West scrambles to save Ukraine from economic collapse

KIEV - Western countries scrambled Tuesday to find a solution to the crisis rocking Ukraine and save the country from economic collapse as its interim leaders delayed the formation of a new government.

Ukraine has appealed to the West for US$35 billion in aid to avoid a catastrophic default as the nation tilts away from Russia following the weekend ousting of pro-Moscow president Viktor Yanukovych after days of carnage in Kiev that left almost 100 people dead.

Yanukovych, whose whereabouts are still unknown, has since been hit with an arrest warrant for "mass murder" over the deaths and his entire government has collapsed.

But Ukraine's former masters in the Kremlin have angrily questioned the legitimacy of the new leadership and accused them of leading an "armed mutiny".

The tumultuous events of the weekend capped more than three months of relentless protests against Yanukovych's rule sparked by his November decision to spurn an historic pact with the European Union in favour of closer ties with Russia.

The country of 46 million people is now in urgent need of a interim government to guide the country to stability ahead of a presidential election set for May 25.

But the much-anticipated announcement of a new cabinet and prime minister was on Tuesday delayed until Thursday.

EU foreign policy chief Catherine Ashton arrived in Kiev on Monday as the Ukrainian capital slowly returned to normal, with shops and restaurants in the centre reopening.

She is due to brief the press Tuesday after meeting interim leader Oleksandr Turchynov, although the European Union has voiced caution about Ukraine's prospects of membership.

Turchynov has warned that Kiev will have no alternative but to default on US$13 billion in foreign obligations due this year should the West fail to come to the aid of the economically-struggling country.

Adding to the diplomatic effort, Washington is sending Deputy Secretary of State William Burns to Kiev Tuesday.

British Foreign Secretary William Hague is also in Washington for talks with US Secretary of State John Kerry and the IMF and is due to visit Ukraine soon.

He said the IMF was "best placed" to provide immediate financial and technical support but stressed that aid would be dependent on economic and political reforms.

While Western powers have cautiously thrown their weight behind the overthrow of democratically-elected Yanukovych, Russia has reacted with outrage to the "mutiny" in a country with centuries-old roots to Moscow.

The United States has stopped short of endorsing Ukraine's interim leader and called for a technocratic government to promote early elections.

Presidential campaign kicks off

On Tuesday, the electoral commission said the campaign for the presidential poll had officially kicked off and candidates had until March 30 to put their names forward, though who exactly will stand for the top post remains to be seen.

Only the pro-Russia governor of Kharkiv, a region in the east, has announced his candidacy.

The main players include protest leader Arseniy Yatsenyuk, a pro-EU former foreign and economy minister; Yulia Tymoshenko, the freed opposition leader and hero of the 2004 Orange Revolution; Petro Poroshenko, a billionaire chocolate baron; and Vitali Klitschko a world heavyweight boxing champion-turned-politician.

One could potentially be named interim premier, although Tymoshenko has already declared she will not stand for the post.

She is due to go to Germany next month for treatment after being freed from more than two years imprisonment.

Whoever is nominated to the premiership will have the tough task of maintaining stability in Ukraine ahead of the polls, amid concerns over separatist tendencies in Russian-speaking areas of the east and south.

Russia's foreign ministry on Monday strongly criticised the new Western-leaning leadership, saying it was restricting "the humanitarian rights of Russians."

"They have set a course to suppress those who do not agree in various regions of Ukraine using dictatorial and sometimes even terrorist methods," it said in a statement.

Russian Prime Minister Dmitry Medvedev also condemned the "armed mutiny" in Ukraine.

Financial assistance crucial

Russia's deep displeasure at the changes convulsing its neighbour has translated into fears that a much-needed US$15-billion bailout from Moscow announced in December may be abandoned after only one payment of US$3 billion came through.

With the looming risk of default, finance chiefs from Europe, the United States and the International Monetary Fund have been discussing how to help out.

Ukraine's interim finance minister Yuriy Kolobov said the "planned volume of macroeconomic assistance for Ukraine may reach around US$35 billion (25 billion euros)" by the end of next year, and called for an international donors conference.

But the EU bluntly said Brussels was not yet ready to sign the ground-breaking political and trade pact that was at the root of Ukraine's turmoil.

"I think our idea is that we must let a transition process go to its final point (the May election) and once we have a government we will be ready to discuss again," commission spokesman Olivier Bailly said.

The whereabouts of Yanukovych, meanwhile, remained unknown.

Acting interior minister Arsen Avakov said he had tried to flee the country Saturday out of the eastern city of Donetsk - his political power base and bastion of pro-Russian support - before escaping to Crimea, a base of Russia's Black Sea fleet, with a team of guards and a cache of weapons the next day.