VILNIUS – German Chancellor Angela Merkel has said Ukraine still has chance to seek a trade pact with the European Union as leaders of the EU gathered in Vilnius for a summit rocked by Kiev’s shock decision not to sign a far-reaching agreement.
Merkel said on Thursday that “the door was still open” for Kiev, despite the Ukrainian government’s rejection of the EU deal to avoid pressure from Russia, which has been seeking to keep the former Soviet state within its sphere of influence.
The deal was expected to be signed later on Thursday in the Lithuanian capital of Vilnius where EU leaders are holding a summit with countries of Eastern Europe and southern Caucasus.
Ukraine’s President Viktor Yanukovich flew into Vilnius in time for a dinner in honour of the Eastern Partnership, the EU’s four-year-old outreach programme for former Soviet republics.
EU enlargement commissioner Stefan Fuele said Ukraine’s decision to walk away from the agreement could imperil its future.
“The Ukrainian economy needs huge investments, but these are not costs. They represent future income, more growth, more jobs and more wealth,” said Fuele, disputing Ukraine’s estimates that upgrading its economic base to European standards would cost $20billion a year.
“The only costs that I can see are the costs of inaction allowing more stagnation of the economy and risking the economic future and health of the country,” he told a business forum in Vilnius, adding the EU offer remained on the table.
While the Ukrainian government has admitted to pulling out of the deal with the EU after pressure from Russia, diplomats were still discussing possible concessions on Wednesday.
On the fourth day of mass pro-European street protests in Kiev, the Ukrainian prime minister said his government still wanted to strike an agreement with the EU.
Ukraine is heavily dependent on Russia for trade and energy supplies, and the EU’s offer appears to have been insufficient to counter Moscow’s threats of commercial retaliation.
Although Ukraine is the largest and most visible of the six countries engaged in the much-lauded EU Eastern partnership, Walker said it was not the first time Europe’s efforts to develop ties in the region have been thwarted by Russia.
“Armenia was another country all the paperwork was ready to sign on the dotted line. A couple of months ago Vladimir Putin traveled there and the next day, Armenia announced it wasn’t joining this EU partnership that it was in fact joining Russia’s EU-style Customs Union,” he said.
Walker and Cragg both argue that the European Union’s image and diplomatic clout have suffered in the Ukrainian rapprochement fiasco at least in the short term.
However, two other former members of the Soviet bloc, Georgia and Moldova, are due to sign free trade agreements with the EU in Vilnius.
Russia’s deputy prime minister has already warned that it will apply pressure to these countries as well.
The conclusion of the trade and reform deal was planned as the highlight of a summit aimed also at building ties with other East European states.
Ukrainian President Viktor Yanukovych is likely to face tough questions from EU leaders on why he stopped the deal, apparently under Russian pressure.
He has requested more EU financial aid.
On arrival in Vilnius, President Yanukovych met the President of the European Council, Herman Van Rompuy. No details were given.
In a Ukrainian TV interview earlier, he accused the EU of offering his country an inadequate amount in loans to help reform the economy.
The EU has offered to lend 610 million euros (510 million pounds; $828) in macro-financial assistance, on condition that Ukraine continues meeting the conditions of an IMF stand-by loan of 11.15 billion euros, agreed in 2010.
Yanukovych, in remarks quoted by his website, said Ukraine would need at least 20 billion euros a year to cover the costs of upgrading its economy to “European standards”.