Yatseniuk left standing but battered after white-knuckle Rada fight

KIEV, Feb. 17 – After narrowly surviving a no-confidence vote, Ukraine’s government has been left politically weakened and under even fiercer pressure from foreign allies to pursue reforms needed for the release of vital aid.

Prime Minister Arseniy Yatseniuk was left standing but battered after a white-knuckle fight in parliament Tuesday that saw deputies muster only 194 of the 226 votes needed to force out his cabinet over its perceived failure to tackle graft.

The outcome has given the cabinet a reprieve of at least five months under a law that forbids the chamber from trying to oust Yatseniuk again during its current session ending on July 22.

But the cash-strapped government remains hobbled by this month's loss of a reformist economy minister who accused an ally of President Petro Poroshenko of trying to seize the cash flows of the vast but opaque defense and energy industries.

IMF chief Christine Lagarde warned last week that it was "hard to see" how a Fund-crafted $40-billion global bailout could continue without Ukraine keeping the pledges it made when the package was agreed a year ago.

And Poroshenko sowed further confusion by urging Yatseniuk to step down voluntarily after losing public trust in his ability to fight corruption and overcome Ukraine's deep economic malaise.

"While Yatseniuk survived this vote of no confidence, his reputation -- and to some degree Poroshenko's too -- have been dealt a heavy blow," said political analyst Andreas Umland.

One of the most crucial questions facing Ukraine and its Western partners is whether the government will still manage to push through the reforms needed for Kiev to secure the release of $10 billion in foreign assistance this year.

"We're watching developments in Ukraine's parliament very closely," US State Department Deputy Spokesman Mark Toner said.

We "don't want to speculate too much on other potential outcomes, but we strongly urge all of Ukraine's political parties to put the needs of the country first."

Glib Vyshlinsky of Kiev's Centre for Economic Strategy said the government had no choice but to follow through on the painful and socially unpopular belt-tightening measures demanded by the International Monetary Fund.

"There are no other sources of foreign assistance," Vyshlinsky told AFP.

Ukraine's economy shrank by about 10 percent last year while annual inflation soared to more than 43 percent even with the Western assistance in place.

A withdrawal of funding could crush Ukraine's hopes of a 2016 economic revival and running only a modest budget deficit.

"An inability to cut the gridlock would... put at risk the financial support of the country not only from the IMF, but also from other official creditors," Dutch banking giant ING said in a research note.

"Given the latter would be a financial disaster for Ukraine, it is in politicians' interest to find a credible and sustainable solution and pass through the current tensions." (afp/ez)