Ukraine is top of Brussels rescue list

MOUNTING concern about Ukraine's stability is prompting a European effort to improve ties, officials and diplomats in Brussels say. Russia has threatened to cut off gas supplies to Ukraine this weekend because of what it claims are arrears in payments. The economy is collapsing. And the country's agreement in January to give up its nuclear weapons removed the most important obstacle to stronger ties. 'We want a very serious upgrading of relations,' said one official last week.

The threat to interrupt gas supplies is of great concern since 90 per cent of Russian gas exports come to Western Europe through Ukraine. There is a risk that the country might start siphoning this off for domestic use if its own supplies cease. More importantly, it has revived fears of Ukraine's economic collapse and the potential for political disintegration that could follow.

The gas dispute is part of a wider pattern of bad relations. Russian officials have said that they believe Ukraine should be brought into economic union with Russia, there is conflict over the Crimean peninsula, and fears are growing that presidential elections on 26 June will exacerbate pressures for the break-up of the country, with the east splitting off to become part of Russia.

The European Union is trying to improve ties to prop up the economy. On Monday, foreign ministers will agree the mandate for negotiating a new partnership and co-operation agreement with Ukraine. It extends the promise of membership of a free-trade area to Ukraine, guarantees equal treatment to foreign investment and relaxes trade barriers in some sensitive areas.

Officials are optimistic that a deal can be stitched up by mid-March. EU states decided that the symbolism of placing Ukraine before Russia could be put on one side, at the risk of irritating Moscow. Part of the agreement would be to increase political ties between the EU and Ukraine.

Representatives of Belgium, Greece and Germany are to visit Ukraine this week to explore the possibilities of more assistance.

Kiev has repeatedly asked for more help. But the increasing pressure from Moscow on Ukraine has stimulated a new concern, notably in Germany, to demonstrate Europe's readiness to assist Ukraine - if it can get its act together.

There may be a decision to increase humanitarian aid. No decision has yet been made about whether broader financial support would be available. Europe is not ready to go much further with financial aid without evidence that Ukraine has a functioning package of market reforms, approved by the International Monetary Fund.

Officials argue that the country has little to lose from radical reform. 'Through inertia, they have already gone completely down the drain,' said one diplomat.

President Leonid Kravchuk is likely to make a visit to Brussels in the coming months to cement the new relationship, officials say. There is some concern about who will succeed him after the presidential elections. Ukraine's memorandum asks for support in overcoming its energy crisis, more trade access, more investment from the West and more humanitarian assistance. It also asks the EU to contribute to a fund for nuclear disarmament, which diplomats say would assist Ukraine both in decommissioning nuclear weapons and dealing with the environmental catastrophe.

There is concern in both Nato and the European Union that both organisations have tended to ignore Ukraine and focus on Russia. 'We've all suffered from the USSR syndrome,' one official said.

WASHINGTON - President Clinton told President Kravchuk he was doubling US assistance to Ukraine to dollars 700m ( pounds 475m) in response to its moves towards economic reform and nuclear disarmament, Reuter reports.