The deal Ukraine’s embattled president Viktor Yanukovitch claimed he had reached this morning with the country’s opposition leaders has now been signed. The political turmoil is taking its toll on investor confidence, with a bond issue cancelled as S&P downgraded the country to CCC.
This live blog will be following developments in the Ukraine as the day progresses. Contributions from Roman Olearchyk and Neil Buckley in Kiev and Peter Spiegel in Brussels. Anchored by Claire Jones and Lindsay Whipp in London.
The FT’s Roman Olearchyk has been watching former presidential candidate Inna Bogoslovska in action this morning:
Roman Olearchyk: Speaking from Ukraine’s parliament podium on Friday, Inna Bogoslovska, who broke ranks with the pro-presidential party in December after riot police brutallly beat peaceful pro-EU student protesters, announced that video evidence exists showing unknown snipers apparently trying to escalate the standoff by shooting simultaneously at police and protesters.
In comments that come amid rumours and suspicions by insides sources that some of the snipers shooting at protesters are from Russia, she said: “More than 100 people were shot dead yesterday. We have video where a sniper dressed in a Berkut [riot police] uniform … but he was obviously not Berkut … was shooting at the protesters from a roof top then turning and shooting at Berkut.”
Paul Cunningham, who is in Kiev covering the crisis for Irish national broadcaster RTE, reports that there has been sporadic gunfire heard from Independence Square again this morning, despite the announced agreement with Yanukovic:
Roman reports that the opposition is demanding the release of former president Yulia Tymoshenko:
Roman Olearchyk: Speaking in Ukraine’s parliament on Friday, Arseniy Yatseniuk, leader of the Fatherland party faction of jailed opposition leader Yulia Tymoshenko, announced that the opposition will as one of its conditions demand her immediate release.
Citing as a key condition the “immediate return to the 2004 constitution” in which parliament, not the president, held more powers in forming government, he added: “We demand the release of Yulia Tymoshenko.”
Another tweet from Paul Cunningham on claims from police that protesters fired the first shots this morning:
Here’s the FT’s latest take on the turmoil:
FT reporters: Ukraine’s embattled president Viktor Yanukovich claimed on Friday to have reached a compromise deal to end the country’s violent political crisis – but EU ministers immediately raised questions and it was unclear that anti-government protesters would accept it.
The announcement followed a massacre in Kiev on Thursday in which as many as 70 Ukrainians were killed as unidentified snipers fired on protesters in the capital’s central square.
The bloodbath brought mounting international pressure on Mr Yanukovich to end the crisis, and he held talks late into the night with a trio of EU foreign ministers from Poland, Germany and France, as well as a representative from Moscow.
And here are some excerpts from S&P’s statement on why they’ve downgraded Ukraine. They don’t sound too convinced by Yanukovitch’s claims of an agreement :
S&P: When we lowered the long- and short-term foreign currency ratings on Ukraine to ‘CCC+/C’ on Jan. 28, 2014, we indicated that we could lower the ratings again if political turmoil further reduced the government’s administrative capacity to meet debt service, or if Ukraine did not receive the expected financial support from Russia or find alternative funding sources.
In our view, the expected financial support from Russia is becoming increasingly uncertain and dependent on the outcome of the deteriorating political situation in Ukraine. The clashes between protesters and security forces that began on Feb. 18 lead us to conclude that a conciliatory end to the political stand-off is now out of reach…
…We estimate that the government, National Bank of Ukraine (NBU; the central bank), and state-owned gas company Naftogaz have about $13 billion in foreign currency debt service to make in 2014. Ukraine’s international reserves fell to $17.8 billion in January 2014 from $20.4 billion in December 2013. At the same time, Ukraine’s large current account deficit, at about 9% of GDP in 2013, and elevated household demand for foreign currency will also put pressure on Ukraine’s foreign currency reserves….
…We expect that alternative financial assistance from the U.S., EU, or IMF to be tied to likely conditions associated with a formal IMF lending program, including increased exchange rate flexibility, policies to strengthen the financial sector, fiscal consolidation, increases in domestic energy tariffs, and comprehensive structural reforms to improve the business climate and support growth. In our view, the incumbent Ukrainian government is disinclined to endorse this policy direction.
KIEV, UKRAINE – FEBRUARY 21: Anti-government protesters man the front line barricades following yesterdays clashes with police in Independence square, in Kiev, Ukraine. (Photo by Jeff J Mitchell/Getty Images)
KIEV, UKRAINE – FEBRUARY 21: Anti-government protesters man the front line barricades following yesterdays clashes with police in Independence square, on February 21, 2014 in Kiev, Ukraine. (Photo by Jeff J Mitchell/Getty Images)
It appears markets aren’t much convinced by this deal either. fastFT is reporting that the currency continues to slide, though bond markets are somewhat calmer:
fastFT: Ukraine’s currency has continued to tumble even as claims of a deal between protestors and the government has calmed bond markets somewhat.
The yield of Ukraine’s bond maturing in 2023 has fallen from a record high of 11.25 per cent on Wednesday to 10.43 per cent on Friday, but the hryvnia has shed 3.3 per cent to a six-year low of 9.25 per cent against the US dollar, according to Bloomberg data.
Trading in the Ukrainian currency is extremely sparse and data on moves therefore patchy, but so-called non-deliverable forwards – contracts that allow investors to bet on the currency’s movements – also soared higher on Friday, indicating that many expect a deeper depreciation.
Queues forming at ATMs. Russian Market tweeting that limits have been placed on ATM withdrawals:
Powerful AFP image of Independence Square before and after the turmoil:
That picture of the queue at cashpoints was taken in Yanukovich’s hometown region of Donetsk in eastern Ukraine. Queues have formed at ATMs around the country, according to Ukrainian television.
Reuters and Interffax are reporting that Yanukovitch has called for an early presidential election. More to follow…
Roman reports that some of the police from western Ukraine have turned up to protect the protesters:
Roman Olearchyk: About one hundred police officers from Lviv, the largest city in western Ukraine where opposition to Yanukovich’s rule is largest, arrived Friday afternoon at the barricaded protest camp in downtown Kiev to side and protect the demonstrators. Dressed in uniform and reportedly armed handguns, they were greeted with cheers by protesters.
Those Reuters flashes courtesy of fastFT:
21-Feb-2014 10:53 – PRESIDENT YANUKOVICH ANNOUNCES UKRAINE TO HOLD EARLY PRESIDENTIAL ELECTION
21-Feb-2014 10:54 – YANUKOVICH ANNOUNCES RETURN TO 2004 CONSTITUTION WITH REDUCED POWERS FOR PRESIDENT
21-Feb-2014 10:54 – YANUKOVICH SAYS WILL START PROCESS TO CREATE NATIONAL UNITY GOVERNMENT IN UKRAINE
From the FT’s Brussels bureau chief Peter Spiegel:
Roman on the announcement on early elections:
Roman Olearchyk: Viktor Yanukovich, the Ukrainian president under fire a day after as many as 70 people were killed, moved on Friday to defuse the country’s worst crisis since independence by accepting calls for early presidential elections and constitutional changes that would curb powers of the presidency.
Addressing his nation through a statement posted on the presidential website as lawmakers moved to adopt legislation changing Ukraine back to a parliamentary system of government, Mr Yanukovich described the events of recent days as “tragic.”
“I am initiating snap presidential elections … and a return to the 2004 constitution with a shift of authority towards a parliamentary republic,” he said. He also called for formation of a “national government of trust” to “preserve the lives of people, peace and calm on our land.”
He made no mention of when the early presidential election would take place, and it remained unclear if protesters would be satisfied by reports suggesting Mr Yanukovich planned on holding the snap poll as late as December.
Andrew Byrne reports from Brussels on the latest developments on the EU’s stance on events in Kiev:
Andrew Byrne: The EU’s group of 28 ambassadors dealing with foreign policy matters – known as the Political and Security Committee – is meeting in Brussels this morning to discuss which figures in Ukraine will face sanctions and exactly what kind.
But don’t expect any definitive list of targets or immediate measures today. It’s likely the committee will pass on instructions to a technical working group currently gathering names from sources in Kiev and EU capitals. Once the list of sanctions is agreed it will then have to go back to ministers for a sign off but they can approve the actions in writing, so another summit isn’t necessary.
All the while, ministers will be keeping in close contact with the trio of German, French and Polish foreign ministers who are still in talks with President Yanukovich in Kiev to find a solution to the crisis.
As the EU’s powerful sanctions machine starts slowly moving into action, all eyes will be on Kiev for any developments.
This from Neil Buckley, who’s in Kiev, shows just how many questions remain over this morning’s deal:
Neil Buckley: Leaving Ukraine’s presidential administration building after Mr Yanukovich’s announcement with the German and French foreign ministers, Poland’s foreign minister Radoslaw Sikorski replied to reporters asking him if there was a deal: “Not yet.”
Just after President Yanukovich announced his concessions, the German foreign ministry said Frank-Walter Steinmeir and Radek Sikorski, the German and Polish foreign ministers, were meeting with opposition figures, presumably to see if they would accept terms of the deal. Laurent Fabius, the third EU foreign minister who had traveled yesterday to Kiev, is now in Beijing for a previously-scheduled meeting with Chinese leadership:
In Berlin, Chancellor Merkel believes this morning’s deal is perhaps the last chance to get out of the crisis. This from our Berlin bureau chief Stefan Wagstyl:
Stefan Wagstyl: “We see a cautious chance, maybe a last chance, to get into a political process that might lead the way out of the deep crisis in Ukraine,” said chancellor Angela Merkel’s spokesman today in Berlin.
Neil Buckley reports that Poland’s Sikorski and the other foreign ministers are heading to Kiev’s central square to discuss the proposed agreement.
Roman reports that the prospects of the early election not taking place until December have gone down badly with the protesters. They want him gone now:
Roman Olearchyk: The prospect of Mr Yanukovich holding on to power for months or perhaps half a year until early elections are held did not appear to be accepted well by protesters in downtown Kiev.
“No, he should step down immediately,” one mid-aged woman describing herself as a “simple Ukrainian mother” was seen saying on local television.
“The regime had three months to take all needed political decisions,” Yuriy Lutsenko, a former interior minister and protest activist said addressing crowds on Kiev’s once cosmopolitan main square which now resembled a battle zone.
Calling for “immediate presidential elections,” he said “we can not feel safe and believe in the future of the country if a bloody dictator will continue dragging out negotiations.”
Some analyst reaction. Clearly claims of a deal and early elections have done little to dampen fears of contagion:
Nicholas Spiro: Any deal that’s agreed between the protesters and the government should be treated with bucket loads of salt. We’re dealing with a highly unpredictable and panic-stricken presidential regime that appears to be in the process of collapsing and an opposition movement that has become much more radicalised and wants Yanukovich out immediately. Any kind of transition in such a politically explosive and volatile environment is fraught with all sorts of dangers and risks.
The vital missing ingredient in Ukraine has been the lack of an external policy “anchor” for meaningful and sustainable economic and institutional reform. This is what drove the reform process in the central and east European countries which joined the EU in 2004 and 2007. There was a time when the EU could have done more to integrate Ukraine more closely with the West but too many opportunities have since been squandered – particularly on the part of successive Ukrainian governments – and Russia’s stance has hardened significantly over the past several months.
The trigger for widespread contagion across CEE/EM would be a dramatic sell-off in Russian assets stemming from a sharp escalation in the domestic and geo-political situation in Ukraine, possibly involving Crimea. The rouble is the EM currency to watch right now.
Simon Quijano-Evans: As foreign policymakers take sides, Ukraine risks being pulled apart, with some calls now for a federal state and a possible secession of regions. The implications for EU and global stability are substantial and highlight the importance of today’s agreement for early elections to go through with support from all sides. A look at the direct risks for the EU shows that humanitarian and cold war fears stand at the top of the list of CEE worries, while the rest of the EU may again be confronted with gas supply issues, banking sector exposure risks and a complete disruption to cross-border activity. Moves to safe-haven are just around the corner.
Opposition leader Vitali Klitschko has told Bild, a German newspaper that he has called on Steinmeier to appeal to representatives of the protesters in the central Kiev square. Until then, the deal will remain unsigned.
Klitschko: “We are ready to do everything to reach a peaceful solution. I have asked the German foreign minister to make a personal appeal to Maidan representatives before the signing. Then we will sign the agreement. “
Neil Buckley reports that the EU foreign ministers have already returned to Ukraine’s presidential administration, according to officials in Kiev, barely an hour after they left. Not clear yet whether the answer they’ve brought from the square is
“yes” or “no” to the deal.
RT reports that panic-stricken Ukranians are storming shops, banks and gas stations:
RT: Bloodshed on Independence Square (Maidan) and rumors of worst yet to come have prompted panic among Ukrainians, with many fleeing the country and those who stay emptying shop shelves, queuing for gasoline and making big cash withdrawals from banks.
The mood is a pre-war one in most Ukrainian cities, where people, afraid of the country falling deeper into economic paralysis, are trying to buy up as many essential foods and goods as they can. Fearing stampedes, some Kiev shops have started limiting the amount of shoppers at any one time.
Full story here
Beyond Brics’ Rob Minto on the S&P downgrade:
Rob Minto: With protesters being killed and the country descending further into chaos, the question is now not whether Ukraine will default, but if it can possibly avoid it.
Full post here
Russian Market tweeting that Sberbank has halted lending in Ukraine:
Bloomberg has flashed that protesters have agreed to a deal. Here are the flashes:
Neil Buckley reports that the German foreign office is tweeting that that after talks with German foreign minister Steinmeier and Polish envoy Sikorski, the Maidan’s coordinating council agreed to mandate opposition party leaders to sign the agreement.
But reports suggest that Russia’s representative Vladimir Lukin does not want to sign, and there are so far unconfirmed reports that Russia’s Sberbank has halted lending in Ukraine – which could be very damaging. We’re not out of the woods yet.
Here’s that tweet from Germany’s foreign office:
Some reports in local Ukrainian media suggest that the opposition party-backed protest coordination council are demanding the new government does not include current Interior Minister Vitaliy Zakharchenko and General Proscutor Viktor Pshonka, writes Roman Olearchyk. One pro-presidential lawmaker said the compromise deal envisions presidential elections being held in December of this year, as opposed to next year. But its unclear if the protesters, enraged by the deaths of at least 77 people, will accept this.
Opposition leader Vitaly Klitschko told Germany’s Bild he was ready to sign the agreement, but that more talks were still needed with protesters, Neil Buckley writes. But Russia’s representative Vladimir Lukin is reported to have left – which would be a bad sign. The Ukrainian parties and EU ministers could sign the deal without Russia – but Moscow could then make life very difficult.
Bloomberg are reporting that Ukranian protesters have agreed to an offer from Yanukovich to hold elections by December and cite Oleksiy Haran, a member of the demonstrators’ Maidan Council, saying by phone
the protesters “gave a mandate” to opposition leaders to sign the deal, which also includes a return to the 2004 constitution within 48 hours, a step that would curb Yanukovych’s powers.
More just in from Neil Buckley, who says that Polish foreign minister Radek Sikorski has tweeted that the Ukraine peace deal is about to be signed.
Officials here at Ukraine’s presidential administration say the main
parties have gone upstairs to sign it in front of TV cameras. But the
Russian representative has left.
And presidential administration officials confirm the peace deal has been signed, Neil Buckley reports.
In further signs that Mr Yanukovich’s compromise offer is not satisfying all protesters, Right Sector, the most militarised grouping within Ukraine’s anti-government movement, called for the “revolution to continue,” reports Roman Olearchyk.
In a statement, Dmytro Yarosh, leader of the group criticised the compromise deal for not delivering on the immediate resignation of Mr Yanukovich, whom he referred to as a “pseudo president.” Mr Yarosh also called for snap parliamentary elections, accusing current lawmakers of being ineffective over three months in defusing the crisis which led to the “killing of almost 100 hundred Ukrainian citizens.”
He also demanded the immediate arrest of current Interior Minister Vitaliy Zakharchenko, riot police commanders, “the killer snipers,” SBU state security chief Oleksandr Yakimenko, General Prosecutor Viktor Pshonka and Defense Minister Pavlo Lebedev.
After the official signing of the compromise, Frank-Walter Steinmeier, Germany ‘s foreign minister, issued a statement on behalf of the European foreign ministers who brokered the deal:
Steinmeier: The Foreign Ministers of France, Germany and Poland welcome the signing of the agreement on the Settlement of the crisis in Ukraine, commend the parties for their courage and commitment to the agreement and call for an immediate end to all violence and confrontation in Ukraine.
Here’s the statement.
Neil Buckley has just heard from Sikorski, who was talking about the deal.
Neil Buckley: Speaking outside Ukraine’s presidential administration, Radoslaw Sikorski, Poland’s foreign minister, said: “I’m satisfied that this is the best agreement we could have and it gives Ukraine a chance to return to peace, to reform, and hopefully to resume its way towards Europe.”
He added that he hoped “just liked the Solidarity Revolution in Poland eventually succeeded [in the 1980s] the Maidan Revolution will also one day succeed,” he said referring to Ukraine’s chances of closer integration with Europe.
Referring to the departure of Russia’s representative before the agreement was signed, Mr Sikorski said: “I hope that Russia will support this agreement even though he was not able to sign it.”
Anyone interested in reading the deal can find it here.
Neil Buckley, East Europe editor, reports from Kiev on Russia’s involvement and why there are echoes of the cold war.
Peter Spiegel’s summation of the deal:
UK prime minister David Cameron has backed the deal. Here’s the statement from Number 10:
David Cameron: I welcome today’s agreement which offers a real chance to end the bloodshed and to stop the downward spiral into the nightmare that is facing Ukraine and her people. It should foster a lasting political solution to the crisis and President Yanukovych, his administration and the opposition must all get behind this deal and deliver it according to the timetable set out. In particular, the 2004 Constitution must be restored within the next two days and a national unity government should be in place by the beginning of March.
I hope that it will restore calm to the streets of Kiev and across the country. The scenes we have witnessed over the last few days have been horrific and my thoughts are with those who have lost loved ones and the injured. Such scenes of carnage are truly shocking and have no place in 21st century Europe.
Over the last 24 hours, I have spoken to President Putin, Chancellor Merkel and Prime Minister Tusk. We all support this deal and want to see it work. And working with other European partners and the United States, we will do all we can to ensure it succeeds.
More from Roman on the curbs in presidential powers:
Roman Olearchyk: Ukraine’s parliament late on Friday afternoon voted to curb presidential powers by shifting the country back to a parliamentary system. In a sign of unity, 386 of 397 lawmakers voted in favour and celebrated immediately after by standing up to sign the national anthem.
As part of the compromise agreement brokered earlier in the day, Mr Yanukovich was expected to immediately sign it into law, as well as legislation ordering detained protestors to be released and granted amnesty.
That missing Russian signature:
Gideon Rachman asks whether the Ukraine deal will stick:
Gideon Rachman: It is obviously too soon to tell whether today’s deal to end the crisis in Ukraine will end up as the final chapter in the story – or a mere footnote. On the positive side, the bloodshed in Kiev may have shocked all sides into reaching for a compromise. The intervention of the foreign ministers of Germany, Poland and France also carries real weight.
But there are obviously grounds for scepticism. The Russians have not yet signed off on the agreement, which is a bad sign. And many Ukrainian protesters – enraged by the killings yesterday – will not like aspects of the deal.
The agreement to hold presidential elections in December is not a particularly large concession by President Yanukovich. There was due to be a presidential poll in March 2015, anyway. Almost nobody in the protest movement trusts Mr Yanukovich and many were demanding his immediate resignation, followed by snap elections.
Those demands for an immediate presidential resignation may only intensify, after the bloodshed in Kiev. Indeed one dangerous area of ambiguity in the agreement is whether those guilty of giving the order to shoot, yesterday, will face prosecution. The current government will not want to give up power, unless they receive reassurances on that point. But in today’s super-charged atmosphere, the protesters would be very unhappy about agreeing to an amnesty.