Russia Raises Pressure on Ukraine After Its Cabinet Quits

Russia ramped up pressure on Ukraine with a threat of withholding aid until the country forms a new government after the cabinet loyal to President Viktor Yanukovych bowed to nationwide protests and quit.

Premier Mykola Azarov, 66, resigned yesterday, as Yanukovych tried to ease a political crisis. It was not enough for protesters, who vowed to hold their positions at the site of deadly clashes with police last week in the capital Kiev. Opposition leaders maintained a demand for a snap presidential election and wrangled with government lawmakers on further concessions including an amnesty for protesters and constitutional changes.

Yanukovych, 63, is struggling to contain unrest thats spread from the capital to other cities since his rejection of a European association pact triggered anti-government protests in November. The demonstrations turned deadly last week and the turmoil has led to a tug-of-war between Russia and Europe for influence in the nation of 45 million people.

Elections are the best method for the people to decide, Elmar Brok, chairman of the European Parliaments foreign affairs committee and head of delegation to Ukraine, told reporters in Kiev. The people have lost the belief they can trust what the government says.

A protester throws a molotov cocktail at riot police in the centre of Kiev on January 22, 2014.

A protester throws a molotov cocktail at riot police in the centre of Kiev on January 22, 2014. Close

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A protester throws a molotov cocktail at riot police in the centre of Kiev on January 22, 2014.

The yield on Ukraines dollar-denominated government debt due 2023 jumped 51 basis points to 9.55 percent at 6:29 p.m. today, data compiled by Bloomberg show. The hryvnia strengthened to 8.4750 per dollar from 8.4850 yesterday.

Russia agreed to lend Ukraine $15 billion and give its western neighbor a one-third discount on natural gas supplies to Ukraine after Yanukovych pulled out of the EU agreement, which Russian President Vladimir Putin has said could damage Russias economy.

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Russia Raises Pressure on Ukraine After Its Cabinet Quits