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Europe

Ukrainian Government Nears Collapse

Ukraine's ruling coalition could be on the brink of collapse after President Viktor Yushchenko threatened to dissolve parliament and call for snap elections if a new government is not formed within the 30 days.

Ukrainian President Viktor Yushchenko gestures speaking at a news conference in Kyiv

Yushchenko said he would dissolve parliament after laws to limit his power passed

The crisis in Kyiv comes at a time when the coalition government of Prime Minister Yulia Tymoshenko faces uncertain relations with Moscow after Ukraine condemned Russia's incursion into the Georgia last month.

Yushchenko and Tymoshenko have been locked in a bitter long-running feud that culminated in the president's parliamentary allies walking out of the alliance on Tuesday night.

"I will use my right to dismiss parliament and announce early elections," Yushchenko said in a televised statement on Wednesday, Sept. 3.

Orange allies turn into rivals

Tymoshenko

Tymoshenko's bloc has grown closer with pro-Russian factions in Kyiv

The accusations after members of Tymoshenko's bloc and the Regions Party of former prime minister Viktor Yanukovych voted together late on Tuesday to reduce presidential powers.

For her part, Tymoshenko accused Yushchenko of destroying the coalition and said he was seeking popular support before a presidential election due in 16 months and urged his party to come back to the coalition.

"You have 10 days of no ultimatums, no demands, no provocations, to come back to the democratic coalition," she said in a televised statement.

Under the constitution, the coalition has 10 days to work out its differences. After that, if parliament does not create a new coalition within 30 days, Yushchenko can call an election.

If the parliament is dissolved, Ukraine could be facing its third parliamentary election since the 2004 Orange Revolution that swept Yushchenko to power on the promise of strengthening ties with the European Union and the United States that includes ultimately joining the EU club and NATO.

The former Orange Revolution allies are now bitter rivals, likely to square off in the 2010 presidential election.

Deal with Moscow?

A column of Russian armored vehicles moving toward the border with Russia's North Ossetia

Yushchenko accused his former ally of making a pact not to fault Russia for the Georgia war

Yushchenko's office had accused the prime minister of not backing Tbilisi when Russians troops invaded the Georgian enclave of South Ossetia in the Caucasus conflict.

Political observers have expressed concern that Kremlin might try to capitalize on the political instability in Ukraine, which is strategically critical to the West for the pipelines that carry Russian gas to European consumers.

However the deepening political crisis seemed to have at least as much impact on the money markets with investors nervous about the geopolitical risk of doing business in the former Soviet bloc following last month’s military conflict in Caucasus region.

"We are in for another round in the ongoing political boxing match," Lars Rasmussen, an analyst at Danske Bank told The Wall Street Journal’s Market Watch. "We can't rule out that the that the president will call snap parliamentary elections. This would generate more uncertainly in the already troubled Ukrainian financial markets."

The bickering also comes ahead of a visit by US Vice-President Dick Cheney on Thursday. He is traveling to Kyiv to show his support for Ukraine after a Russian with Georgia, another former Soviet republic.

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