IMF bails out Ukraine as Tymoshenko runs for president

The IMF announced on Thursday a $14-$18 billion bailout for Ukraine that requires the crisis-hit country to pursue painful and unpopular reforms to avert bankruptcy amid its escalating standoff with Russia. The vital economic breakthrough was reached just as Ukraine's presidential campaign heated up with the announcement by opposition icon Yulia Tymoshenko that she will contest the race to see who will replace the ousted pro-Russian regime that sent her to jail. Washington and its EU allies hope the rescue and a mounting diplomatic offensive against Russia should keep Ukraine on a stable enough footing to conduct snap polls on May 25 that could help unite the culturally splintered country of 46 million behind one democratically elected leader. But the pledge of Western assistance comes amid growing worries about a rapid Russian buildup at Ukraine's eastern border that one Kiev official said had now reached 100,000 troops. German Chancellor Angela Merkel said on Thursday she hoped the threat of further sanctions would be enough to keep Russia's expansionist ambitions in check following its annexation of Crimea -- an incursion that has left the Kremlin more isolated from the West than at any stage since the 1989 fall of the Berlin Wall. - $27 billion in world aid - Kiev's International Monetary Fund agreement -- worth the equivalent of 10.8-13.1 billion euros -- imposes tough economic conditions that will alter the lives Ukrainians who have grown accustomed to the comforts of Soviet-era subsidies and welfare benefits. But it also appears to herald a fundamental shift from a reliance in Kiev on Russian help to save a crumbling system, to a commitment to the types of free-market efficiencies that could one day bring Ukraine far closer to the West. "This significant support will help stabilise the economy and meet the needs of Ukrainian people over the long term because it provides the prospect for true growth," US President Barack Obama said in Rome. The Fund's "standby arrangement" will form the heart of a broader package released by other governments and agencies amounting to $27 billion (19.6 billion euros) over the next two years. Western support became essential for Ukraine once Russia froze payments on a $15 billion (10.9 billion euro) loan it awarded ousted president Viktor Yanukovych for his decision to ditch a historic EU trade and political relations pact. Prime Minister Arseniy Yatsenyuk has now made sure that Ukraine will be getting even more money from the West after earlier signing the political portion of the EU deal ditched by Yanukovych -- moves that are likely to further unsettle the Kremlin. - Return of the 'iron lady' - Many of the interim leaders -- from Yatsenyuk to acting President Oleksandr Turchynov -- are either close allies or political proteges of former prime minister and opposition veteran Tymoshenko. The 53-year-old has remained one of Ukraine's most powerful but also divisive figures since the day she helped organise the 2004 pro-democracy Orange Revolution that first tried to shake Kiev's powerful links to the Kremlin. But the woman known at home as "the iron lady" moved from her current behind-the-scenes role in Ukraine's political crisis to its central stage by announcing plans to run for the presidency she lost to Yanukovych by a razor-thin margin in 2010. Her downfall after that vote was rapid and seemingly fatal. Yanukovych's government quickly launched a series of criminal probes against his rival that led to a controversial trial over Tymoshenko's role in agreeing a 2009 gas contract with Russia that many Ukrainians thought came at too high a price. Tymoshenko was convicted in October 2011 for abuse of power and sentenced to a seven-year jail term that Western nations denounced as a brazen show of selective justice. But she emerged triumphantly from the state hospital in which she had spent most of her sentence under guard on February 22 -- the day parliament ousted Yanukovych for his role in the deaths of nearly 100 protesters that month. Polls suggest that Tymoshenko may now have a tough time beating Petro Poroshenko -- a billionaire also known as the "chocolate baron" who stood at the barricades during three months of deadly Kiev protests against Yanukovych's rule. "Her support has slipped significantly since 2010," said Valeriy Chaly of the Razumov political research centre. - 100,000 Russian soldiers - But Ukraine's efforts to resolve its worst post-Soviet political crisis through elections are coming against the backdrop of worries Russia may yet set its sights on more of its western neighbour's land. The United States in particular has been uneasy about the steadily growing presence of Russian soldiers at Ukraine's eastern border -- a buildup that is putting psychological pressure on the interim government and leaving Western leaders guessing at the Kremlin's next move. US Defense Secretary Chuck Hagel noted on Wednesday that "they continue to build up their forces" despite Russian Defence Minister Sergei Shoigu's assurance that no broader invasion of Ukraine was planned. Ukraine's National Security and Defence Council chief Andriy Parubiy on Thursday put the figure of Russian soldiers around Ukraine at "almost 100,000". "Russian troops are not in Crimea only, they are along all Ukrainian borders. They're in the south, they're in the east and in the north," Parubiy said. There was no initial response to Parubiy's comments from Russia.