* EU wants Ukraine to stick to westward course, not go to
* Yanukovich pollicy U-turn has brought thousands on to Kiev
* Ukraine deputy prime minister says Kiev will sign EU deal
By Richard Balmforth
KIEV, Dec 12 Thousands of anti-government
protesters gathered in central Kiev, rebuilding barricades torn
down by police, on Thursday as the European Union held out a
promise of increased aid for Ukraine if it signed a trade and
Ukraine's first deputy prime minister Serhiy Arbuzov flew to
Brussels with a high-level delegation seeking billions of euros
of aid from the EU in return for signing the agreement, which
Kiev suddenly backed away from last month.
He said Ukraine, which is on the brink of bankruptcy, would
"soon sign" the accord, but declined to provide any date.
EU enlargement chief Stefan Fuele pledged more aid to Kiev
if it signed the agreement, and to help it negotiate a loan from
the IMF, but gave no figures.
After hours of talks with Arbuzov, Fuele warned that Ukraine
faced looming financial crisis.
"We need to help Ukraine to restore rapidly the confidence
not only of its citizens, but also that of international
investors and creditors as a stable and predictable economy," he
Ukraine's Prime Minister Mykola Azarov was quoted as saying
on Wednesday he had asked the EU for 20 billion euros ($27
billion) in aid to offset the cost of signing the EU deal.
A sudden decision by President Viktor Yanukovich on Nov. 21
to walk away from a trade-and-political agreement with the EU
and revive trade with Ukraine's old Soviet master has brought
hundreds of thousands on to the streets in a chain of weekend
rallies, each one larger than the one before it.
Russian President Vladimir Putin, concerned protests could
yet induce Yanukovich to seal the trade agreement with the EU to
Moscow's detriment, painted a picture of a secure future for
Ukraine in a Russian-led alliance.
"Our integration project is based on equal rights and real
economic interests," said Putin, referring to a customs union
with Belarus and Kazakhstan which he plans to develop into a
political and trading bloc to be known as the Eurasian Union.
"I'm sure achieving Eurasian integration will only increase
interest (in it) from our other neighbours, including from our
Ukrainian partners ... I hope that all political sides can
successfully reach an agreement in the interests of the
Ukrainian people," he said in a state-of-the-nation address.
A decision to sign the EU deal after all would be likely to
European officials are in discussion with the IMF, the World
Bank and other major financial bodies on ways of helping the
ex-Soviet republic should it decide to sign the free-trade
agreement with the EU after all.
Putin had threatened to respond to such a deal with economic
sanctions against Ukraine, which has huge debts and unpaid gas
bills outstanding with Moscow. Ukraine's ultimate decision could
be decisive to Putin's Eurasian Union plan.
Battalions of riot police withdrew on Wednesday from a
protest camp in central Kiev after moving against demonstrators
in the early hours in an angry confrontation.
But more people were streaming into the snowbound capital
for the weekend to boost the 10,000 or so crammed onto
Independence Square, focal point of the unrest. About 70,000
extra people from three areas of western Ukraine alone were
heading for the capital, citizens' protest groups said.
Demonstrators have re-built barricades, torn down by police,
using public benches, metal barriers and wire-netting to fence
off the square, known simply as the 'Maidan' in the
The protests began as pro-Europe demonstrations but have now
morphed into a broader show of street anger against perceived
corruption and sleaze in the country Yanukovich has led for
nearly four years.
After his talks with Arbuzov, Fuele said that, if Ukraine
gave a clear commitment to sign the deal, the EU would prepare a
roadmap for implementing the accord.
If Ukraine signed, the EU was ready to help it by topping up
IMF loans and stepping up financial aid, Fuele said.
EU aid to Ukraine would only get "bigger and bigger" if it
signed the agreement, he said without giving figures.
Arbuzov was joined in Brussels by the ministers of finance,
economy and revenue and duties, and the central bank head.
At stake is the future of a country of 46 million people,
torn between popular hope of joining the European mainstream and
the demands of Russia, which controls the flow of cheap natural
gas needed to stave off bankruptcy.
After Yanukovich met Putin on Dec. 6, Azarov said the two
sides had agreed a strategic partnership.
Some believe that Yanukovich may sign a series of agreements
- almost certainly bringing cheaper gas for Ukraine and possibly
credits - in Moscow on Dec. 17.
The crisis has added to the financial hardship of a country
on the brink of bankruptcy. The cost of insuring Ukraine's debt
against default has hit four-year highs.
It now costs more than $1 million a year for five years to
insure $10 million in Ukrainian debt over that term, reflecting
high default risk.
The most Brussels has so far offered is 610 million euros in