Ukraine PM says will stick to austerity despite Moscow pressure

KYIV — The Kyiv government will stick to unpopular austerity measures “as the price of independence” as Russia steps up pressure on Ukraine to destabilise it, including by raising the price of gas, Prime Minister Arseny Yatseniuk told Reuters.

Mr Yatseniuk, 39, who stepped in as interim prime minister last month after Mr Viktor Yanukovich and his ministers fled the “Euromaidan” protests, conceded that it would be very difficult “under the current Russian presence” to undo what he described as Russia’s “international crime” in seizing Crimea.

But he said Ukraine would never recognise the Russian takeover in exchange for re-establishing good relations.

“I want to be perfectly clear. We will never recognise the annexation of Crimea … The time will come when Ukraine will take over control of Crimea,” he said, speaking in English, seated in his cavernous, Soviet-built government headquarters beneath the blue and yellow Ukrainian flag.

He has called himself the leader of a “kamikaze” government, doomed by unpopular austerity measures it must take, but he said Ukraine would stick to the measures, which include doubling gas prices for domestic consumers from May 1 and holding down state pensions and salaries against a background of a 3 per cent contraction of the economy and double-digit inflation.

IMF support — a US$14 billion to US$18 billion (S$17.6 billion to S$22.7 billion) financial lifeline in return for tough economic reforms — would be a “tremendous step forward”, he said.

“We will regain trust and credibility from foreign investors. This is the roadmap for Ukraine,” he added.

The Kyiv government has said that without the IMF-mandated austerity measures, the economy could shrink by up to 10 per cent this year.

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Mr Yatseniuk, a former economy minister, lawyer, and economist by education, has often been regarded as too aloof and intellectual to be a contender for high office in Ukraine, which he told the Kyiv Post newspaper in December 2012 was “because I’m bald and wear glasses”.

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