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Russia holds out prospect of loan for Ukraine

Russian President Vladimir Putin looks on during a joint news conference with European Council President Herman Van Rompuy and European Comm
Russian President Vladimir Putin looks on during a joint news conference with European Council President Herman Van Rompuy and European Comm

MOSCOW (Reuters) - A Kremlin aide made clear on Monday that Russia was ready to extend a credit to Ukraine to help Kiev cope with its economic problems and keep the country in Moscow's orbit.

Economic adviser Andrei Belousov said it was possible that a credit could be agreed at talks on Tuesday between Russian President Vladimir Putin and Ukrainian President Viktor Yanukovich, who has turned to Moscow for help after spurning a free trade deal with the European Union last month.

"I do not rule out that, if there is a request, a credit could be provided (to Ukraine)," Interfax news agency quoted Belousov as saying.

"The situation in Ukraine is now such that without loans, from one side or another, they will simply fail to maintain economic stability."

Ukraine is seeking help to cover an external funding gap of $17 billion next year - almost the level of the central bank's depleted currency reserves.

Belousov did not say how much Russia might be ready to loan Ukraine.

Yanukovich has faced street protests since Kiev's U-turn away from Europe, but Ukrainian officials have made clear they do not think the EU is prepared to come up with enough money to help Ukraine through its economic difficulties.

The EU on Sunday suspended work on the trade and political pact it has been negotiating with Ukraine, and has accused Russia of putting heavy pressure on the former Soviet republic not to move closer to the EU.

But Yanukovich has not said whether he will bow to Russia's calls to take his country into a Moscow-led customs union with Belarus and Kazakhstan.

Apart from loans, Ukraine is seeking a lower price for Russian gas - now at around $400 per 1,000 cubic meters - to help it cope with its debt burden.

Ukrainian Prime Minister Mykola Azarov was quoted as saying on Sunday that he hoped a deal on a cheaper price for gas deliveries would be concluded.

(Reporting by Katya Golubkova, Editing by Timothy Heritage)

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