinet,” said Viktor Zamyatin, an analyst at the Razumkov Center,
a Kyiv-based think tank. “The aim was to stop repressions, to punish the people responsible and for the resignation of
Yanukovych.”
Write to Alan Cullison at alan.cullison@wsj.com and James Marson at james.marson@wsj.com
(END) Dow Jones Newswires 01-28-140355ET