* Russia concerned about impact of deal on its economy
* Putin wants "systemic adjustments" to EU-Ukraine deal
By Robin Emmott
BRUSSELS, Sept 23 Moscow will curtail Ukraine's
access to vital Russian markets if Kiev implements any part of a
trade agreement with the European Union, President Vladimir
Putin warned in a letter, toughening his stance on a deal at the
centre of East-West tensions.
In a letter to Ukrainian President Petro Poroshenko, seen by
Reuters on Tuesday, Putin warned that even changing national
legislation to prepare for the EU-Ukraine trade deal, known as
the association agreement, would trigger an immediate response
"We still believe that only systemic adjustments of the
Association Agreement, which take into account the full range of
risks to Russian-Ukranian economic ties and to the whole Russian
economy, will allow to retain existing trade and economic
cooperation between the Russian Federation and Ukraine," Putin
wrote in the letter, which is dated Sept. 17.
Putin did not go into detail about possible retaliation, but
Russian Prime Minister Dmitry Medvedev said last week he had
signed an order to curb Ukrainian exporters' access to Russia.
Those measures are yet to take effect.
Substantially raising Russian tariffs could mean 3 billion
euros a year in lost business for Ukraine, which exports mainly
steel, coal, chemicals and grains to Russia, EU diplomats say.
The EU-Ukraine deal is at the heart of a dispute that has
grown from a tug-of-war between Brussels and the Kremlin over
Kiev to economic sanctions, the annexation of Crimea by Russia,
armed conflict in eastern Ukraine, and concern about a new Cold
Following the overthrow in February of a pro-Moscow leader
who rejected the EU deal, Ukraine's parliament sealed a historic
shift by ratifying the political and trade agreement. That put
Kiev on a path it hopes will bring the prosperity it sees in
fellow ex-communist states like Poland.
DELAYED OR FROZEN?
In a last-minute concession to Moscow, the EU delayed
implementing the trade accord until Dec. 31 2015. Brussels hopes
that will give it time to assuage Russian concerns about the
pact, which is now a legal treaty that cannot easily be changed.
But Putin's letter suggests that the Kremlin considers the
15-month delay to the EU-Ukraine agreement a complete freezing
of the process until Russian demands for changes to the legal
texts are met.
"Adoption of such amendments to Ukrainian legislation,
including implementing acts, will be considered as infringement
of the arrangement to postpone implementation of the Association
Agreement, entailing immediate and adequate retaliatory measures
from the Russian side," Putin wrote.
Putin wants three-way negotiations to amend the EU's accord
with Kiev, which Russia says will hurt its own economy.
According to EU officials, Russia wants to remove more than
2,000 products eligible for duty-free access to the European
Union, tearing up about a quarter of the agreement.
Russian companies are also concerned they will not be able
to import into Ukraine after Ukraine adopts higher EU standards
as part of its implementation of the pact.
Ukrainian companies will receive European technical help
and funds to help adapt to EU regulations. But without some kind
of agreement with the EU, Russia would have to put up its own
funds to help its companies such as carmakers modernise and
comply with EU standards.
EU officials say there is room for compromise.
Russian exporters could have a soft route to compliance with
EU quality and other standards in Ukraine so that they only need
meet the requirements for selling goods into the EU-Ukraine
free-trade area over a very long time.
(Reporting by Robin Emmott; Editing by Larry King)