KIEV: Ukraine’s parliament rejected Prime Minister Arseny Yatseniuk’s resignation Thursday and finally passed legislation he said was needed to finance an army offensive against a separatist rebellion in the east and avert a national default on its debts.
The assembly’s about-turn on laws it refused to back a week earlier offers relief to Kiev’s Western backers, who had feared Ukraine was sliding deeper into political chaos and might renege on an international bailout as it heads into an election period.
“There are two pieces of news today. The first is that Argentina has defaulted, and the second is that Ukraine has not defaulted and never will,” Yatseniuk told the chamber, making clear he would stay in office.
The political battle has been taking place against the backdrop of a military campaign to win back parts of the Donbass region, which borders Russia, from the pro-Moscow rebels.
Having recaptured the rebel stronghold of Slaviansk in early July, government forces are now moving on the cities of Donetsk and Luhansk, with the latter now all but encircled and electricity and food supplies cut off.
Both sides stopped shooting long enough for an initial group of international experts, after several days of trying, to reach the site where a Malaysian airliner came down in rebel-held territory in the east July 17, killing all 298 people on board.
The experts hope a larger team of investigators will also soon have access to the site to recover the remains of the last missing victims and look for evidence showing what brought the plane down.
Western leaders accuse the rebels of shooting it down and have imposed sanctions on Russia because they accuse it of arming the separatists, a charge Moscow denies.
There is scant hope of a quick end to the crisis, during which Moscow has annexed the Crimea peninsula from Ukraine, but envoys from Russia and Ukraine met in the Belarussian capital, Minsk, Thursday with the Organization for Security and Cooperation.
Kiev said they had agreed to keep the route open to the crash site that was used Thursday, signaling the rebels and government forces would try to use the road from Donetsk as a corridor even if fighting continued elsewhere.
In sharp contrast to the stormy parliamentary session last week at which Yatseniuk bellowed at legislators and accused them of betraying Ukraine by blocking reforms, deputies stood and applauded him after backing the amendments.
President Petro Poroshenko said the new votes in parliament would help Kiev’s fight against separatists. “We need consolidation, not confrontation,” he said. “We have to be united against external aggression.”
Parliament’s support for amendments to the 2014 budget was needed to offset a shortage of revenues and take into account extra spending on the army to release an additional 9.1 billion hryvnia ($758 million) to finance the military.
The government also wanted parliament to back legislation allowing consortiums with European or U.S. companies to operate the aging gas distribution system.
Yatseniuk had said the government would have defaulted on debt payments and missed out on the release of further funds under a $17 billion International Monetary Fund bailout if it had failed to pass the legislation.
“The laws the government is insisting on are unpopular and difficult, but very necessary,” Poroshenko said, adding that they would “enable the economy, the state as a whole, to function.”
Laws passed Thursday also introduce an additional 1.5 percent personal income tax until the end of the year to cover for the military, raise excise tax on tobacco and up other taxes in the mining, oil and gas sectors.
They also earmark nearly 2 billion hryvnia extra on rebuilding of infrastructure damaged by fighting in the east.
The exit of two parties from the ruling coalition last week amounted to the start of a campaign for seats in a legislature still packed with former allies of pro-Russian president Viktor Yanukovich, who was ousted by street protests in February.
Western governments have come to regard Yatseniuk as a key interlocutor in the worst standoff between Russia and the West since the Cold War ended. His departure would have been seen as leaving a vacuum at the heart of decision making.
Facing the toughest sanctions against it so far, with the latest curbing arms sales to Russia and cutting off financing for targeted banks, Moscow is hitting back.
It announced a ban on fruit and vegetable imports from Poland Wednesday and a day later placed an embargo on Ukrainian fruit juice. Greek fruits and U.S. poultry could follow, Russian media said.