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Kiev 'ready to pay price' after Russia curbs trade ties over EU deal

MOSCOW/BRUSSELS (Reuters) - Ukraine is “ready to pay the price” for a trade deal with the European Union, President Petro Poroshenko said on Wednesday after Moscow moved to restrict its own trade ties with Kiev over the accord that is due to take effect on Jan.1.

Russian President Vladimir Putin addresses the Federal Assembly, including State Duma deputies, members of the Federation Council, regional governors and civil society representatives, at the Kremlin in Moscow, Russia, December 3, 2015. REUTERS/Sergei Karpukhin

Controversy over the EU-Ukraine trade deal was the initial trigger of unrest in Kiev that culminated in the ousting of a Moscow-allied president in 2014. Russia then annexed Crimea and backed a separatist revolt in eastern Ukraine in moves that led to Moscow’s worst standoff with the West in decades.

As Poroshenko arrived in Brussels, Russian President Vladimir Putin ordered his government to suspend a free trade zone with Ukraine from Jan. 1, making good on Moscow’s threats to retaliate if Kiev presses ahead with closer EU ties.

“Ukraine is aware of these restrictions and the expected damage to the Ukrainian economy. But we are ready to pay this price for our freedom and our European choice,” Poroshenko said in Brussels.

Russia has staunchly opposed the EU-Ukraine free trade pact, saying it could lead to a flood of European imports across its own borders and damage the competitiveness of Russian exports to Ukraine.

Putin’s decision to suspend a 2011 free trade deal with Ukraine was set out in a decree which cited “extraordinary circumstances affecting the interests and economic security” of Russia. It made no mention of how long the free trade regime would be suspended.

Poroshenko, speaking alongside European Council President Donald Tusk and European Commission President Jean-Claude Juncker, said the trade accord with the EU would be implemented in full as planned on Jan.1 and would not be delayed.

Juncker said a meeting planned on Monday in Brussels between the Commission’s trade team and Ukrainian and Russian ministers on the trade agreement would still go ahead and was the “last chance” to overcome Moscow’s opposition to the accord.

The 28-nation EU is also due to extend economic sanctions against Moscow this week over the unrest in east Ukraine, where it blames Russia for driving the rebellion and where more than 9,000 people have been killed in fighting.

But, as some EU member states are seeking to reengage with Russia to tackle the crisis in Syria and the related threat of terrorist attacks, Poroshenko was received in Brussels by Tusk and Juncker rather than by all 28 national leaders.

The three men will also discuss easing visa restrictions for Ukrainians travelling to the EU.

Tusk, a former Polish prime minister, said he hoped they could resolve outstanding issues regarding the visa regime on Wednesday. Poroshenko said he wanted to see the new rules come into effect next year.

Reporting by Vladimir Soldatkin in Moscow, Gabriela Baczynska in Brussels and Alessandra Prentice in Kiev; Editing by Gareth Jones