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UPDATE 1-Ukraine parliament rejects proposed laws to release Tymoshenko

Richard Balmforth and Pavel Polityuk
Thursday, 21 Nov 2013 | 5:12 AM ET

* Her imprisonment threatens EU-Ukraine trade pact

* Yanukovich fears ex-PM could stage comeback

(Adds rejection of draft laws, quotes)

KIEV, Nov 21 (Reuters) - Ukraine's parliament on Thursday rejected draft laws that would allow jailed opposition leader Yulia Tymoshenko to go to Germany for medical treatment, clouding prospects for a landmark trade agreement with the European Union.

The ex-Soviet republic is scheduled to sign a far-reaching free trade and cooperation agreement with the EU at a summit on Nov. 29 - but EU governments are pressing for the release of Tymoshenko, President Viktor Yanukovich's fiercest opponent.

Yanukovich, whose pro-Europe course has angered Russia and led to threats of trade retaliation from Moscow, earlier this week took a harder line in negotiations with the EU and threatened not to sign the deal.

EU envoys have been trying to find a compromise under which Tymoshenko, who suffers from back trouble, could be released to go to Germany for medical treatment.

But parliament, dominated by allies of Yanukovich, on Thursday rejected all six draft laws proposed by the opposition which would allow her to be released. They all fell well short of getting the required 226 votes to pass.

Parliament speaker Volodymyr Rybak kept the door ajar for a possible solution in the coming days, ordering all the parties, including Yanukovich's Regions Party, to negotiate behind the scenes on an agreed draft.

But a joint working group has already met on several occasions and failed to find common ground on the Tymoshenko issue.

"President Yanukovich is personally stopping Ukraine's road to Europe," former economy minister Arseny Yatsenyuk, an opposition leader, said in angry reaction. He said he would press for a presidential pardon for Tymoshenko.

The free trade and cooperation agreement due to be signed at a summit in the Lithuanian capital Vilnius should mark a strategic shift westwards for the former Soviet republic away from Russia.

But ex-prime minister Tymoshenko's plight has become symbolic of what the EU sees as a problem of selective justice in Ukraine and has become the key to success at Vilnius.

The 52-year-old, who came to international prominence as the braided-haired co-leader of the 2004-5 Orange Revolution protests, is serving a seven-year sentence for abuse of power following a trial which Western governments say was political.

Tymoshenko was only narrowly defeated by Yanukovich in a run-off vote in February 2010 and he has continued to stall over letting her go - even though her imprisonment threatens success in Vilnius - out of fear that her political rehabilitation could harm his chances of re-election in 2015.

The key figure now in any possible breakthrough, Yanukovich was away on a visit to Austria on Thursday.

Earlier in the week Yanukovich took a sudden tough line in EU negotiations, telling the EU's point-man on Ukraine, commissioner Stefan Fuele, that in the current situation he could not sign in Vilnius, a European diplomatic source said.

Yanukovich, who has wrong-footed Russia - Ukraine's big supplier of gas - by sticking to his pro-EU course, was likely to be bluffing to secure better financial terms from the 28-member bloc, the source said.

Many of the EU members are anxious to seal a deal at Vilnius because it will prise Ukraine away from Russia's historic embrace. But other EU members feel that fundamental democratic values are at stake and want Ukraine to fulfil criteria, including ending the practice of 'selective justice'.

(Additional reporting by Natalya Zinets; editing by Anna Willard)