KIEV, Oct. 29 – Prime Minister Yulia Tymoshenko on Thursday began desperately seeking to put international pressure on President Viktor Yushchenko to force him to veto a controversial social spending bill.

Hyhoriy Nemyria, deputy prime minister and Tymoshenko’s foreign policy chief, has been meeting European leaders in Brussels, including European Commission President Jose Manuel Barroso and German Chancellor Angela Merkel, seeking their support.

“It was clear that the leaders watch the situation in Ukraine,” Nemyria said. “Everybody has expressed concerns over the president’s intention not to veto, but to sign the bill.”

Enactment of the bill, which was recently approved by Parliament, led by the opposition Regions Party, would most likely force the International Monetary Fund to postpone its $3.4 billion loan installment.

This would inflict major pressure on the government, which has been running out of money, and make it hard to keep scheduled spending, a development that may undermine Tymoshenko’s popularity ahead of the next presidential election.

Yushchenko indicated on Wednesday that he will probably sign the bill and said he will provide rationale for the move on Thursday.

But the president eventually delayed his statement on the issue, perhaps underscoring intense negotiations on the matter.

The Regions Party accused the IMF of disbursing money to Ukraine even as the Tymoshenko-led government had been failing to implement the promised economic reforms, including the failure to hike household natural gas prices and to refinance the banking sector.

The Regions Party, led by Viktor Yanukovych – Tymoshenko’s main rival at the upcoming election - charged the IMF has been politically supporting Tymoshenko with $16.4 billion Standby loan with the money de-facto going to support her campaign ahead of January 17, 2010 election.

Ukraine has so far received $10.6 billion from the IMF since November 2008.

The government believes it will need extra 8.1 billion hryvnias in 2009 and extra 71.3 billion hryvnias in 2010 to comply with the bill, which sets immediate increase in pensions and minimum wages.

The government estimated it would have to lay off 1.6 million people, or 45% of workforce that is on the payroll of the state budget in order to make funds available for the social payments increases.

“This may push Ukraine into abyss and lead to huge unemployment, shutting down of factories and cutting jobs,” Oleksandr Turchynov, first deputy prime minister and Tymoshenko’s closest ally, said.

“Yanukovych has his influence on the president, but we will also be influencing the president from our side to make the president understand that his departure from power does not mean that the country must be destroyed.”

“We will find ways how within the boundaries of the constitution to maintain the situation in the country,” Turchynov said. “We are working out several scenarios how to counteract this.” (tl/ez)