* Accords part of EU-Russia tug-of-war for influence
* EU hopes will lead Ukraine towards stability, prosperity
By Robin Emmott
BRUSSELS, June 26 After months of upheaval,
Ukraine will complete a broad political and trade accord with
the European Union on Friday, making a historic shift away from
Russia and closer to the West.
The signing is a victory for pro-EU Ukrainians who drove
Russian-backed president Viktor Yanukovich from power after he
abandoned the pact last year in favour of cash from Moscow. New
President Petro Poroshenko hopes to bind the nation of 45
million to the European Union via the accord.
The victory was hard-won: it led to Russia's annexation of
Crimea from Ukraine and to attempts by
pro-Russians in eastern Ukraine to break away and join Russia
. That conflict continues; the latest attempt at
a ceasefire between the rebels and the Ukrainian government
appears to be crumbling.
Ukraine also incurred considerable costs when it lost
Crimea. One government minister estimated the country had lost
resources worth $10 billion
The association agreement with the EU may help offset some
of those costs. It falls short of EU membership, but should tie
Kiev economically into the 28-nation European Union. It could
offer Ukraine a route to the kind of stability and prosperity
that neighbouring Poland has achieved.
WHAT IS AN EU ASSOCIATION AGREEMENT?
The agreements are the EU's way of extending influence to
its neighbours without offering actual membership. Moldova and
Georgia are also signing on Friday.
The agreements gradually liberalise trade with partners,
meaning countries end up with unfettered access to the 28-nation
bloc's 500 million consumers - the world's largest and
wealthiest single market.
The EU also provides technical help and funds to help
countries adapt to its regulations and allow businesses to bid
for lucrative EU public works contracts.
In return, the EU requires that countries meet its standards
on human rights and democracy, fight corruption, strengthens the
rule of law and reforms its economy.
WHAT BENEFITS DOES IT BRING?
If properly implemented, the association agreements will
help provide Ukraine, Moldova and Georgia with a path towards
economic modernisation, higher living standards and a stronger
Ukrainian exporters will save almost 500 million euros ($685
million) a year because they no longer have to pay customs
duties, the EU says. Overall, Ukrainian exports to the EU are
expected to increase by 1 billion euros a year, including
greater sales of textiles, metals and food products.
In the long run, Ukraine's economic output could grow an
additional 1 percent a year because of increased exports in
goods and services, as well as more European investment in
Ukraine, according to an EU study.
Under the accords, the EU will grant access to its market
more quickly than Ukraine, Moldova and Georgia. They will enjoy
better access to the bloc than the EU will get in return in the
first few years.
Brussels also hopes that by meeting EU standards for goods
and services, Ukraine, Moldova and Georgia will improve their
chances of selling more goods internationally, beyond the EU.
WHAT ARE THE COSTS?
One reason that ousted Ukrainian president Yanukovich
rejected the EU deal in November was because he said it would
cost Kiev $500 billion in trade with Russia. Implementing EU
standards would cost another $104 billion, he said.
The EU says Ukraine is still free to trade with Russia, and
it will provide support and funds to help meet EU rules.
However, by agreeing to the EU accord, Ukraine can no longer
join Russia's customs union, because members Belarus and
Kazakhstan are not members of the World Trade Organisation.
EU diplomats worry Moscow may take punitive action against
Ukraine, Moldova and Georgia in retaliation for siding with the
European Union, an act of "commercial aggression".
That could involve Russia removing Ukraine's preferential
treatment to its markets and implementing high tariffs, or at
worst blocking goods at its border.
Ukraine, Moldova and Georgia are also agreeing to
considerable domestic reforms that will challenge entrenched
interests among business and the political class.
(Additional reporting by Adrian Croft; Editing by Larry King)