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Russia Agrees To Financial Massive Bail-Out For Ukraine

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Russia Agrees To Financial Massive Bail-Out For Ukraine

Europe

Russia Agrees To Financial Massive Bail-Out For Ukraine

Russia Agrees To Financial Massive Bail-Out For Ukraine

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Moscow has agreed to a massive financial bail-out for Ukraine, including big discounts on natural gas supplies from Russia and billions of dollars in loans. The deal will buy some time for embattled President Viktor Yanukovich, but it's unlikely to solve Ukraine's weeks-long political crisis. Tens of thousands of demonstrators continue to occupy the main square in Kiev, protesting Yanukovich's refusal to sign an agreement with the European Union, and his turn toward Russia. Critics are asking what strings are attached to Russia's largesse, and economists question whether it's a good deal for anyone.

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This is ALL THINGS CONSIDERED from NPR News. I'm Melissa Block.

Russia has agreed to a multibillion-dollar bailout for Ukraine. The deal comes amid a political crisis in Ukraine, as tens of thousands of demonstrators keep up a weeks-long protest. They're demanding the country's president step down. As NPR's Corey Flintoff reports from Moscow, the bailout may buy some breathing room for President Viktor Yanukovych, but it triggered new outrage among his opposition.

COREY FLINTOFF, BYLINE: Russian President Vladimir Putin announced the deal after a meeting with Yanukovych at the Kremlin. Putin said that Russia will cut the price for natural gas supplies to Ukraine by one-third and will lend the neighboring country about $15 billion. That amounts to a financial lifejacket for Ukraine's sinking economy, which faces billions of dollars in debt payments that come due next year.

PRESIDENT VLADIMIR PUTIN: (Foreign language spoken)

FLINTOFF: But Putin stressed that the natural gas agreement was temporary and said it means that long-term agreements should and will be signed. It's unclear what those long-term agreements may entail. But President Putin wants Ukraine to join a Moscow-led customs union, along with other former Soviet Republics, such as Belarus and Kazakhstan.

The announcement of the deal with Russia drew thousands more angry protesters to the central square in Ukraine's capital, Kiev, where protest leaders such as boxing champion, Vitali Klitschko, accused the president of selling his country to the highest bidder. They're protest ignited last month when Yanukovych reneged on a promise to sign an agreement that would have brought closer ties to the European Union. But the EU is offering far less money, and that money would have come from the International Monetary Fund with stringent conditions.

This is Igor Burakovsky, head of the independent Institute for Economic Research and Policy Consulting.

IGOR BURAKOVSKY: This assistance would require to implement a number of reforms, and some of the reforms are not very much popular in the country.

FLINTOFF: Burakovsky says those reforms would include taking away a subsidy on natural gas prices and devaluing the currency. That's something that would be political suicide for Yanukovych, who's up for re-election in early 2015. But Yanukovych may have few good options left.

Some analysts, such as Olexiy Haran, fear that Russia is drawing the Ukrainian president into a scenario where Ukraine will be so indebted to Russia that it has no choice but to join the Moscow-led customs union.

OLEXIY HARAN: Because Russian scenario is to weaken Yanukovych as much as possible and then to receive strategic concessions. There would be no other ally for Yanukovych except for Kremlin.

FLINTOFF: Haran, a professor of political science at Kiev-Mohyla University, says Yanukovych may hope that Russian money and political support will keep him in power.

At tonight's news conference, President Putin insisted that he and Yanukovych had not discussed the customs union. It may be that the Ukrainian president will argue that he won a good deal for the country without compromising its independence.

Corey Flintoff, NPR News, Moscow.

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