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Ukraine's Poroshenko plans new team to take on Putin, build ties with West

Petro Poroshenko (R) walks past the honour guard as he arrives for his inauguration ceremony as Ukraine's new president in Kiev June 7, 2014. 
REUTERS/Konstantin Grishin
Petro Poroshenko (R) walks past the honour guard as he arrives for his inauguration ceremony as Ukraine's new president in Kiev June 7, 2014. REUTERS/Konstantin Grishin

By Richard Balmforth

KIEV (Reuters) - Ukraine's newly-installed President Petro Poroshenko is set to remake a governing team which will handle the crisis with Russia, with talks on gas prices on Monday providing an early test of his new relationship with Russia's Vladimir Putin.

Poroshenko's swearing-in as president at a pomp-filled, but relaxed, ceremony on Saturday conveyed the feeling that a line had been drawn under six months of unprecedented and bloody upheaval which toppled his predecessor, Viktor Yanukovich.

But behind the euphoria that Ukraine might now, at last, start to "Live in a new way", as Poroshenko's campaign slogan has promised, lies the reality of seething separatism in the east in which Ukraine sees Moscow's hand, and Russia's opposition to his plans to lead Ukraine into mainstream Europe.

Poroshenko's blunt refusal to accept the loss of Crimea in a combative inaugural speech puts him further at odds with Putin.

An indication of whether Putin is ready to give the 48-year-old businessman-politician some early breaks or test him in his first days in office may come in trilateral talks in Brussels on Monday aimed at solving a dispute over the price of Russian gas.

Russia has threatened to cut off supplies to its neighbor, a major gas transit route to the European Union, if it fails to pay its debts to Gazprom by Tuesday. [ID:nL5N0OP077]

In early steps to install key allies, Poroshenko is expected in the coming days to name new foreign and defense ministers.

The rebellions, in which pro-Russian separatists have declared "people's republics", have claimed scores of lives in clashes between government forces and armed militias. Militia leaders declared on Saturday they would not give up their fight.

These are not the only challenges facing Poroshenko. He inherits a country on the verge of bankruptcy which is rated by monitoring agencies as one of Europe's most corrupt and ill-governed.

CRIMEA

Poroshenko, a billionaire from a confectionery business with big experience in government, says he is pen-poised to sign an association and trade agreement this month with the EU.

His pledge to stick to West-leaning policies was quickly rewarded in the shape of aid worth $48 million from Washington to go towards economic reform. [ID:nL1N0OO0CN]

The EU agreement - which Yanukovich spurned, sparking street protests that finally drove him from office - will take Ukraine into a free-trade zone with the European Union, thwarting Putin's ambition of keeping Kiev in his sphere of influence.

Putin, who is under threat of further Western sanctions over his Ukraine policies, warned on Friday that as soon as Ukraine signed the agreement and it came into force Russia would be obliged to take steps to defend its economy and its markets.

In his inaugural speech, Poroshenko vowed he would never accept the loss of Crimea which Russia annexed in March following the fall of the Moscow-backed Yanukovich. He declared: "Crimea was, is and will be Ukrainian soil". But the reality on the ground is that there are few, if any, forces that can persuade Russia to hand the territory back.

A greater priority, analysts say, must be to end the rebellions which threaten Poroshenko's vision of a unitary state.

He reached out to the people of the east on Saturday promising to guarantee their Russian-language rights and the prospect of a bigger say in running their own affairs.

He offered rebels an amnesty if they laid down their weapons and a secure corridor back to Russia for Russian fighters.

But - as with almost all the problems facing Poroshenko - ending the rebellions requires the goodwill and cooperation of others, in this case that of Putin.

NEW MINISTERS

In what might be a positive signal from Moscow, Russian news agencies reported Putin had ordered the Federal Security Service to strengthen protection of the border with Ukraine and prevent people crossing illegally.

The move was potentially significant because Ukraine and Western governments have been pressing Moscow to stop what they say is a flow of Russian arms and fighters into eastern Ukraine.

First steps for Poroshenko, whose confectionery business earned him the nickname of the "Chocolate King", will be to name some key members of his team.

He is expected soon to name a new foreign minister - possibly Valery Chaly who has been in charge of foreign policy issues in his campaign. He has the right also to name a defense minister - another key post given the army's involvement in quelling the eastern rebellions and the perceived need to stop Russian fighters crossing the border.

Other key allies will be Prime Minister Arseny Yatseniuk, who is at the forefront of the sensitive gas talks with Russia over pricing. The liberal prime minister, himself a former economy minister, has already pledged to work "as a single whole" with the president and parliament.

(Writing By Richard Balmforth; Editing by Jon Boyle)

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