Ukraine is on a cliff edge. Both financially and politically, it is not far from disaster. Its reserves have almost disappeared, its currency is vulnerable, its trade has been disrupted by Russian meddling, and it will run out of money completely by March. President Viktor Yanukovych's last minute decision to back out of years of negotiations with the European Union has split the country. Much of the centre of the capital and the government quarter is in contention between armed police and demonstrators protesting against Yanukovych's choice, with the constant possibility that, by accident or design, the skirmishes between them will again degenerate into serious violence. European and American envoys have rushed to Kiev in the hope of containing the crisis, while the Russians are naturally also trying to shape events to suit their interests. Through the smoke and confusion of the street battles at the forefront of the news, two important things are clear. One is that the European Union's proposed deal, together with a parallel arrangement with the International Monetary Fund , are both still on the table, and that President Yanukovych has not yet definitively rejected the European option. The other is that his belief that he is in a position to conduct an auction of Ukraine's allegiance in exchange for massive financial help - help that will, and not incidentally, rescue his own political position - continues to be at the root of his country's problems. The EU has never provided budgetary support to countries seeking a closer relationship. Its rules would not permit it to offer financial aid of that kind even if it wished to, and the most that could be expected would be that the EU would use its influence with the IMF to secure slightly better terms for IMF help. The IMF, for its part, remains insistent that help is conditional on reforms, the more so since it has experience of Ukraine committing itself to reform in the past and then not delivering. Yet Mr Yanukovych believes, against all the evidence, that the rules can be bent to accommodate him, and that if they cannot, he can then easily turn to the Russians. This misguided view bedevilled the negotiations leading up to the failed summit in Vilnius last month because Europe was never going to be able to provide the bailout he wanted, while a sudden plumping for Russia was going to inflame at least half of the population. Polls have shown majority support for the European deal, well ahead of the number of Ukrainians favouring the Russian connection. Now Mr Yanukovych seems to think he can begin the auction all over again. He may already have succeeded in getting a promise of a discount on Russian gas supplies if Ukraine signs up for the Eurasian Union , and he has also secured some investment deals with China . It is possible that he could get slightly better terms in a second round of negotiations with Europe . The EU will not change the offered package, but it could supply various inducements on the side. Yet that will not much alter any final result and, in any case, the political argument in Ukraine has moved on from the European issue considered in isolation. The demonstrators in Kiev are now complaining about almost everything, about governmental incompetence, corruption, about the difficulties faced by small businesses, and about the personal failings of the president. They will not be satisfied by a change of tack on Europe , although they might be appeased by a change that put in place a government of national unity, although still under Mr Yanukovych, whose term lasts until 2015. Nothing like that is so far on offer. A round table of previous presidents convened to advise him has made no public statements or suggestions. In the absence of a political solution of that kind, the danger is that the government, which has veered in recent days between repression and appeals for negotiations with the demonstrators, will go for harsh measures, with tragic consequences.
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