Russian President Dmitry Medvedev on Monday threw his country's weight behind an economic recovery in Ukraine, pledging at the start of an official visit to back support for international lending to the ex-Soviet republic.
Medvedev’s first official visit to Ukraine took place as ties markedly improve under President Viktor Yanukovych after turning sour with his pro-Western predecessor and the Kremlin leader said he was glad a new page had been turned.
"Russia as a participant in the G-20 and the G-8 is ready, as a partner, to advance all issues relating to Ukraine, including International Monetary Fund and World Bank support," he told journalists
"Russia is ready to help in the modernisation of Ukraine’s economy," he added.
The new Yanukovych leadership is hoping to secure a new $19 billion credit programme from the IMF for its struggling economy after ramming through parliament a 2010 budget with a relatively tight deficit target of 5.3 percent of GDP.
Yanukovych has tilted Kyiv’s policy firmly towards Moscow since following the pro-Western Viktor Yushchenko — who had chilly relations with the Kremlin — into office in late February.
Medvedev expressed satisfaction that there was now a Ukrainian leadership he could do business with. "Trade, business contacts, are becoming more active and this is due in no small part to the fact that the Ukrainian state now has another administration …," he said before talks with Yanukovych.
Yanukovych last month extended the lease of the Russian navy in Ukraine’s port of Sevastopol until 2042 in return for cheaper gas — a move that caused an outcry among his opponents.
His opposition to membership of the U.S.-led NATO military alliance, ardently pursued by ex-president Viktor Yushchenko, has endeared him to Moscow, too.
But Yanukovych’s pro-Russian moves have re-invigorated the political opposition around his old rival, former prime minister Yulia Tymoshenko.
The Ukrainian nationalist group, Svoboda, gathered a few score of protesters in a small demonstration near the city centre in protest at what it said was the sell-out of the country’s sovereignty.
SIGNING AGREEMENTS
Medvedev and Yanukovych signed agreements on border demarcation, inter-bank cooperation, European security and cooperation between their respective intelligence services.
All the same, the two-day visit to Ukraine seemed likely to test the new close relationship between the two powers and stake out its limits.
Yanukovych, who says he also sees European integration as a priority for Ukraine, has been cool to a proposal from Moscow for a merger between Ukraine’s energy holding Naftogas and Russia’s state gas giant Gazprom <GAZP.MM>.
Ukraine is eager to retain control of a network that serves as a conduit for 80 percent of Russian gas supplies to the European Union and has dwelt on the fact that Russian Prime Minister Vladimir Putin made his merger proposal off-the-cuff with no advance warning to Kyiv.
Gazprom chief Alexei Miller on Monday stepped up pressure on Kiev, saying Russia would be ready to fund a complete overhaul of Ukraine’s gas network if it agreed to the merger.
"The proposal to merge the two companies is fully in line with global trends to merge energy firms," Miller told reporters. "If Gazprom and Naftogaz merge, Gazprom can rely on its financial resources to fully modernise Ukraine’s gas transportation system," he said.
Yanukovych, to Moscow’s irritation, has suggested the EU should be involved in any talk of a merger. And, asked about the issue last Thursday, Yanukovych said only Ukraine’s fully equal participation in such a joint venture could be envisaged. "Fifty-fifty — that would be the only way," he said.
The Yanukovych leadership is rather pushing for creation of a consortium involving the European Union as well as Russia to modernise the ageing pipelines.
Medvedev also took the unusual step of attending a memorial to victims of the Great Famine of 1932-33. The pro-Western Yushchenko, to the anger of Moscow, sought international recognition of the famine as genocide by Soviet dictator Josef Stalin, though Yanukovych has shied away from this line.
