Fears for Ukraine as pro-west coalition fails

Ukraine`s pro-west coalition collapsed on Wednesday, plunging the country into political uncertainty, hitting financial markets and undermining recent efforts by western leaders to show their support for Kyiv following Russia`s intervention in Georgia.

President Viktor Yushchenko threatened to dissolve parliament and call snap elections unless a new coalition can be formed, blaming the crisis on supporters of Yulia Tymoshenko, his firebrand prime minister.

While Mr Yushchenko and Ms Tymoshenko joined forces in the 2004 Orange Revolution and both support west-oriented policies, they have engaged in a bitter personal power struggle that has persistently handicapped the government.

The upheaval comes just before Dick Cheney, the US vice-president, arrives in Kiev this week with a message of support for Ukraine and a few days before Mr Yushchenko is due to travel to France for a European Union-Ukraine summit. Kyiv is seeking membership of both the EU and Nato and wants to secure increased western backing to counter growing Russian political and economic pressure.

Although the coalition has not yet been formally scrapped, ministers backing Mr Yushchenko yesterday walked out of a cabinet meeting and their Our Ukraine party threatened to quit the coalition.

Addressing the nation, Mr Yushchenko ac-cused Ms Tymoshenko`s followers of plotting an "anticonstitutional coup" by voting in tan-dem with the opposition Communist and -Moscow-leaning Regions parties in favour of legislation to cut the president`s authority. "Without a doubt, the collapse of the coalition was a well-planned action," he said.

Ms Tymoshenko hit back, blaming the crisis on Mr Yushchenko`s "fight" for next year`s presidential election, in which both politicians are expected to run. She also denied being soft on the Georgia conflict, saying: "My position on Georgia is in line with the EU position, and is not to drag Ukraine into any conflicts."

Russia`s military incursion in Georgia has raised fears in Kiev that Moscow could next target Ukraine, a much larger country of 46m where Russia and the west have also jostled for influence.

Moscow has denied suggestions it could challenge Ukraine`s territorial integrity, but has openly protested against the speedy westward integration drive adopted by Mr Yushchenko, especially plans to join Nato, pointing out that Ukrainians are themselves divided over joining the alliance.

Kyiv hopes to conclude an agreement on closer integration with the EU at the summit in France, on September 9. Ukraine`s president also hopes Nato will grant his country a membership action plan in December.

Olexiy Haran, a political science professor in Kyiv, said the political standoff in Kyiv was rooted more in the ambitions of Ukraine`s political elite than in any plot by Russia to undercut Kiev`s pro-west path. But he warned that "Moscow would try to capitalise on it".

"If the coalition collapses, Ukraine`s pro-western drive will not change in the long term, but it will suffer short-term setbacks. This scenario would complicate Ukraine`s efforts to integrate closer with Nato and the European Union in the near term."

Mr Yushchenko`s camp has accused Ms Tymoshenko of siding with the Kremlin by refusing to adopt a resolution sharply condemning Moscow for its actions in Georgia.

Ms Tymoshenko said her position was in line with the EU`s and that she did not want to drag Ukraine into conflict.

A new coalition, which must be formed within 40 days to avoid elections, could include opposition parties that lean towards Moscow. Speculation has abounded that either Ms Tymoshenko`s or Mr Yushchenko`s party could join forces with the Regions party of Viktor Yanukovich, former prime minister. who also plans to run in next year`s presidential polls. Many politicians see all the bickering as pre-presidential election manoeuvring.

An early parliamentary poll could cost Mr Yushchenko`s party dearly as it is far behind the Tymoshenko and Yanukovich parties in opinion polls.

In financial markets, the Ukrainian currency re-mained largely stable but the PFTS index fell 3.8 per cent. Ukraine`s five-year credit default swap rate - the cost of insuring debt - rose from 445 to 463 basis points, a new high.

By Roman Olearchyk and Stefan Wagstyl, The Financial Times