E.U. Imposes Sanctions on Ukrainian Officials

Travel bans and asset freezes for those behind the government's violent crackdown

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The European Union agreed Thursday to impose sanctions on Ukrainian officials behind the deadly crackdown that has killed dozens of anti-government protestors this week.

At an emergency meeting in Brussels, the 28-nation organization imposed travel bans and asset freezes on officials who are “responsible for violence and excessive force.” Swedish Foreign Minister Carl Bildt confirmed the sanctions on Twitter:

At least 22 civilians died in clashes between protesters and government forces in Kiev on Thursday, and protest leaders say at least 70 have been killed. The renewed fighting quickly quelled hopes that a truce called Wednesday by President Viktor Yanukovych would hold. The United States is also considering sanctions against the Ukrainian government. President Barack Obama spoke out against the government’s violent response to the demonstrations on Wednesday.

PHOTOSDeadly Protests Rage on in Kiev

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Share prices around the world rose this week after the Bank of Japan (BoJ) promised to increase its cheap loans to banks. Markets welcomed the move in part because they saw it as a sign that the BoJ wants to bolster the weak recovery - real GDP rose a disappointing 0.3 per cent in the final quarter of last year - and hence as a sign that more quantitative easing might be on the way.

The same could be true in the euro area. Figures next Friday are expected to show that inflation is well below 1 per cent. This poses the risk not only of deflation - falling prices - but of a return of the debt crisis. Erik Britton at Fathom Consulting warns that persistent sub-1 per cent inflation would see the ratio of government debt to GDP in Italy "rise without bound" because nominal interest rates would be above nominal GDP growth.

The European Central Bank (ECB) "will take action", says Alan Higgins at Coutts. Most economists, however, think that a cut in the main refinancing rate would have little effect. Instead, they suspect the ECB will restart long-term refinancing operations - giving cheap loans to banks in the expectation that they will use the money to buy bonds. This would be a form of quantitative easing (QE) at one remove, with commercial banks rather than the ECB buying bonds.

In the US, although economists expect the Fed to continue to reduce or taper QE, this means they will continue printing money, just at a slower rate. Axa's Chris Iggo says: "Tapering is not tightening, it is just less easing. The Fed's balance sheet is still expanding."

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Beleagured Ukrainian President Viktor Yanukovich announced plans on Friday to hold early presidential elections, form a national unity government and make constitutional changes reducing his powers. 


He made the announcement in a statement after all-night talks with the opposition and three European Union ministers on resolving a crisis in which 77 people have been killed in two days of gun battles between protesters and police this week. 

Yanukovich appeared to be making major concessions to his opponents but did not bow to the main demand of demonstrators protesting in central Kiev — that he quit. He also did not make clear whether agreement had been reached at the talks. 

"In these tragic days, when Ukraine has suffered such heavy losses, when people have been killed on both sides of the barricades, I consider it my duty in the light of the holy memory of the dead to declare that there is nothing more important than human life," he said in a written statement. 

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