Ukraine crisis a setback for NATO bid

By David Brunnstrom - Analysis

BRUSSELS (Reuters) - Renewed crisis in Ukraine is a fresh setback for its EU ambitions and those who want it to join NATO, despite growing concern about Russian moves to roll back Western influence after intervening in Georgia, analysts say.

A shaky coalition between President Viktor Yushchenko and Prime Minister Yulia Tymoshenko collapsed on Wednesday, less than a week before an EU-Ukraine summit at which Kiev has been seeking a clear signal it can one day join the European Union.

Yushchenko wants to move his strategically important country towards the EU and NATO but bickering between him and Tymoshenko has stalled reforms in the former Soviet republic of 47 million.

"It's incredibly bad timing," said Andrew Wilson of the European Council on Foreign Relations think tank.

"The inability to keep domestic housekeeping in order is the very reason many EU states argue against Ukraine. It's not just the traditional EU divide about whether or not to offend Russia, but the genuine question about reform capacity and the short-term future of Ukraine."

EU diplomats said Tuesday's summit in the French town of Evian was expected to offer Ukraine some concessions, including talks on long-term moves to ease visa requirements.

It may also designate a broad pact governing ties as an "Association Agreement" -- wording that can imply the possibility of future membership.

However, they said divisions within the bloc meant it would fall short of any explicit statement making clear Ukraine could one day join the 27-nation European Union.

EU states including Britain, Sweden and former communist countries such as Poland want such a statement. "But it's not where the EU as a whole is right now," an EU diplomat said.

An explicit offer is opposed by the Benelux countries, and Germany and Italy are also not keen, given waning public support for further EU expansion, Kiev's poor record on EU-related reforms and a desire to avoid further straining ties with Moscow, a key supplier of energy to Europe.

The political infighting in Kiev has prevented the government adopting a unified approach to inflation, which rose to more than 30 percent in May and is still high at 26 percent, and divided the central bank as it revalued the currency.

UKRAINE VITAL FOR EU STRATEGY

Analysts say Ukraine is vital to long-term EU security and economic strategy and should be encouraged on its path towards Europe, especially in the light of Russia's attempt to counter Western influence with its intervention in Georgia.

"Regardless of the political turmoil in Ukraine, this is the right time to reach out and offer more," said Wilson. "Russia is trying to send out a clear sphere-of-influence message and we need to push back."

Russia was incensed by the promise of eventual NATO membership to Ukraine and Georgia, another former Soviet republic, and many see this as the motive behind its intervention in Georgia last month.