Ukraine PM Resigns; Ukraine's Economy; Ukrainian Opposition; Next for Ukraine; Emerging Markets Turmoil; Dow Rebounds
PAULA NEWTON, HOST: Well, what a relief. The closing bell rings on Wall Street and the Dow finishes firmly in the black. It's Tuesday, January the 28th. Ukraine's government is out. Tonight, one Ukrainian billionaire says he's ready to lead a new government. A rotten day for Apple. The share price takes a sharp drop on Wall Street. And ruffling the NSA's feathers. How Angry Birds is being used by government spies. I'm Paula Newton, and this is QUEST MEANS BUSINESS. Good evening. Tonight, it's sub-zero temperatures in Kiev, but protesters are refusing to move. That's despite significant concessions from the government. President Viktor Yanukovych has accepted the resignations of Prime Minister Mykola Azarov and his entire cabinet. Now, that announcement came as parliament voted overwhelmingly to repeal anti-protest laws that were passed earlier this month. People demonstrating out on the streets say the concessions are merely a step in the right direction, but not everything they want. Now, in Brussels, European leaders met with Russia's president. The EU -- EU's Herman Van Rompuy called for restraint in Ukraine on all sides. Vladimir Putin and Russia will not revise the conditions of any loans for gas price discounts to Ukraine.</s>VLADIMIR PUTIN, PRESIDENT OF RUSSIA (through translator): At this point, since nobody knows what the next government in Ukraine will be, no one could say anything about its future economic strategy. However, we will abide by our commitments.</s>NEWTON: Ukraine's crisis was triggered by President Yanukovych's decision to spurn closer ties with the European Union in favor of Russia. Now, the heavily indebted former Soviet republic faces two stark options: stick with Russia or sidle up to the EU. Now, the Russia option. In December, Russia agreed to buy $15 billion of Ukraine's debt and slash the price of gas. The deal enraged Ukraine's opposition and sparked protest. Ukraine's other option, seek financial aid from the EU and the IMF. Talks with the IMF broke down last year. Ukraine's outgoing prime minister, the one who just resigned, told Richard Quest in Davos last week that the IMF's conditions would have been disastrous for Ukraine.</s>MYKOLA AZAROV, OUTGOING PRIME MINISTER OF UKRAINE (through translator): And these conditions would mean even worsening of the economic situation in the state, like that is in Greece and other countries. Greece cannot get out of crisis for six years. So should we have implemented the comprehensive measures suggested by the International Monetary Fund, we would have faced a terrible economic crisis in the country.</s>NEWTON: Just before we came to air tonight, I spoke with Petro Poroshenko. He's a Ukrainian billionaire and politician whose name has been mentioned as a possible candidate for prime minister. I asked him if he will be Ukraine's next prime minister.</s>PETRO POROSHENKO, UKRAINIAN POLITICIAN AND BUSINESSMAN: I think that we should make the question the opposite one. Is the opposition ready to take responsibility for the whole situation in the country? And my answer would be yes. But if we would take responsibility, that means that we will form the government. And one of the representatives from the opposition, we have several potential candidates, are ready to be a prime minister to do the absolutely necessary reform, to keep democracy or to bring back democracy to Ukraine, to sign association agreement, to relieve the political prisoner, to restore the cooperation with the European Union and the United States. And most important thing, we are promising security for the people, democracy for the people, provide free and fair elections. We have a lot of things to be done from now.</s>NEWTON: And yet, none of this has really done anything to shore up Ukrainian economy. Many people believing you guys are on a dangerous position right now. How significant is it that President Putin said that no matter who's in power in Ukraine, his $15 million loan stands, as does those discounts to energy prices for Ukraine?</s>POROSHENKO: That's a very important message come today from the EU- Russia summit. And I think this is a very important compromise and very important message, which gives us the opportunity for facilitating to find that compromise. I think that the Ukrainian economy is in real danger, but not because of the action that's going on for 70 days, but because of the huge volume of the corruption, because of the extremely bad investment climate. Because of the enormous budget deficit, because of the enormous pressure of the foreign debt and absolute mismanagement of Ukrainian government. We don't have an independent court, we don't have the industries and competition should be built for running a normal economy. And that is actually the main problem, which from the very beginning put people out of their houses on the protest. When President Yanukovych and his team changed his mind and stopped signing -- the process of signing the association agreement. Because the association agreement for my country is the only way how to modernize my country, the only way to improve legislation, to remove corruption, and to build up absolutely -- to use absolutely unique opportunities which Ukraine has to develop their economy. That's why I'm absolutely confident that with the cooperation of the European Union, restoring the memorandum for cooperation with the International Monetary Fund, providing the investor confidence, we can significantly improve the budget and financial situation for Ukraine. And without doing any of that, today, the famous S&P; agency lowered the rating for the Ukraine sovereign paper to CCC plus. This is a very dangerous zone, and that would be another motivation for our government and for our authorities to be much more flexible in negotiation with Ukrainian opposition, Ukrainian people, and Ukrainian Maidan, which is behind my back.</s>NEWTON: Significant comments, there, from Mr. Poroshenko, live from Kiev just a few moments ago. Now, to talk about what's next for Ukraine, we're joined by William Green Miller. He is in Washington. He is a former US ambassador to Ukraine. Thank you so much for joining us on what must be a very dramatic night in Ukraine tonight. Many in that country wondering where the country is going next. From all the developments that you've heard throughout the day, do you believe the country's in better shape today to move away from the brink, to strike that compromise that so far has been so elusive?</s>WILLIAM GREEN MILLER, FORMER US AMBASSADOR TO UKRAINE: I certainly think so. And what Petro Poroshenko just said is the right agenda for the new government, and I very much hope that he'll be a part of it. I think very well of him, and he certainly has been part and parcel of the political and economic experience of the newly-independent Ukraine. We have to understand that the country is a new country, coming out of the ruins of the Soviet Union, and a new democracy and they've made many, many mistakes, but they have also significantly laid out the course that the majority thinks should be the path of Ukraine.</s>NEWTON: And yet, to just interrupt there for a second, and yet, President Putin today saying that look, I'm going to keep that $15 billion in place for the Ukrainian people, no matter what government comes into place. How significant were his comments today?</s>MILLER: Well, I think that's very helpful. And the EU, I'm sure, will work with Ukraine, particularly if it commits itself to the kinds of reform that Petro spoke of just a few minutes ago. And certainly, that's what the Maidan people want. An end to corruption, the thieves to jail, and a democracy that reflects the needs and will of all of the people, not just a few.</s>NEWTON: What you seem to be indicating is that we could be at a transformative moment. But is it really going to be that easy? I'm not saying that 70 days of protest isn't impressive, that the protesters haven't been through a lot, but we're talking about entrenched interests in Ukraine that are staring, perhaps as you say, jail time, prosecution in the face. Are they really going to relinquish power that easily?</s>MILLER: No, they're not going to relinquish power easily. But they've been confronted with a protest that speaks to the realities of Ukraine. It has been led by a corrupt government, and that's what they're protesting. It's not primarily alliance with the EU as opposed to Russia. It's more about the nature of their system of governance. They want a clean government. They don't want elected officials or governmental officials to enrich themselves from the public coffers. They want a decent government and a rule of law that reflects a fair system of justice.</s>NEWTON: Now, this whole protest started over the fact that there were two ways forward, one to align with Russia more closely and one to the EU. Do you believe that there is a way forward for Ukraine that can still have that close relationship with Russia that historically has always been there, and out of necessity, from an energy point of view, but still trade with the EU? Still become part of that EU bloc?</s>MILLER: Yes. I think that is the destiny of Ukraine, being a borderland country between East and West. They certainly have extensive trade and cultural relations with Russia. But they also have trade and cultural relations with the West. And there's no reason in a time of peace why they can't have a normal relationship with both Russia and Europe.</s>NEWTON: It's been the challenge so far. We'll wait to see how it turns out in the coming days and hours. Thank you so much for joining us. Appreciate it, your time.</s>MILLER: It's a pleasure.</s>NEWTON: Now, investors are watching developments in Ukraine. The revolution of the -- the evolution of the crisis there may still stabilize the turmoil in emerging markets. Ukraine's currency rebounded from four- year lows Tuesday following the prime minister's resignation. However, as we heard earlier, the country's credit rating was cut by Standard & Poor's. Elsewhere, India unexpectedly raised interest rates by -- get this -- a full 25 basis points to 8 percent. The central bank had warned there is a clear risk of contagion surrounding the emerging economies. And Turkey's central bank, officials are meeting at this moment. An interest rate hike is expected from them as well. The statement is due in around 45 minutes, and if we get it, we will bring that to you. Coming up on QUEST MEANS BUSINESS, the Apple may not fall far from the tree, but boy, it could face a big drop on Wall Street. A closer look at its rough day on the markets.