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EU-Ukraine deal: how will Russia react?

Friday, June 27, 2014 - 02:30

A new EU-Ukraine free-trade and political cooperation pact is signed - drawing an immediate threat of ''grave consequences'' from Russia. Will the deal dash fragile hopes for a resolution to the Ukraine crisis? David Pollard reports.

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Elsewhere in the EU, they've closed down border posts like this. Here on the Polish border, a new one is just opening to visitors from Ukraine. Full EU membership is what Ukraine wants. It's a step closer to it with a new trade and cooperation pact with the EU, signed in Brussels. Last November, former president Viktor Yanukovich tipped Ukraine into months of violence when he spurned a previous accord. For current president, Petro Poroshenko, the new one's a two-way street. (SOUNDBITE) (English) PRESIDENT OF UKRAINE, PETRO POROSHENKO, SAYING: "Ukraine takes enormous commitment in terms of reform but it is a document of joint ownership and joint responsibility, so in the spirit of the political association we also expect the European Union to put an effort to support our sovereign choice and protect Ukraine independence." There's now hope Ukraine can follow the same path of growth as Poland and others after similar deals. According to economist Holger Schmieding of Berenberg Bank. And Russia shouldn't worry. (SOUNDBITE) (English) HOLGER SCHMIEDING, CHIEF ECONOMIST, BERENBERG BANK, SAYING: ''The trade deal is structured in such a way that Russia should not be hurt directly by it in its own trade relations with Ukraine. So Russian objections seem to be political rather than economic.'' The political signals are mixed. Pro-Russian rebels have released a number of international observers they were holding hostage. But other rebels have brought in a constitution for the breakaway regions of Donetsk and Luhansk. Russia itself has been staging military exercises in strength along the Ukrainian border. And Europe is making a mistake, says President Putin's aide Sergei Glazyev. SOUNDBITE (Russian) RUSSIAN PRESIDENT VLADIMIR PUTIN'S AIDE, SERGEI GLAZYEV, SAYING: "They try to make a colony out of Ukraine by stripping it of its sovereignty. Poroshenko has embarked on this path, a catastrophic one when it comes to consequences for Ukraine's economy." Any economic pain though, could be as much Russia's, says Schmieding. (SOUNDBITE) (English) HOLGER SCHMIEDING, CHIEF ECONOMIST, BERENBERG BANK, SAYING: ''The big question is what does Putin really want .... The signs over the last few weeks have been that, likely, the conflict whilst staying nasty can be contained and that in the end Putin will not dare to wreck his own Russian economy completely by waging open war and by incurring really serious Western sanctions.'' In his latest move, Putin has called for a new truce - and for peace talks to resume. That move came exactly as, at their summit in Brussels, EU leaders demanded ceasefire terms from Russia - with a Monday deadline.

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EU-Ukraine deal: how will Russia react?

Friday, June 27, 2014 - 02:30