By CNN Foreign Affairs Correspondent Jill Dougherty
For the past year, Ukraine insisted it was intent on signing an historic political and trade agreement with the European Union, but on Thursday, the government in Kiev made the surprising last-minute decision to suspend talks with the EU, drawing dismayed reaction from Europe and the United States.
Commenting on the news just minutes after it broke, U.S. State Department spokeswoman Jen Psaki that if reports were true "and if the decision is the Ukrainian government's final decision," the Obama administration was "disappointed."
Psaki said the U.S. believes there was "ample time to resolve all remaining obstacles to signing the association agreement ... with sufficient effort and commitment."
The deal, the EU's "Eastern Partnership," was aimed at creating closer political and economic ties and fostering economic growth among the nations of Eastern Europe and the Caucasus, including Ukraine, Moldova, Georgia, Armenia, Azerbaijan and Belarus. The agreement was expected to be signed next week at a summit in in Vilnius, Lithuania.
The UK called Ukraine's decision a "missed opportunity." Ukrainian opposition leader Arseniy Yatsenyuk called for the impeachment of President Viktor Yanukovych, media reported.
Yanukovych is in a tight spot. Under severe economic pressure from Ukraine's giant neighbor, Russia, not to join the EU, the Ukrainian President also was facing a key EU demand that he was unwilling to meet: free former Prime Minister Yulia Tymoshenko, his bitter political opponent. Two years ago, she was found guilty of abuse of office in a Russian gas deal and sentenced to seven years in prison in a case wide seen as politically motivated. Her supporters say she needs to travel abroad for medical treatment.
David Kramer of Freedom House, a U.S.-based nongovernmental organization, said Thursday "Yanukovych has decided it's more important to keep Tymoshenko in prison than to integrate Ukraine closer toward Europe. He has left his country vulnerable to Vladimir Putin's threats and pressure. That will be Yanukovych's legacy if he doesn't reverse course."
Anders Aslund, an economist and a senior fellow at the Peterson Institute in Washington, says that by not signing the EU agreement, Ukraine "has missed a great opportunity to integrate with Europe and modernize its state."
Aslund says that since August, "Russia has effectively imposed sanctions on Ukraine in an escalating economic war to discourage it from turning west. Now it appears that Russia's sanctions have had a substantial and desired effect."
Russia's role in Ukraine's about-face is raising the ire of member of the U.S. Congress.
Rep. Eliot Engel of New York, senior Democratic member of the House Foreign Affairs Committee, sponsored a resolution supporting nations of Eastern Europe and the Caucasus trying to move closer to Europe as part of the Eastern Partnership initiative. The resolution passed this week, and Engel said it "should signal that the international community will not stand idly by when Russia attempts to dictate its neighbors' relationships with Europe."
Aslund calls Ukraine's decision not to sign the EU agreement "a sad day for Ukraine and Europe."
Yanukovych, he says, has no real desire to improve his country's economy. His aim, Aslund says, "appears to be to transfer financial resources and companies to what is known as the Yanukovych family, a group of young businessmen, who are quickly buying up both private and public companies at rock-bottom prices. They are the only permitted buyers in key industries."
The worse Ukraine's economic situation is, he says, "the cheaper these companies are for the young robber capitalists." The sad outcome?
Yanukovych ends up "excessively dependent on Putin" and also liable for blame for blocking Ukraine's European integration, "which a large majority of the Ukrainian people supports."