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Tuesday March 11, 2014 MYT 2:55:02 AM
Tuesday March 11, 2014 MYT 2:56:19 AM
by luke baker
BRUSSELS (Reuters) - In its effort to show Russia it means business over Ukraine, the European Union may have created extra problems for itself in committing to a quick political deal with Kiev while leaving closer economic ties for later.
Complicating matters, the EU is standing by a promise to consult Russia on the economic consequences of any agreement with Ukraine, while threatening to call off the forum where it would raise such issues with Moscow.
At an emergency summit last week to discuss how to respond to Russia's seizure of Crimea, the EU decided to split its original plan for a far-reaching free trade and association agreement with Ukraine's new rulers into two parts.
The political aspects would be signed "very shortly", with officials indicating that a ceremony could be held with Ukraine's interim prime minister, Arseny Yatseniuk, as soon as March 20-21, when EU leaders next meet in Brussels.
But the more important economic and trade aspects, which have far more potential to reinvigorate Ukraine's economy, would wait until after presidential elections have been held on May 25 and a new, permanent government installed in Kiev.
From the EU's point of view, it looked like a clever way of reconstituting its long-negotiated plans for closer ties with Ukraine, which were rejected by former president Viktor Yanukovich last November under intense pressure from Russia.
But in its desire to reassure Ukraine it is not being abandoned, while making clear to Russia it will not be intimidated, the EU may be complicating what is already an the greatest period of East-West tension since the Cold War.
In creating a two-step process with Ukraine, the EU risks making the interim government in Kiev feel like a second-class administration: one that is fine for a symbolic political agreement, but not good enough for a trade deal.
What's more, at an EU-Russia summit held in January, the EU promised to hold consultations at "expert level" with Moscow on ties with Ukraine and any "possible economic consequences".
As a result, just as Brussels is trying to cold-shoulder Russia over Crimea, including threatening asset freezes, travel bans and other sanctions, it is obliged to consult with Moscow on any steps it takes towards stronger economic ties with Kiev.
Kiev wants the whole deal even if this means Brussels dropping the promise to consult Moscow.
Speaking last month, Ukraine's ambassador to the EU, Kostiantyn Yelisieiev, said all aspects of the association agreement needed to be put in place in one go, suggesting March 20-21 as the best date.
"Any formulation like let's wait until the May 25 elections would be unfounded," he told Euractiv, a Brussels news website.
Some EU diplomats, notably those from former east bloc countries, are worried about Russia retaining leverage.
"By dividing the agreement we are giving Moscow a chance to block the signing of the economic part of the association agreement," said a diplomat from an east European member state.
Asked about the conflicting priorities, EU officials said on Monday they intended to stick to the agreement reached with Russia in January - to consult on the next steps.
The officials added that there was no reason for Moscow to kick up a fuss because the economic and trade aspects of the deal with Ukraine were positive for Russia too. But given tensions between the EU and Russia, cooperation is unlikely.
What's more, the next step in the EU's stated plans to apply pressure on Moscow over its seizure of Crimea would involve cancelling EU-Russia summits.
In their statement last week, EU leaders said Russia must start negotiating with Ukraine's interim leaders on a solution to the crisis immediately, demanding progress in "the next few days" or else the following consequences:
"The European Union will decide on additional measures, such as travel bans, assets freezes and the cancellation of the EU-Russia summit."
With no signs that Russia is "de-escalating" in Crimea, EU officials said they would begin the process of implementing the sanctions shortly, including cancelling summits with Moscow.
But if the next summit is cancelled, there will be no forum for the EU to consult Moscow on the closer economic ties it is planning with Ukraine after May 25. In its effort to act tough, the EU may have boxed itself into a corner.
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