EU signs landmark deal with Ukraine

The EU & Ukraine have committed to the same deal Viktor Yanukovich rejected last year.

Ukrainian Prime Minister Arseniy Yatsenyuk (2nd-R) meets with EU leaders during the signing of a landmark political cooperation accord on 21 March. Picture:AFP.

BRUSSELS - The European Union and Ukraine have signed a landmark political cooperation accord, committing to the same deal former president Viktor Yanukovich rejected last November, a decision that led to his overthrow.

Ukrainian Prime Minister Arseny Yatseniuk, EU presidents Herman Van Rompuy and Jose Manuel Barroso, and the leaders of the bloc's 28 nations signed the core chapters of the Association Agreement during an EU summit in Brussels.

Soon afterwards, Russian President Vladimir Putin signed legislation completing the process of absorbing Crimea into Russia, defying Western leaders who say the Black Sea peninsula remains part of Ukraine.

The deal commits Ukraine and the EU to closer political and economic cooperation, although it's more substantial parts concerning free trade will be signed only after Ukraine has held a presidential election on 25 May.

Van Rompuy, the European Council president, said the agreement would bring Ukraine and its 46 million people closer to the heart of Europe and a "European way of life".

"(This) recognises the aspirations of the people of Ukraine to live in a country governed by values, by democracy and the rule of law, where all citizens have a stake in national prosperity."

Yanukovich turned his back on signing the EU agreement last November in favour of closer ties with Moscow, triggering months of street protests that eventually led to his flight from the country.

Soon afterwards, Russian forces occupied Crimea, a Russian-majority region in the far southeast of the country, drawing outrage and sanctions from the United States and EU.

CRISIS INTENSIFYING

Yatseniuk urged European leaders to move decisively to contain Putin with economic pressure or risk the conflict, the most bitter East-West confrontation since the Cold war, spilling elsewhere into Europe.

"The best way to contain Russia is to impose real economic leverage on them."

On Thursday, EU leaders began preparations for economic sanctions if Russia expands its footprint in Ukraine, but failed to detail what measures the bloc could take.

Underscoring divisions in Europe, which have hampered its response to the crisis in Ukraine, French President Francois Hollande said late on Thursday that Kiev could count on tightening relations with the EU but not on membership.

Some European policymakers have pushed the EU to open its doors to countries in the east as an incentive to reform and resist Russian pressure on those states to shun Europe.

But many EU governments, wary of goading Russia with which they have had major commercial ties, are loath to so much as suggest Ukraine could one day join the bloc.

As well as the closer political ties, the European Commission has agreed to extend nearly 500 million euros ($689 million) worth of trade benefits to Ukraine, removing duties on a wide range of farm goods, textiles and other imports.

Once Ukraine has a new administration and signs a free-trade agreement with the European Union, it will have unfettered access to the EU's market of 500 million consumers.

That has the potential to strengthen Ukraine's shattered economy, but also runs the risk of provoking retaliatory steps from Russia, which has already imposed stricter customs checks on trade with Ukraine.

The other burden for Kiev is meeting the obligations that come with EU political association. These include instituting changes to the rule of law and justice in a country long plagued by corruption and repressive governance, and adopting business and environmental standards that will require hard work and long-term investment to meet.

Underlining Kiev's difficult relationship with Moscow, Russian Prime Minister Dmitry Medvedev said in a meeting with Putin on Friday that Ukraine owed Russia $16 billion.