US, EU officials use Sochi calm to try to reach deal in Ukraine

Inside the ring of barricades and sandbags that have turned Kyiv’s two-month-old Independence Square protest into something resembling a well-defended military encampment, there was a sense on Thursday that this period of calm during the Sochi Winter Olympics may be the last opportunity to avoid a more violent confrontation that could engulf Ukraine.

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Officials from the United States and the European Union descended on Ukraine on Wednesday and Thursday in an effort to persuade President Viktor Yanukovych to step down, call an election and amend the constitution to remove the increasingly authoritarian powers he granted himself after being elected in 2010.

At the same time, Russia on Thursday threatened to withdraw the $15-billion (U.S.) bailout fund it pledged to fiscally troubled Ukraine in November in exchange for Mr. Yanukovych’s cancellation of an open-borders agreement with the EU – a deal whose cancellation infuriated pro-European Ukrainians and provoked the protests. Russian officials also threatened to bill Ukraine for more than $3-billion in Russian natural gas the country has used.

Both protesters and Western officials say this could be the only moment to reach a compromise. Russian President Vladimir Putin presumably wants to avoid a violent spectacle or a political crackdown taking place in Kyiv during the Games, and he currently seems to have less influence over the weakened Mr. Yanukovych.

“The EU really needs to come in right now, while Putin’s busy with the Olympics, and get involved, provide its own aid and impose sanctions against Yanukovych, because if they don’t do it now this place is going to blow up,” said Vitaliy Kotlyarov, a protest marshal associated with the right-wing nationalist Svoboda party.

In fact, EU foreign minister Catherine Ashton, in Kyiv on Thursday morning, met with Mr. Yanukovych and afterward issued a warning that his government’s inaction in meeting protest demands could lead it to be isolated and punished by Europe. “I really do need to feel a growing sense of momentum on this,” she said.

Her visit was followed by one beginning on Thursday from U.S. Assistant Secretary of State Victoria Nuland, who was said to be issuing similar warnings of sanctions and offers of aid in exchange for reforms and immediate elections.

On the other hand, Mr. Yanukovych is due to travel to Sochi this weekend, on Mr. Putin’s invitation, to meet with the Russian President – who has been more strident in his demand that Ukraine honour its deal to take Russian aid in place of an EU deal.

There was an urgent sense that the EU and the U.S. were trying to seal a deal generous enough to overcome Russian threats of fiscal revenge. Stefan Fuele, the EU Enlargement Commissioner, told the Agence France-Presse wire service on Thursday that the EU was willing to provide financial assistance “in case of a positive scenario.”

The feeling that Russia and Europe are both closing in on Mr. Yanukovych did little to raise confidence among either protesters or financial markets.

Ukraine’s currency, the hryvnya, fell dramatically on Wednesday night, to 9.40 to the dollar compared with 8.0 a few days earlier, as investors lost confidence in the country’s political future.

And protest organizers, while almost unanimous in saying they hoped for a deal brokered by the EU and involving immediate elections, also said they feel that the walls are closing in on Kyiv, and that they should be prepared for a less political and more physical confrontation.

“We have the weapons ready for a real conflict,” Mr. Kotlyarov said. “We are prepared to fight for our freedom, and lay down our lives for it if we have to.” It is that sense of violent desperation that Western officials are desperately trying to assuage as they wrestle for a deal while the Olympics provide a political pause.

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