Tymoshenko clings on as PM after Ukraine poll loss

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KIEV- Ukraine's Yulia Tymoshenko on Thursday defiantly refused to concede defeat to rival Viktor Yanukovich in a presidential election, throwing Ukraine into turmoil that threatened chances of a swift return to stability.

Stepping back into the public limelight after a bizarre three-day silence, the fiery prime minister went onto the attack against Yanukovich and his Regions Party, saying their social spending policies amounted simply to pre-election PR.

Minutes after she appeared at a cabinet meeting in her trademark peasant braid, first deputy and close aide Oleksander Turchynov told reporters she had no intention of bowing to a call by opposition leader Yanukovich for her to step down.

The government does not plan to resign voluntarily, Turchynov told reporters. I don't see any basis for this (resignation), he said.

Her defiant stance opened up prospects of a protracted stand-off between the two rivals for power who fought a bitter campaign of smears and insults leading up to the February 7 run-off which Yanukovich won by 3.48 percentage points.

Yanukovich's supporters in parliament can now try to force her out through a vote of no-confidence.

But Tymoshenko would still stay on as acting prime minister until a new parliamentary coalition was formed -- itself a lengthy process of horse-trading over government posts.

With all votes counted in an election hailed as fully fair by international monitors, Western governments were expected to begin congratulating the winner, increasing the pressure on Tymoshenko.

But Yanukovich, who would normally expect to be sworn in as president by March 17, cannot rest easy.

The 59-year-old ex-mechanic would have to call snap elections if he could not put together a new coalition -- but his Regions Party would almost certainly then lose ground leaving him in an even weaker position.

The main result of these elections is that Yanukovich came first, but did not win. Tymoshenko, on the other hand, lost but was not defeated, Ukrainska Pravda commentator Vadym Karasov wrote.

ECONOMIC WOES

Most analysts said the likely final outcome seemed to be that she would go into opposition to fight Yanukovich whose position as president may end up as weak as that of his predecessor, Viktor Yushchenko.

The turmoil spelled only fresh instability for the ex-Soviet state of 46 million that could deter investors and dim prospects for a recovery for the sickly economy.

It could also delay the resumption of International Monetary Fund lending under a $16.4 billion bail-out program. This was crucial last year for the state's finances but was suspended because of breached Ukrainian promises of fiscal restraint.

In order to resume economic growth, we have to renew cooperation with the IMF but the Fund has a very simple position, they say 'bring us the letter which has the signature of a fully empowered, fully authoritative president, prime minister and central bank, said political analyst Yuri Ruban.

In this sense, it's a complete mess when the who, the what and the where is not known. This is not liable to smooth out relations with the IMF, he added.

Ukraine's $120 billion economy has been battered by a decline in the value of vital steel and chemicals exports that has hammered the hryvnia currency, slashed budget revenues and undermined the domestic banking system.

Tymoshenko's camp has alleged cynical fraud by the Yanukovich camp in Sunday's election, which tilted the former Soviet republic back toward Russia five years after its pro-Western Orange Revolution co-led by her.

Her supporters are forcing a recount in some regions with a view to mounting a legal challenge, though it is unclear how successful this is likely to be.

(Additional reporting by Yuri Kulikov; Writing by Richard Balmforth; Editing by Diana Abdallah)

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