UPDATE 1-New German minister criticises Russia over Ukraine

Tue Dec 17, 2013 12:47pm EST

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(Updates after Steinmeier delivers speech to reflect differences from advance text)

* Social Democrat Steinmeier returns to former post

* Says Russia's exploitation of Ukraine's plight scandalous

* EU must answer questions on Ukraine before mediating

By Alexandra Hudson

BERLIN, Dec 17 (Reuters) - Germany's new Foreign Minister Frank-Walter Steinmeier criticised Russia in his inaugural speech for exploiting Ukraine's economic plight to prevent it from signing a free-trade deal with the European Union.

The Social Democrat (SPD) returned on Tuesday to the post he held during Angela Merkel's first "grand coalition" government from 2005-2009. Merkel's conservatives came out on top in a federal election in September but were forced into another alliance with the centre left.

"It is utterly scandalous how Russia used Ukraine's economic plight for its own ends, also in order to prevent the signing of the association agreement with the EU. Of course, the violent behaviour of the Ukrainian security forces towards peaceful demonstrators was also scandalous," he said.

He repeated questions raised by Polish President Bronislaw Komorowski about whether the EU had underestimated how divided Ukraine was and how determined Moscow was.

"I say quite openly I have no answers to that. But I'm certain we need to be able to answer that before we can respond to calls for help in stabilising the situation there."

He will travel to Poland on Thursday for talks on Ukraine.

Just days ago Steinmeier's Free Democrat predecessor Guido Westerwelle, walked through Kiev's Independence Square flanked by opposition leaders, earning a stiff rebuke from Russia for his "interference".

One of the opposition leaders in Ukraine, Vitaly Klitschko, called on Steinmeier to visit the square and mediate.

Steinmeier omitted from his speech a comment that appeared in a text version circulated earlier, saying the EU's offer to Ukraine fell far short of what was needed by the country.

Russia threw Ukraine an economic lifeline on Tuesday, agreeing to buy $15 billion of Ukrainian debt and to reduce the price its cash-strapped neighbour pays for vital Russian gas supplies by about a third.

The deal, reached at talks in Moscow between the Russian and Ukrainian leaders, is intended to help Ukraine stave off the economic crisis though Moscow will hope it keeps Kiev in its political and economic orbit.

Russia had threatened to impose sanctions on the country of 46 million, including hindrances to Ukrainian imports should Kiev opt to strengthen its links to the EU.

Ukraine needs help to cover an external funding gap of $17 billion. The most Brussels had so far offered Ukraine was 610 million euros ($838 million).

Steinmeier and the SPD are viewed as more pragmatic towards Russia than Merkel's conservatives or the FDP, and their coalition agreement with the chancellor contains a separate section dedicated to ties with Russia, which her 2009 deal with the FDP did not.

As the architect of Germany's "modernisation partnership" with Moscow, and an ally of Angela Merkel's predecessor Gerhard Schroeder, who cultivated a hearty, macho rapport with Putin, Steinmeier is seen launching a greater push for dialogue. (Editing by Noah Barkin and Alison Williams)

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