Economic battle over Ukraine heats up

The battle over Ukraine's future is also economic: today, Russia cranked up the pressure by saying it would end discounts on its natural gas supplies, while the US and European Union offered quick-fix aid to the beleaguered government.
To help Ukraine in the longer term, International Monetary Fund experts began work here on a plan to stabilise the near-bankrupt country's finances and failing economy. The IMF's help is expected to come with conditions that will be tough, but at this point unavoidable.
"Without the expected financial assistance from Western donors, Ukraine is likely to default," Lilit Gevorgyan of IHS Global Insight says in a research note.

Concerns over Ukraine's financial condition whose treasury account is, by its own admission, almost empty rose after Russian state gas company Gazprom said it would cancel a substantial discount on natural gas granted in December.
President Vladimir Putin, meanwhile, noted Ukraine's state gas company Naftogaz will owe $2 billion for gas, including February's bill.
The Russian position is a shift from last year, when Moscow tolerated Ukraine piling up unpaid bills. The discount was granted under a USD 15-billion Russian bailout in December but that was halted following the ouster of pro-Russian President Viktor Yanukovych by a protest movement by people who want closer ties with the European Union.

Putin said the decision to raise the gas prices for Ukraine was not political.
"There was an agreement," Putin said. "We give you the cash and a discount on gas, and you pay us on time. We have given them money, we have cut the price, but there have been no payments."
To counter Moscow's tougher stance, US Secretary of State John Kerry, who was visiting Kiev today, offered USD 1 billion in loan guarantees. The European Commission, the European Union's executive arm, will decide on a package of support measures tomorrow, spokesperson Pia Ahrenkilde Hansen told reporters in Brussels without providing details.