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. Last Updated: 07/27/2016

Yushchenko and Yanukovych Dig In Their Heels

ReutersViktor Yanukovych, left, meeting on Thursday with Viktor Yushchenko in Kiev.
KIEV -- A standoff between Ukraine's president and prime minister deepened Thursday, with both men refusing to compromise over a new election and trading threats of prosecution.

President Viktor Yushchenko issued a decree to dissolve the parliament and hold new elections earlier this week, in what is seen as a last-ditch bid to reassert his authority.

Prime Minister Viktor Yanukovych reiterated Thursday that he would not take part in the elections.

"I stress one more time that it is obligatory to implement the decree of Ukraine's president. Any refusal to implement it will result in criminal proceedings," Yushchenko told a meeting of Ukraine's Security Council, where he sat next to Yanukovych.

"I will not take a single step toward rescinding the decree," he said.

Yanukovych responded by saying Ukraine should wait for the Constitutional Court to rule on whether the parliament's dissolution was legal. The court began on Thursday to examine a collective suit filed by pro-Yanukovych legislators challenging the president's decision. A ruling is expected to take more than a month.

"We reject any form of early elections," Yanukovych said at a news conference. He urged the president to start talks.

"If the decree is unconstitutional, then the heads of law enforcement agencies should get involved to look into how the situation got to this point and who started it," Yanukovych said.

He said he had asked Austria to help mediate the political crisis during a telephone call earlier in the day with Chancellor Alfred Gusenbauer.

"It was kind of by chance ... but I'm sure that he is the proper man. Their country is a democratic, modern European country," he said.

He said he might later ask Russia and Poland for assistance. Poland played mediator during the Orange Revolution, while Russia strongly backed Yanukovych and accused the West of stealing his victory.

EU foreign policy chief Javier Solana telephoned the two Ukrainian leaders to appeal for a political solution and urge restraint, his spokeswoman said. "We need a solution that respects the democratic rights of the people," the spokeswoman, Cristina Gallach, said.

For the first time, analysts voiced concern that the battle could hurt the economy.

Standard & Poor's cut the outlook on its rating on Ukraine, citing the deteriorating political climate as posing risks to economic policies.

S&P said there was little chance that elections would return a reform-oriented and market-friendly government with a chance that opposition leader Yulia Tymoshenko could return to power. This increases the risk of more price rises for Russian gas imports and subsequent trade shocks, it said.

Political uncertainty is compounded by the structure of the Ukrainian economy, which is driven by exporters. Key Ukrainian exports are steel and chemicals but markets for them are cyclical.

Economy Minister Anatoly Kinakh said, however, that the government had no plans so far to change its economic forecast of 6.5 percent growth this year after a 7.1 percent rise in 2006. He expected gross domestic product growth of about 8 percent in the first quarter.

Yushchenko's popularity has slid amid accusations that he betrayed the promise of the Orange Revolution more than two years ago, when he pledged to take Ukraine into the European Union and boost low living standards.

He accuses Yanukovych of violating the constitution by poaching members of his team to enlarge the majority in parliament that underpins his government.

Backed by thousands of supporters who have taken to the streets, Yanukovych has refused to take part in the election campaign, which officially started Wednesday. Reuters, AP