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Fighting eases in eastern Ukraine

The Los Angeles Times
By The Los Angeles Times
2 Min Read Feb. 27, 2015 | 11 years Ago
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Fighting has eased between Ukrainian government forces and pro-Russia separatists in recent days as both sides have begun to withdraw heavy weapons but the greater danger now confronting Ukrainians is collapse of their debt-strangled economy.

The national treasury's hard currency holdings are estimated to have dwindled to less than $5.5 billion, or about as much as importers have traditionally spent every three weeks.

The hryvnia currency lost more than half its value in February, plunging to a record 34 against the dollar by Thursday.

The dollar bought only eight hryvnia before the tumult of a government overthrow and separatist rebellion early last year.

Russia's Gazprom monopoly has exerted additional pressure on the Kiev government this week by demanding payment in advance for gas to heat homes in the lingering winter months.

This week Ukraine paid the Russian energy giant $15 million for a one-day supply infusion that will keep furnaces burning until Tuesday.

The Kremlin-controlled energy behemoth also began directing some of the gas bought by Kiev to the Russia-backed rebels occupying eastern Ukraine, with President Vladimir Putin chastising Ukrainian leaders for cutting off the separatist-held areas while still claiming them as Ukrainian territory.

Ukraine's central bank imposed new capital controls Tuesday to stem the flight of its evaporating hard currency reserves, prohibiting sales of dollars and euros on credit and severely restricting the amount each bank can sell to importers in exchange for hryvnias.

That accelerated the national currency's decline by undermining investor confidence and prompted a one-day suspension of currency sales Wednesday.

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