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 For three hours Yanukovich cajoled and bullied anyone who pushed
for Ukraine to have closer ties to Russia. A handful of deputies
from his Party of Regions complained that their businesses in
Ukraine's Russian-speaking east would suffer if Yanukovich didn't
agree to closer ties with Russia. That set him off.
"Forget about it ... forever!" he shouted at them, according to
people who attended the meeting. Instead the president argued for an
agreement to deepen trade and other cooperation with the European
Union.
Some deputies implored him to change his mind, people who attended
the meeting told Reuters. Businessmen warned that a deal with the EU
would provoke Russia — Ukraine's former master in Soviet times —
into toughening an economic blockade on Ukrainian goods. Yanukovich
stood firm.
"We will pursue integration with Europe," he barked back, according
to three people who attended the meeting. He seemed dead set on
looking west.
Less than three months later Yanukovich spurned the EU, embraced
Russian President Vladimir Putin and struck a deal on December 17
for a bailout of his country. Russia will invest $15 billion in
Ukraine's government debt and reduce by about a third the price that
Naftogaz, Ukraine's national energy company, pays for Russian gas.
It is not clear what Yanukovich agreed to give Russia in return, but
two sources close to him said he may have had to surrender some
control over Ukraine's gas pipeline network.
What caused the U-turn by the leadership of a country of 46 million
people that occupies a strategic position between the EU and Russia?
Public and private arm-twisting by Putin, including threats to
Ukraine's economy and Yanukovich's political future, played a
significant part. But the unwillingness of the EU and International
Monetary Fund to be flexible in their demands of Ukraine also had an
effect, making them less attractive partners.
And amid this international tug-of-war, Yanukovich's personal
antipathy towards his jailed political rival, Yulia Tymoshenko, was
a factor, according to Volodymyr Oliynyk, an ally of Yanukovich and
a prominent member of the ruling party. The EU accused Ukraine of
treating Tymoshenko unfairly — to the annoyance of Yanukovich,
according to his supporters and one of her lawyers.
The upshot is that Yanukovich, 63, has split his party and his
country. Some leading party officials have deserted him. His hopes
of re-election in 2015 — if there is a free and fair vote — look
weak.
Hundreds of thousands of protesters have taken to the streets,
demanding he step down and the country pursue closer links with the
EU. Yanukovich, who has been increasingly cut off in his sprawling
residence outside Kiev and distant even from some of his oldest
friends, did not respond to requests for comment.
PROUD EGO
Risen from humble roots, Yanukovich likes to be treated with respect
and as an equal, a characteristic that has informed much of his
reluctance to join the customs union of former Soviet states that
Putin wants to create.
Colleagues describe the burly leader as an intuitive politician who
cannot abide being patronized. Inna Bohoslovska, a member of
Yanukovich's Party of Regions until last month, said Yanukovich made
clear at the cinema meeting his dislike of Russia treating Ukraine
as second rate.
"He told us Russia was not fit for talks, Russia did not consider
Ukraine to be an equal partner, that it tried to force us to act by
its own rules, that Russia does not act in Ukraine's best interests
in any negotiations, and therefore there can be no talk of having
negotiations with Russia," she said.
Yanukovich felt he was better treated by EU officials, two party
members said, despite finding it hard to grasp the complexity of EU
bureaucracy. Hailing from Ukraine's industrial east, Yanukovich also
seemed the perfect man to persuade Ukraine's pro-Russian eastern
regions to agree to closer ties with Europe.
"That a president from the east would bring Ukraine into Europe was
the ideal combination for us. We were willing to do anything," said
David Zhvaniya, a former member of the Party of Regions who helped
lead efforts to prepare Ukraine for deeper cooperation with the EU.
Now deeply disillusioned, Zhvaniya feels misled by Yanukovich: "He
tricked us all ... It was a complete, utter lie." He accuses
Yanukovich of acting like a tsar.
Others say Yanukovich's desire to forge closer links with the EU was
genuine, but that he became dismayed when he felt the EU failed to
acknowledge the scale of the financial difficulties he would face if
he chose Brussels over Moscow.
Yanukovich estimated that he needed $160 billion over three years to
make up for the trade Ukraine stood to lose with Russia, and to help
cushion the pain from reforms the EU was demanding. The EU refused
to give such a sum, which it said was exaggerated and unjustified.
The EU offered 610 million euros ($839 million) immediately. EU
officials said increased trade, combined with various aid and
financing programs, might go some way to providing Kiev with the
investment it needed.
An EU source said Ukraine could have been in line to receive at
least 19 billion euros in EU loans and grants over the next seven
years if it had signed a trade and cooperation agreement and reached
a deal with the IMF. But that sum was not mentioned to Ukraine
officials during negotiations, said the source.
To Ukraine, there seemed little prospect of getting the EU, already
struggling to help its indebted members, to offer a better deal than
its original offer.
Oliynyk, who is Ukraine's permanent representative for NATO, and
others were furious. He told Reuters that when Ukraine turned to
Europe's officials for help, they "spat on us."
Next year Ukraine will have to cover foreign debt payments of $8
billion, according to its finance ministry. It was teetering on the
brink of bankruptcy, partly because Moscow was blocking sales of
Ukrainian-produced meat, cheese and some confectionery, and
scrapping duty-free quotas on steel pipes. Some officials said the
restrictions showed what life would be like if Ukraine signed the EU
agreement.
Yanukovich's other hope was the IMF. It rescued Ukraine during the
onset of the global financial crisis with a $16.5 billion loan in
2008 when Tymoshenko was prime minister. It also approved a $15.5
billion stand-by program for the Yanukovich government in 2010,
disbursing about $3.5 billion, before freezing the program in 2011
because Ukraine failed to meet its conditions. A year later, the
program had expired.
The IMF, like the EU, was unwilling to grant the sort of loans
Yanukovich wanted under a new program. In a letter dated November
20, it told Ukraine that it would not soften conditions for a new
loan and that it would offer only $5 billion, Oliynyk said. And Kiev
would have to pay back almost the same amount next year, he said, as
part of repayments for the earlier $16.5 billion loan.
The IMF declined to comment. According to IMF figures, Kiev should
pay back $3.7 billion next year.
"We could not contain our emotions, it was unacceptable," said
Oliynyk.
Yanukovich was furious, party members said. He believed the IMF had
ignored what he saw as reasonable demands to lift tough conditions
for its earlier help, such as increasing the retirement age and
freezing pensions and wages. Worse, the IMF was asking him to repay
a loan that had been negotiated by his arch enemy, Tymoshenko.
JUSTICE ON TRIAL
Despite his reputation as a hard man — he was sent to Soviet prisons
twice for theft and assault when he was a youth — Yanukovich has a
particular weak point: jailed opposition leader Tymoshenko. He both
detests and fears her, according to his aides and diplomats.
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Conspicuous for her plaited blonde hair, Tymoshenko was one of the
leaders of the 2004 Orange Revolution, which snuffed out
Yanukovich's first bid to be president. She served as prime minister
in 2005 and then from 2007-2010, and their enmity deepened when a
plan to form a coalition against a common enemy failed in 2009.
Tymoshenko, who has said she wanted to "kill" Yanukovich over his
policy U-turn, was jailed in 2011 for abuse of office after a trial
Western governments say was political. Most Ukrainians think she
should be released, though many question how she amassed her wealth.
To the EU, Tymoshenko's case represented an unacceptable standard of
justice. As part of the trade pact, the EU demanded Ukraine release
Tymoshenko or, as some officials suggested, make a commitment to do
so.
Yanukovich and his supporters resisted. "We had done most things on
the list for the EU accession agreement, but there was a question
mark over Tymoshenko ... We believe she is guilty ... and among
those people who think she is guilty, 80 percent are our voters,"
Oliynyk said, going on to document the dozens of perceived slights
Tymoshenko has made against Yanukovich.
Tymoshenko has never acknowledged his legitimacy as president and
refuses to ask for forgiveness so he can pardon her, he said.
Serhiy Vlasenko, a lawyer for Tymoshenko, said his client was a
factor in Yanukovich's decision not to accept a deal with the EU:
"He (Yanukovich) had dozens of reasons not to sign it, and yes, one
of the reasons is that he acknowledges Mrs Tymoshenko as his main
political opponent and he does not want to see her free as she is
the only politician who could beat him."
Yanukovich was also offended when he found out Kiev would not be
offered a firm prospect of full membership of the EU; he felt
Ukraine was being treated as a lesser country to "even Poland", with
which it shares a border.
"Many citizens have got it wrong on European integration. It is not
about membership, we are apparently not Poland, apparently we are
not on a level with Poland ... they are not letting us in really, we
will be standing at the doors. We're nice but we're not Poles,"
Oliynyk said.
Poland became a full member of the EU in 2004. EU enlargement chief
Stefan Fuele suggested after Yanukovich's U-turn that perhaps the
bloc should have offered Ukraine membership at some point.
Amid the acrimony, leading officials, including Mykola Azarov,
Yanukovich's prime minister, performed a volte-face.
In September, just after his government had approved signing the
pact with the EU, Azarov had painted a glowing future for Ukraine in
Europe. "We all want clean air and water, safe food, good education
for our children, up-to-date medical services, reliable legal
representation, etc. All these are not abstract terms, but norms and
rules that are already in place in the EU, which we need in
Ukraine," he said.
But on November 21, Azarov suspended discussions with the EU in the
interests of "national security" and ordered a renewal of "active
dialogue" with Moscow.
EU negotiators had no time to renegotiate before a meeting in the
Lithuanian capital Vilnius seven days later, where Yanukovich had
been expected to sign an agreement with the EU. He failed to do so.
Last week Azarov was on the streets of Kiev explaining the change of
direction to pro-Yanukovich supporters. "So-called leaders tell us
fairy tales about how, once we had signed, we would be able to
travel to Europe without visas. Nothing of the sort. To get that we
would have to fulfill a whole raft of conditions," he said.
A HEAVY PRICE
Yanukovich knew there would be a cost, whichever way he turned.
Spurning Putin would likely bring economic damage; spurning the EU
has brought political damage.
Yanukovich will resist for as long as possible signing up to Putin's
customs union, say analysts; but the prospect of Ukraine joining has
already fired up mass protests in Kiev calling for him to resign. It
has also split his inner circle.
Yanukovich has become increasingly isolated, spending more time at
his estate of Mezhyhirya, 16 km (9 miles) north of Kiev, complete
with lake and nearby forests where he likes to hunt. There he is
guarded by a large contingent of police, who allow in only family
members and his closest aides.
Bohoslovska, who quit Yanukovich's party last month after more than
four years of membership, said some of his oldest friends, business
leaders and consultants no longer felt they could tell him the
truth.
"His old friends, who have known him his whole life, I have spoken
to them and they say that when they tell him the truth, he doesn't
talk to them for a few months," she told Reuters. "In recent years,
Yanukovich created a system around him by which he doesn't have to
hear what he doesn't like."
At the same time, two advisers with stronger ties to Moscow than
others have grown influential. Andriy Kluyev, secretary of the
National Security and Defence Council, and Viktor Medvedchuk, who
has no formal role in government, are called Putin's emissaries by
opposition leaders and Yanukovich allies alike.
Both have business interests in Russia. Kluyev arranged the purchase
by Russians of Prominvestbank, a private bank in Ukraine, and Putin
is godfather to one of Medvedchuk's children, sources close to both
men say. Both helped on Yanukovich's 2004 and 2010 election
campaigns.
"Kluyev is the direct agent of Putin's influence in Ukraine. He is a
big friend of Medvedchuk, who has family ties with Putin,"
Bohoslovska said.
Kremlin spokesman Dmitry Peskov said the Russian leader and
Medvedchuk "know each other well" and have "very good relations,"
but declined to comment on whether Medvedchuk and Kluyev were
advocates of Putin's interests in Ukraine.
Sources close to Kluyev and Medvedchuk said they were committed to
supporting Ukraine's interests.
It is clear that Yanukovich's more liberal advisers are weaker than
before the protests, or even out to distance themselves from him.
His chief of staff, Serhiy Lyovochkin, offered to resign on November
30 over the violence meted out against protesters, but Yanukovich
said no. Lyovchkin declined to comment.
Two senior members of the Party of Regions have already quit; and
more than a dozen others remain on board only through fear that
their businesses will be raided if they fail to support Yanukovich,
according to a businessman who asked not to be named.
For Yanukovich, it's a daunting balancing act. His best hope may be
to portray his sudden reversal of strategy as a masterstroke of
negotiation — pulling EU and U.S. officials back to the table and
forcing them to reconsider what they can offer.
"Ukraine is at a crossroads and there's a huge boulder there. We go
one way to Russia and we get hit. We go the other way, to Europe,
and we get hit. We stand still, and we get hit," Oliynyk said,
drawing a diagram on a notebook.
"But it will hurt less this way," he said, pointing in the European
direction.
(Additional reporting by Luke Baker and Adrian Croft in Brussels,
and Anna Yukhananov in Washington; editing by Richard Woods)
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