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Russia makes $15 billion, gas discount commitments to Ukraine

Russia will extend a $15-billion loan to Ukraine, and will also lower the price of gas supplies to their neighbors. But a free-trade agreement has not been discussed, according to Russian President Vladimir Putin.

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Viktor Yanukovich meets Russia's Putin

Russia will extend a $15-billion loan to Ukraine, and will also lower the price of gas supplies to their neighbors. But a free-trade agreement has not been discussed, according to Russian President Vladimir Putin.

Putin and his Ukraine counterpart, Viktor Yanukovych, met in Moscow on Tuesday, with mass protests still going on in Kyiv over the government's decision to shelve talks with the European Union over an association agreement.

Having indicated he would be open to re-igniting negotiations should the EU up its financial support to the Ukraine, Yanukovych has now secured credit from Putin. As well as Russia's investment in Ukraine's government bonds, Putin also agreed to cut the price of gas deliveries to their neighbors by around a third.

"The Russian government made a decision to invest part of the National Welfare fund to the amount of $15 billion in Ukrainian government securities," Putin told reporters after talks.

The prospect of Ukraine joining the Customs Union also including Belarus and Kazakhstan was not discussed, said Putin. Russia had been

accused of putting pressure on Ukraine

to sign the Customs Union deal instead of the association agreement with the EU. The latter would put Ukraine a step closer to joining the EU bloc.

Steinmeier critical at inauguration

The meeting on Tuesday in the Kremlin came two days after the European Union suspended talks on an association deal with Ukraine. Putin and Yanukovych had said prior to Tuesday's meeting that the Customs Union would not be on the agenda, a claim the Ukrainian opposition met with skepticism.

"I would like to calm everyone down, today we have not discussed the issue of Ukraine joining the Customs Union at all," Putin said.

Yanukovych added: "The implementation of this action plan will substantially deepen our strategic cooperation in many areas," he said.

The move drew criticism from Germany’s new foreign minister, Frank-Walter Steinmeier, who accused Russia of being opportunistic.

"It is scandalous how Russia used Ukraine's economic plight in order to prevent the signing of the association agreement with the European Union. Just as scandalous is the violent behavior of the Ukrainian security forces against peaceful demonstrators," Steinmeier said in his inaugural speech. He also acknowledged, however, that the EU’s "financial and economic package … fell far short of what was needed to keep Ukraine competitive and bind it economically to Europe."

Protestors remain at Kyiv’s Maidan - also known as Independence Square - in an established camp that has withstood raids from police. On Sunday, the anti-government demonstrators again showed their strength of numbers, with the opposition estimating that 300,000 took to the streets in central Kyiv.

Yanukovych’s government has countered by

bussing in thousands of supporters from eastern Ukraine,

but they number far less than those calling for new leadership in the capital. Ukraine’s president

held round-table talks with opposition leaders on Friday,

suggesting an amnesty for demonstrators who had been arrested in protests.

He has also

suspended the mayor of Kyiv, Oleksandr Popov, and several other high-ranking security and police officials

over the violence that marred protests on November 30.

ph/msh (AFP, AP, Reuters)

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