A glimmer of hope in Ukraine?
Let’s not count our chickens after 75 people were killed over the past two days but President Viktor Yanukovich’s people are saying an agreement on resolving the crisis has been reached at all-night talks involving the president, opposition leaders and three visiting European Union ministers.
A deal is due to be signed at 1000 GMT apparently although no details are as yet forthcoming. There has been no word from the EU ministers or the opposition so far.
Even if the violence subsides and some sort of political agreement is reached (a huge if), there is potential financial chaos to deal with despite Russia’s only partially delivered pledge of $15 billion to bail its neighbour out.
Standard & Poor’s has cut Ukraine’s sovereign rating for the second time in three weeks, saying the political situation has deteriorated substantially, posing an increased risk of default. The rating is now deep in junk territory at ‘CCC’ and with a negative outlook, meaning further cuts are likely.
Moscow is expected to pay the second instalment of $2 billion soon but has signalled that Yanukovich must first restore order to get it. So in essence the EU says sanctions will be imposed if the violence doesn’t stop while Russia says aid money won’t flow if the violence does stop and the opposition has not been quelled.
Russian Prime Minister Dmitry Medvedev said Moscow would not hand over cash to a leadership that let opponents walk over it “like a doormat”. S&P said Russian support through 2014 was uncertain, putting Kiev’s abilities to service its debt at increasing risk.