Ashton says Ukraine president "intends to sign" EU deal

By bne IntelliNews December 12, 2013

bne -

The EU's top diplomat Catherine Ashton said on December 12 Ukrainian President Viktor Yanukovych made it clear to her following her second meeting with him in two days that he "intends to sign" an association and free trade deal with the EU, according to a report from the Associated Press.

"Look, Yanukovych made it clear to me that he intends to sign the association agreement," Ashton said on arrival for a meeting in Brussels early Thursday after her visit to Kyiv.

Ashton added that she was sure the short-term economic and financial issues that Ukraine faces can be overcome, if the Eastern European state signs up with Brussels and not with the Russia-led Customs Union.

Yanukovych balked at signing off on the Association Agreement during the Vilnius summit on November 28-29, as it didn't contain any short-term cash that the Ukrainian government desperately needs to shore up its economy and prevent a looming devaluation of the national currency. Nor were there any promises of longer-term support to compensate Ukraine from the expected economic retribution from Russia, which has been pushing Kyiv to join its Customs Union with Belarus and Kazakhstan.

Yanukovych's decision has brought hundreds of thousands of protestors onto the streets of most of Ukraine's major cities and the prospect of a violent confrontation is close, while that of a resolution between the two sides remains distant.

But Ashton suggested that for a deal to work, Yanukovych would have to agree to far-reaching reforms as the solution would not come just from EU institutions, "but actually by showing that he has a serious economic plan in signing the association agreement," she said, AP reported.

A team from Ukraine is supposed to travel to Brussels on December 13 to thrash out the terms of the deal, probably Ukraine's last chance to resolve the issue before the Christmas holidays.

The US State Department was turning the screws too. "All options remain on the table, including sanctions," State Department spokeswoman Jen Psaki said in comments broadcast by Russian state-owned media RT.

Deal speculation

There has been speculation for two days that Ashton arrived in Kyiv on December 11 to deliver a new and improved deal for Ukraine. She sat with Yanukovych for three and half hours. Although the contents of their discussions were not disclosed, as bne reported it appeared that she offered the Ukrainian president a better deal for siding with the West.

Ashton arrived the day after European Commissioner for Enlargement and European Neighbourhood Policy Stefan Fuele also hinted that a new deal was on the table. "We stand ready to help and support Ukraine on its modernization journey, including through topping up [International Monetary Fund] IMF loans with macro-financial assistance; by stepping up the European Union's financial assistance programs to help Ukraine implement the Agreement, when it is signed, and helping to bring on board other international partners," he said at a plenary sitting of the European Parliament in Strasbourg on December 10 during discussion of the Ukrainian issue.

The IMF also seems to be softening its tone with similar comments, also made on December 10. "The IMF is ready to offer support for Ukraine if the country implements the needed reforms, in particular those relating to its national currency and the price of energy," said IMF President Christine Lagarde at a press conference late on December 10.

Finally, Germany's foreign minister, Guido Westerweller, who has just returned from a trip to Ukraine, tweeted on December 11: "#EU has made a very compelling offer to #Ukraine. AssociationAgreement would have very positive impact on economic situation."

For its part, the Ukrainian government also appears to be softening its position. Previously it had been demanding €160bn as economic "compensation" for turning its back on Russia and its Customs Union. However, on December 11 Ukrainian Prime Minister Mykola Azarov reduced the amount to €20bn of financial assistance as part of preparations for signing the Association Agreement.

"Those who have gathered at Maidan [Independence Square in Kyiv] are demanding that an association agreement be immediately signed with the EU. The government also favors the soonest possible signing of the agreement, but we want to provide conditions to minimize losses for the Ukrainian economy," Azarov said.

"We have invited the European Commission to consider under what conditions our industry and economy as a whole will work. We propose resolving the issue by offering financial aid to Ukraine. We have determined its approximate amount at €20bn," Azarov said in opening a government meeting on December 11, reported Interfax.

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