Ukraine's rejection of a European Union trade deal, under pressure from the Kremlin, was met with dismay by Western powers that feared a halt to the country's democratization process. However, economic analysts said a move towards Russia and away from Europe could benefit Ukraine over the coming months.
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The former Soviet satellite state had been expected to sign a long-awaited free trade agreement with the EU later this week, after half a decade of preparation. But, the country struck a surprise move last week when it dropped out of the deal and announced its intention to focus instead on its relationship with the Commonwealth of Independent States (CIS) group of former Soviet countries — just hours after Ukrainian President Viktor Yanukovich reaffirmed his commitment to the EU treaty.
European officials were quick to attribute the U-turn to pressure from Russia, which has threatened to disrupt trade if the agreement were signed. And analysts said that in the near-term, the risk of punitive action by Russia outweighed the benefits of the EU deal — especially when coupled with reports of rewards in exchange for toeing the line, including a lowering in the price at which Ukraine imports Russian natural gas, and a much-needed loan.
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