Russian President Vladimir Putin today agreed to buy USD 15 billion of Ukrainian bonds and slash its gas bill by a third to prop up the embattled Kiev government as it battles mass protests over the rejection of a historic EU pact.
Tens of thousands of pro-EU protesters flocked to Independence Square in the heart of Kiev after the talks between Putin and President Viktor Yanukovych to denounce what they saw as surrender of Ukrainian sovereignty to Russia.
The help from Russia may allow Kiev to stave off the threat of an imminent balance of payments crisis and possible default amid a recession that has seen the economy shrink since the first half of last year.
But it may also give the Kiev protesters new momentum after Yanukovych's refusal to sign the historic Association Agreement with the European Union sparked almost a month of mass rallies against his rule.
White House spokesman Jay Carney indicated that Washington was unimpressed by the deal, saying it did not respond to the concerns of the Kiev protesters.
The Kremlin summit came as Ukrainian opposition leader and heavyweight boxing world champion Vitali Klitschko upped the pressure on Yanukovych by announcing he was relinquishing his WBC title to concentrate full time on politics.
Putin announced after about three hours of talks in the Kremlin that Russia would be dipping into its own rainy day fund in order to help its western neighbour.
"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 said at a ceremony with Yanukovych.
Russia's Finance Minister Anton Siluanov said Moscow would invest the USD 15 billion into eurobonds that Kiev intends to issue by the end of next year.
The decision saw the yield on Ukraine's 10-year bonds plummet from 9.69 to 8.75 percent on the secondary market -- a drop that makes borrowing much easier for the cash-strapped government.
