Russian Finance Minister Anton Siluanov told US Secretary Jack Lew yesterday (10 April) that Moscow was concerned about Ukraine’s unpaid debt for supplies of natural gas, but was ready to work with international partners on financial aid for Kyiv.
“A concern was expressed about Ukraine’s growing debt for Russian gas supplies, particularly in the context of preparations for the winter season of 2014-2015,” Siluanov told journalists after meeting Lew at the World Bank-International Monetary Fund spring meeting in Washington.
In the meantime, Ukraine Finance Minister Oleksander Shlapak said that Kyiv has fulfilled all conditions to receive the first portion of the financial aid package from the International Monetary Fund.
“We’re here to speak in more specific terms about time and conditions of (international) support,” Shlapak told journalists on the sidelines of the World Bank-IMF spring meeting in Washington.
“Moreover, Ukraine has fulfilled all the conditions set by the IMF for the first tranche.”
The IMF agreed in late March to a $14 billion-$18 billion (€10 to €13 billion) two-year bailout for Ukraine, a deal to help it recover from months of turmoil that will also unlock further credits making a total of $27 billion (€20 billion) [read more].
The Fund’s executive board has yet to approve the distribution of the programme, but Fund Managing Director Christine Lagarde said on Thursday the board is likely to consider it by early May at the latest.
Ukraine’s Shlapak said Kyiv had to fulfil 13 IMF conditions in order to receive the money, including ones referring to monetary policy, liquidity requirements, banks’ recapitalisation and a stress test of 35 banks.
“We have met all theses conditions,” National Bank of Ukraine Governor Stepan Kubiv said at the same briefing.
First tranche not to be used to pay Gazprom
Both Kubiv and Shlapak said that the first tranche of the money will not be used to repay debts to Russia. Moscow claims that Kyiv owes it $2.2 billion for supplies of natural gas.
“The money that we will receive will be divided between the reserves of the National Bank and the state budget and this money will be targeted so we don’t plan to spend it on repaying debts to Russia,” Shlapak said. “At least the first portion of the money.”
They also said that the steps taken by the West against Russia over Moscow’s seizure of the Crimea region of Ukraine are not enough. Washington and the European Union have imposed visa bans and asset freezes on a group of Russians and Ukrainians.
“We will ask for sanctions that are related to Russia’s policies and economic actions, because Russia conducts its actions in a non-market manner and it dictates non-market prices,” Kubiv said.
“I think you saw how the Russians are simply laughing because of the sanctions introduced by the United States and Europe,” Shlapak added.
Both Kubiv and Shlapak said that they are disappointed with the statement issued by the Group of 7 largest economies on Thursday, in which the group failed to directly address the conflict between Russia and Ukraine.
“Today, Russia violates laws against Ukraine,” Kubiv said. “Tomorrow it will violate laws against other countries of the Earth.”
The ministers of foreign affairs of the USA, Russia, Ukraine and the EU foreign affairs chief Catherine Ashton, are expected to meet on 16 April in Geneva to discuss the Ukraine crisis.
Russian President Vladimir Putin informed several European leaders today about the “critical situation” over Ukraine’s natural gas debt, and about a possible impact on the transit of gas to Europe.
According to the letter, Putin calls on the economy, finance and energy ministers of EU countries to meet with their Russian counterparts and “work out concerted actions to stabilize Ukraine’s economy and to ensure delivery and transit of Russian natural gas in accordance with the terms and conditions set down in the contract”.
Sanctions against Moscow remain on the table
US President Barack Obama and German Chancellor Angela Merkel spoke on Thursday about further potential sanctions for Russia over its actions in Ukraine, calling again on Moscow to move its troops back from the border region, the White House said.
The administration said pro-Russian separatists, “apparently with support from Moscow,” were destabilizing Ukraine through “an orchestrated campaign of incitement and sabotage” [read more].
“The President underscored the need for the United States, European Union, and other global partners to be prepared to meet further Russian escalation with additional sanctions,” the White House said in a statement about the phone call.
NATO Secretary-General Anders Fogh Rasmussen, visiting Prague, said the threat was real. “Russia is stirring up ethnic tensions in eastern Ukraine and provoking unrest,” he told a news conference.
“And Russia is using its military might to dictate that Ukraine should become a federal, neutral state. That is a decision which only Ukraine as a sovereign state can make.”
Moscow dismissed the Western concerns as “groundless”. It said Rasmussen was being confrontational and not offering “any constructive agenda” for Ukraine.
“The constant accusations against us by the secretary general convince us that the alliance is trying to use the crisis in Ukraine to rally its ranks in the face of an imaginary external threat to NATO members and to strengthen demand for the alliance … in the 21st century,” the Russian Foreign Ministry said in a statement.
A Pentagon representative confirmed that the destroyer USS Donald Cook arrived in the Black Sea on Thursday for exercises with ships from Romania, Bulgaria and Turkey.
NATO presented satellite photographs on Thursday it said showed Russian deployment of 40,000 troops near the Ukrainian frontier along with tanks, armoured vehicles, artillery and aircraft ready for action.
“This is a force that is very capable, at high readiness, and, as we have illustrated through the imagery, is close to routes and lines of communication,” British Brigadier Gary Deakin said at a briefing at NATO military headquarters at Mons in southern Belgium.
“It has the resources to be able to move quickly into Ukraine if it was ordered to do so,” he said.
The crisis in Ukraine erupted after its former President Viktor Yanukovich cancelled plans to sign trade and political pacts with the EU in November 2013 and instead sought closer ties with Russia, triggering protests that turned bloody and drove him from power.
Moscow annexed Crimea in March following a referendum staged after Russian forces established control over the Black Sea peninsula in the biggest East-West crisis since the Cold War.