* EU and U.S. have both offered aid to Ukraine
* Keeping Ukraine's economy afloat is the priority, Ashton
* EU trade chief criticises Russia over "frozen conflicts"
By Adrian Croft
BRUSSELS, March 22 European Union foreign policy
chief Catherine Ashton voiced deep concern on Saturday over the
fragility of Ukraine's economy and urged the rest of the world
to rally round to support it.
"We have to make sure that Ukraine, economically, does not
fall over ... My biggest fear right now is the state of economy
and the need for us all to offer the support that they need,"
Ashton told an event organised by the German Marshall Fund think
tank. "How do we make sure this economy holds together?"
Ukraine's new government, which took power when pro-Russian
president Viktor Yanukovich was ousted after months of street
protests, has said it desperately needs cash to cover expenses
including gas imports and avert a possible debt default.
Ashton said a short-term budget deficit problem had to be
resolved "relatively quickly".
Another problem was the "economic viability of industry,
many parts of which need to be modernised, an issue ... which
needs a slightly longer-term plan," Ashton said.
"And then there are the underlying structural problems in
how to make sure that they are able to generate the resources
they need to be able to pay their bills and to be able to
develop that economy without running into the buffers of not
having enough money day-to-day."
U.S. President Barack Obama's administration has asked
Congress to approve a $1 billion loan guarantee package for
Ukraine while the European Union has said it is willing to
provide $15 billion in loans and grants over several years to
help get the economy back on its feet.
The EU aid requires widespread reforms by the new Ukrainian
government and the signing of a deal between Ukraine and the
International Monetary Fund, which is due to report next Tuesday
on advanced talks with Ukraine on a loan programme.
AID FOR UKRAINE
The EU has also agreed to extend nearly 500 million euros
($690 million) of trade benefits to Ukraine, removing duties on
a wide range of farm goods, textiles and other imports.
The protests against Yanukovich erupted after he pulled out
of signing a political cooperation and trade agreement with the
European Union in favour of closer ties with Russia. After he
fled, Russia sent troops into Ukraine's Crimea region and
annexed it in what Ashton described as a "land grab".
The United States and the EU responded by imposing visa bans
and asset freezes on Russian officials, including some close
allies of President Vladimir Putin.
The EU this week also began preparations for possible trade
and economic sanctions against Russia if its forces move beyond
Crimea into southern and eastern Ukraine.
EU Trade Commissioner Karel de Gucht accused Russia on
Saturday of creating a "line of pearls" along its border -
referring to Crimea as well as so-called frozen conflicts in
Georgia and Moldova.
"What's the sense of that? Do we have to swallow that? No, I
think there is a price for that and I think we should be very
clear - the United States and the EU together - that they simply
cannot do this," he told the meeting.
Before Yanukovich jilted the EU last November, Moscow had
put pressure on Ukraine by tightening checks on imports and
threatening to cut off its gas supplies in the depth of winter.
That has fuelled fears in the EU that Moldova and Georgia,
two other ex-Soviet republics that have negotiated free trade
agreements with the EU, could come under Russian pressure to
change their minds before they sign them, most likely in June.
"We are being extremely active with Moldova and with
Georgia. We are concerned about things that can suddenly happen
- how their wine is suddenly not accepted, what can happen in
terms of pressure, and we are ready for that," Ashton said.
Russia responded to Moldova's overtures towards Brussels
last year by cutting off imports of Moldovan wine.
(Editing by Kevin Liffey)