Monday 26 May 2014

WSJ: Russia Ready for Talks With New Ukraine President

             The WSJ reports,"billionaire candy maker Petro Poroshenko scored a decisive victory in Sunday's election, capturing just over 54% of the vote with 90% of the ballots counted. He won in every region where voting was held, avoiding a runoff despite severe disruptions in the east, where separatists shut polling stations.
At a news conference Monday, Mr. Poroshenko said he would do everything in his power to win over people in eastern Ukraine, the country's industrial heartland".
"I'm going to do everything possible to win their trust," Mr. Poroshenko said. "Because without their trust, this process will be impossible."
The Kremlin seemed willing to accept the result and said it was ready to engage in dialogue with Mr. Poroshenko.
Russian Foreign Minister Sergei Lavrov didn't explicitly say Moscow recognized the election, but said it respected the will of the Ukrainian people.
He insisted that talks be conducted directly between Moscow and Kiev without the help of intermediaries from the U.S. or the European Union, as Mr. Poroshenko has suggested. He also called a decision by Kiev to carry on with a military operation to dislodge pro-Russian militants in the east "a colossal mistake."
In another sign of detente, Russia and Ukraine took a tentative step Monday toward resolving a fight over unpaid natural-gas bills that led Gazprom, the Russian export giant, to threaten to cut Ukraine's supply off as early as next week.
After talks in Berlin, the two sides said they would consider a deal in which Ukraine would pay $2 billion owed to Russia on Thursday, followed by negotiations over a disputed price increase, according to European Energy Commissioner Günther Oettinger.
Analysts said that Russia's softening position suggested the Kremlin wanted to head off possible additional sanctions now that it has achieved its objectives in Ukraine, with Crimea firmly in its hands and the new government in Kiev struggling to maintain control over the country.
Instability in the primarily Russian-speaking east of Ukraine gives Moscow leverage over Kiev, and is also likely to hamstring any efforts by the new government to draw closer to the West—a shift the Kremlin opposes.
Pro-Russian rebels mounted their most dramatic challenge to what was left of the Kiev government's authority in the troubled Donetsk region, with a separatist leader declaring martial law and rebels taking control of the airport.
The seizure marked a change in tactics for the rebels, who had largely stayed out of the regional capital, instead manning checkpoints on roads leading into it.
The surprise move prompted a strong military response and heavy shooting and explosions could be heard. The Defense Ministry said fighter jets and army helicopters opened fire on rebel positions at the airport, destroying an antiaircraft battery they had set up on the roof.
Local police said one man had been killed while standing at a bus stop a mile away from the airport, the apparent victim of a stray bullet.
Mr. Poroshenko said that his priority would be integrating Ukraine into Europe but that he is prepared to engage with Russia. He also said he would continue to support the government's military effort in eastern Ukraine, but would move to make it "more effective" and quicker. He insisted Ukraine won't negotiate with those he called terrorists.
On Sunday night, he said he would make his first official visit as president to the troubled eastern region. He said his first foreign visit would likely be to Poland, where he plans to meet European leaders and U.S. representatives.
Analysts said Russia's steadily softening position on Ukraine signaled a more pragmatic approach intended to make sure its vital trade relationship with Europe didn't deteriorate any further.
While Western sanctions were limited to a short list of government officials, confidantes of President Vladimir Putin and companies connected to them, the chilling effect was far greater.
Russia saw $65 billion in capital outflows in the first quarter, its economic growth forecast for the year has dwindled to near zero and the ruble sunk to all-time lows.
"Russia had a long-standing and stable relationship with Europe that has grown extremely fraught. It is a major objective for them to normalize these relations," said Kristine Berzina of the German Marshall Fund.
Following Russia's effective blessing of the vote, the ruble pushed back to levels last seen in January and Moscow's main Micex stock index hit a three-month high. Economically, Russian officials argue that the worst may have passed, with capital flight figures dropping to $4.6 billion in April and the possibility of recession declining.
Dmitry Trenin, director of the Carnegie Moscow Center, said economics aside, Russia realized it made little sense not to accept the results of such a clear election.
"They are realists in Moscow," he said. "They see that the president elect has several million votes and the Ukrainian people behind him. You can ignore a bunch of leaders who have emerged from a coup, but you cannot ignore a popularly elected leader."

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