EU snub reveals Ukraine still under Kremlin sway

(KIEV) - Ukraine's decision to scrap a historic deal with the European Union has shown up the influence the Kremlin retains over its neighbour over two decades after the fall of the Soviet Union, analysts said Friday.

They said the prime motivation for Ukraine's shock decision to abandon plans to sign the Association Agreement was pressure from Moscow and fear of the damage the Kremlin could wreak on the Ukrainian economy in retaliation.

Many pro-EU Ukrainians had believed that the 2004 Orange Revolution that annulled the results of rigged presidential polls would rid the country of the Kremlin's influence that had lingered after its independence in 1991.

However after the 2005-2010 rule of the staunchly pro-West president Viktor Yushchenko proved a disaster, they still find themselves in the Kremlin's orbit under his successor Viktor Yanukovych.

"Russia put pressure and then Ukraine refused to sign the agreement," said Alexei Malashenko, an analyst at the Carnegie Institute in Moscow.

"They (the government) need to pay the salaries now and the money can only be borrowed from Russia, no-one else is going to give it," he said, adding that the EU failed to understand that Ukraine needed more than just the sheer prospect of integration.

Yanukovych's mystery Moscow trip

The Agreement -- a broad political and trade deal -- would have marked a historic break by Ukraine away from Russia's influence and also been a first step on the long road to EU membership.

The possible key moment in Ukraine's switch may have come on November 9, when President Viktor Yanukovych suddenly departed to Moscow for talks with President Vladimir Putin on a visit whose circumstances remain shrouded in mystery.

Russia, which wants Ukraine to join a Moscow-led Customs Union, had threatened retaliation if Ukraine signed the Association Agreement, measures which could have hurt the already embattled Ukrainian economy.

"It is clear that Putin promised him money in return for turning down European integration," said the director of the Kiev-based Open Politics think tank, Igor Zhdanov.

"Yanukovych's financial obligations are becoming a political burden for him and Ukraine is now heading towards the Customs Union."

Earlier this month, Standard & Poor's downgraded Ukraine even deeper into junk status, warning of the "short- to medium-term negative implications" of the Russian reaction to signing the agreement.

A senior advisor to Lithuania's President Dalia Grybauskaite claimed that Yanukovych had said in a phone call this week that Russia threatened to cut imports from eastern Ukraine, the stronghold of his ruling Regions Party.

But Putin furiously rubbished the suggestion, saying it was the European Union, not Russia, that was trying to "blackmail" Ukraine.

Fyodor Lukyanov, editor of the Russia in Global Politics journal, said that the decision had come as Ukraine had understood "very late" the true consequences of signing the Association Agreement with the EU.

"Yanukovych understood that for him it would be a catastrophe and would not bring any pluses, just gigantic and dangerous minuses," he said.

'Preservation of his power'

While economic considerations were likely decisive for the Ukrainian government, Kiev-based analysts also pointed out that Yanukovych had an interest in keeping jailed opposition leader Yulia Tymoshenko out of politics ahead of 2015 presidential polls.

The freeing of Tymoshenko in some form was a crucial condition set by the European Union for Ukraine signing the Association Agreement at a summit in Vilnius next week.

Zhdanov said: "Yanukovych was never a champion of European integration. The main thing for thing is to ensure the preservation of his own power and thinks that Putin will help him in this."

Meanwhile, Prime Minister Mykola Azarov said in parliament the "last straw" was the tough conditions imposed by the International Monetary Fund for extending a new credit to Ukraine to help its struggling economy.

"The government is not capable of fulfilling its obligations and it needs urgent aid," said Vasiliy Yurchishin of the Razumkov Centre in Kiev.

"But Ukraine is remaining in Russia's orbit and is going to lose badly," he added, saying the move would be seen negatively by Western investors.