Ukraine signs historic trade deal with EU despite Russian wishes

Ukraine’s new president signed an economic and political pact with the European Union on Friday, pushing his troubled country closer into a European orbit over the protests of Russia, which warned of possible sanctions.

BRUSSELS, Belgium — Ukraine’s new president signed an economic and political pact with the European Union on Friday, pushing his troubled country closer into a European orbit over the protests of Russia, which warned of possible sanctions.

“What a great day!” a beaming President Petro Poroshenko said in Brussels. “Maybe the most important day for my country after independence” from the Soviet Union in 1991.

Russia has long been opposed to closer ties between Ukraine and the EU. Moscow is loath to see its historic influence wane in its strategic neighbour, which it considers the birthplace of Russian statehood and of Russian Orthodox Christianity.

“There will undoubtedly be serious consequences for Ukraine and Moldova’s signing,” Russian Deputy Foreign Minister Grigory Karasin said.

European Union leaders decided not to immediately impose new sanctions on Russia for destabilizing eastern Ukraine. But in a statement, they warned that new sanctions have been prepared so they could be levied “without delay” and listed several demands for Vladimir Putin’s government and the pro-Russian rebels in eastern Ukraine.

Poroshenko’s pro-Moscow predecessor, Viktor Yanukovych, had backed out of signing the agreement in November, igniting the bloody protests that toppled his government in February. Tensions between Ukrainians in the west who want closer ties to Europe and those who favour traditional ties with Russia sparked an insurgency in the east and Russia’s annexation of the mainly Russian-speaking Crimean Peninsula in March.

In a speech, Poroshenko reminded EU leaders of the scores of Ukrainians who died opposing Yanukovych’s government and in the ongoing battle against the insurgency.

“(Ukraine) paid the highest possible price to make her European dreams come true,” he said, asking the leaders to take a further step and formally pledge that one day Ukraine can join the 28-nation bloc.

“(That) would cost the European Union nothing,” he said, “but would mean the world to my country.”

Agreements signed Friday let businesses in the former Soviet republics of Ukraine, Moldova and Georgia trade freely in any of the EU’s nations without tariffs or restrictions as long as their goods and practices meet EU standards. Likewise, goods and services from the EU will be sold more easily and cheaply in the three countries.

Putin did not immediately comment on the trade pact but has signalled that he wants to de-escalate the conflict. Poroshenko began a unilateral cease-fire against the separatists a week ago, which was to expire Friday.

“The most important thing is to guarantee a long-term cease-fire as a precondition for meaningful talks between the Kyiv authorities and representatives of the southeast (of Ukraine),” Putin said Friday.

The weeklong cease-fire, which both sides accuse the other of violating, was set to expire at 10 p.m. but Poroshenko told a news conference he would decide later Friday whether to extend it.

The EU leaders gave the Russian government and the rebels until Monday to take steps to improve the situation in eastern Ukraine, including agreeing on a way to verify the cease-fire, returning three border checkpoints to Ukraine, releasing all captives and launching “substantial negotiations” on Poroshenko’s peace plan.

Insurgent leader Alexander Borodai said the rebels are ready to extend a cease-fire and will soon release the European observers they have been holding for weeks.

He spoke after talks Friday in the eastern city of Donetsk involving a former Ukraine president, the Russian ambassador and an envoy from the Organization for Security and Cooperation in Europe.

Borodai, however, demanded Ukrainian troops withdraw from eastern Ukraine and rejected the EU demand to withdraw from the Ukrainian checkpoints on the border with Russia they have seized.

Amanda Paul, a policy analyst at the Brussels-based think-tank European Policy Center, said Russia has levers to inflict serious economic pain on Ukraine, Moldova and Georgia through trade restrictions, cuts in energy supplies or the deportation of migrant workers from those countries.

Georgia has already lost chunks of its territory and Black Sea coast to rebels backed by Russia after a brief war in 2008.

European Commission experts estimate the deal will boost Ukraine’s national income by 1.2 billion euros ($1.6 billion) a year. Ukraine won a 15-year transition period during which it can use tariffs to support its domestic auto industry from competition. Moldova will gradually eliminate protections for its dairy, pork, poultry and wine producers over 10 years, while the EU placed limits on imports of chicken from both countries.

The trade deal also demands that Ukraine change the way it does business. Adopting EU rules on government contracts, competition policy and copyright for ideas and inventions should improve Ukraine’s economy by reducing widespread corruption and making it more investor-friendly.

Interior Minister Arsen Avakov told Ukraine’s Fifth Channel that at least 20 servicemen had been killed since the rebels agreed to the cease-fire Monday. He said the government would respond “harshly and adequately” to all rebels who did not put down their arms by Friday evening.

There was no corresponding casualty figure from the rebels.

An overnight battle for a National Guard base in the eastern city of Donetsk left the rebels in control early Friday. All servicemen were set free but the commander was taken captive.

A rally was held at Kyiv’s Independence Square, the site of the protests that toppled Yanukovych. A trickle of people filed by votive candles and portraits of the so-called “Heavenly Hundred,” the protesters killed — many by snipers — near the square in February.

Andrei Berezov, a 30-year-old driver who lives in a Kyiv suburb, said he favoured Poroshenko’s decision to bring Ukraine closer to Europe.

“I have lived and worked in Madrid, there’s no comparison, it’s black and white,” he said. “There’s no corruption, paying a policeman 50 hryvnias, it wouldn’t happen there.”

Svetlana Kosenko, an 18-year-old student from Ukraine’s western regions, said she didn’t believe the country would change overnight.

“I think it will take a long time,” she said. “As they say, hope dies last, and for now we hope things will be good.”

The U.N. said Friday that 110,000 Ukrainians had fled to Russia this year and another 54,000 fled their homes but stayed in Ukraine. Long lines of cars stuffed with belongings backed up at the border headed into Russia this week.