BRUSSELS: Ukraine’s new Western-backed president on Friday signed a landmark European Union (EU) pact whose rejection by his pro-Moscow predecessor plunged the ex-Soviet country into turmoil and sent East-West relations to their lowest level since the Cold War.
Ukraine President Petro Poroshenko hailed the deal, which pulls Kiev out of Kremlin’s orbit, as a turning point for the strategic country sandwiched between Europe and Russia.
But the agreement bursts Russian President Vladimir Putin’s dream of enlisting Kiev in a Kremlin-led alliance that could rival the European Union and North Atlantic Treaty Organization, and Moscow warned it would have “serious consequences.”
The Association Agreement is also deeply unpopular in Ukraine’s heavily Russified eastern rustbelt, where pro-Russian insurgents are battling Kiev government troops.
The EU also sealed similar partnership agreements on Friday with Georgia and Moldova—two former Soviet nations nations with similarly complicated relations with Russia.
Poroshenko said the deal offered Ukraine “an absolutely new perspective for my country,” hailing a “historic day, the most important day since independence.”
The deals were signed in Brussels just hours after pro-Russian rebels released four monitors from the Organization and Security and Cooperation in Europe (OSCE) they had abducted on May 26.
Another four European observers and their Ukrainian translator are still being held captive by the gunmen and Putin has personally urged the militias to secure their release.
The Kremlin chief denies exerting control over the fighters and is yet to address in public reports from Kiev and Washington of rocket launchers and even tanks crossing the Russian border into the conflict zone.
But Putin is also facing the threat of imminent economic sanctions should he fail to show that he is backing Poroshenko’s bid to end nearly three months of fighting that have claimed more than 435 lives.
The Russian leader said on Thursday that he wanted to see a temporary truce due to expire at 7 p.m. Manila time, extended to give nascent peace talks between Kiev and separatist leaders a chance to work.
Poroshenko responded by announcing that he was “ready to make peace with anybody.” But he is yet to commit himself to the ceasefire’s extension.
The EU argues that Friday’s deal will boost Ukraine’s exports to the 28-nation bloc by $1.35 billion (1.0 billion euros) a year and save the country roughly half that amount in revoked customs duties.
But Russia has warned that it will have no choice but to slap punishing trade restrictions on Ukraine after already nearly doubling its gas price—a step Kiev disputed and that led to a cut in its supplies this month.
Putin’s hawkish economic adviser Sergey Glazyev told the BBC that Poroshenko had assembled “a Nazi government [that]is bombing the largest region in Ukraine.”
“For Russia it is imperative to maintain preferential trade and economic linkages with eastern Ukraine,” the Eurasia Group political risk consultancy said in a report.
It noted that about a quarter of Ukraine’s exports go to Russia and predicted punitive trade measures from Moscow “in coming days.”
Others said Ukraine’s economy —already expected to shrink by an additional 5.0 percent this year— should eventually benefit from the adoption of European business and production standards that could make its goods competitive again.
“The agreement, coupled with Ukraine’s IMF [$17-billion, 12.5-billion-euro] deal, should act as an anchor for much-needed economic and political reforms,” London’s Capital Economics consultancy said in a research note, referring to the International Monetary Fund.
European monitors freed
A senior leader of the self-declared Donetsk People’s Republic said the four unarmed European monitors were released as a gesture of good will.
“They have been freed without conditions. They are a Dane, a Turk, a Swiss national and I believe an Estonian,” Alexandre Borodai told reporters in the eastern industrial hub of Donetsk.
The team appeared tired and tense at a Donetsk hotel and declined to speak to the media.
Swiss President and OSCE chief Didier Burkhalter expressed his “gratitude to all who helped in setting four of the eight monitors of the OSCE Special Monitoring Mission free.”
But there was no immediate word about the fate of another OSCE mission that went missing at the end of May.