Ukraine takes first step toward giving rebels self-rule

Ukraine’s parliament took the first step Thursday toward granting temporary self-rule to pro-Russian rebels under a change to the constitution the West hopes can end one of Europe’s deadliest wars in recent years.

The divisive issue came to the floor on the day lawmakers also vote on belt-tightening measures needed for the quick release of a $5-billion (4.6-billion-euro) IMF payment that could spare cash-strapped Kiev from slipping into default.

The sudden flurry of activity led visiting US Assistant Secretary of State Victoria Nuland to call Thursday “yet another historic day” in a war-torn country that has seen 6,500 people killed since the overthrow of its Russian-backed leadership in February 2014.

Nuland will meet Ukrainian President Petro Poroshenko later on Thursday to reassure him of Washington’s backing and continued focus on the government’s 15-month fight against separatists in the shattered industrial east.

– Special status –

The idea of granting autonomous status to rebel-run parts of Ukraine’s east for the coming three years has struck a note of disquiet among many lawmakers and much of the Kiev media.

But it was inscribed in a truce agreement that Poroshenko and Russian President Vladimir Putin signed off on under strong pressure from the leaders of Germany and France in February.

Lawmakers on Thursday voted by a commanding 288-57 majority to ask Ukraine’s constitutional court to rule whether such changes to the basic law were legal.

The court must weigh in on the issue before any formal vote is held in the weeks or months to come.

Both Washington and its EU allies believe that partial self-rule could satisfy the insurgents and remove any arguments Russia may have for arming and funding them — support Moscow firmly denies ever giving.

But Leonid Yemets of parliament’s pro-government People’s Front party said he and other top lawmakers had told Nuland her logic was flawed because it failed to take ongoing hostilities into account.

“First we must end the war… and only then conduct (local separatist) elections and make corresponding changes in the constitution,” the lawmaker said.

Poroshenko himself told parliament that a decision to give the militias partial self-rule was “difficult” but necessary because it was a condition being sought with increasing urgency by both Brussels and Washington.

“We cannot create a situation in which we end up facing the aggressor (Russia) on our own,” the Ukrainian leader said.

– ‘Technical default’ –

The constitutional amendments now under discussion have been denounced as insufficient by the rebels and are unlikely to make any immediate impact on the ground.

Support for the IMF-prescribed austerity measures also before parliament on Wednesday could, by contrast, prove vital to Ukraine’s ability to weather an economic crisis exacerbated by the conflict.

Ukraine is running up against a July 24 deadline to make a $120-million payment on a $2.6-billion Eurobond that comes due in July 2017.

That sum is small in comparison to the $500 million Kiev must cover by late September on another maturing note.

The IMF wants to see Kiev restructure those and nearly $15 billion in other payments in order to focus its resources on investments that could finally put the east European nation on the path back to growth.

Ukraine is asking its private creditors to take a 40-percent cut to the value of their holdings and accept a delay in interest payments for several years.

But a group of lenders that collectively own two-thirds of the sum under discussion would prefer to save the original value of their assets and accept much longer repayment terms.

Neither sides has shown signs of being willing to budge.

Ukrainian Finance Minister Natalie Jaresko warned that Kiev may now skip next week’s Eurobond coupon payment and declare a “technical default” aimed at putting even more pressure on the creditors to compromise.

Such a freeze “is theoretically possible,” Jaresko told reporters after holding her first direct meeting with the lenders in Washington.