Russia, Ukraine talk up cooperation as ties with EU unravel

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Russia and Ukraine on Tuesday talked up regional cooperation as Brussels postponed a scheduled meeting with Ukrainian leader Viktor Yanukovych amid a growing diplomatic crisis.

Arriving in the Ukrainian leader's industrial power base of Donetsk for a planned economic forum, Russian President Dmitry Medvedev called for closer cooperation as officials in both countries said talks to renegotiate a 2009 gas deal were at an advanced stage.

The leaders met ahead of a football match between Ukraine's Shakhtar Donetsk and Russian club Zenit St Petersburg that Donetsk hosts on Wednesday.

"I would like to wish our teams -- in a broad sense of the word, not only football ones -- stability and good luck," Medvedev said. "Only in this case will there be success."

"We expect that all the events will facilitate rapprochement between our countries," he said. "A significant number of joint plans lie ahead of us."

The talks with Russia come as Yanukovych performs a tight balancing act as he is struggling with an unprecedented row with the EU while seeking to negotiate a lower gas prices with Russia and fighting off Kremlin's advances.

The crisis with the EU flared last week when Ukraine sentenced former prime minister Yulia Tymoshenko to seven years in prison for signing a gas deal with Russia in 2009 which Kiev says forced it to overpay by up to $8 billion every year.

Ahead of his talks with Medvedev, Yanukovych, speaking in an interview with several US and other Western newspapers, rejected calls to review the jailing of Tymoshenko, insisting on the independence of the country's courts.

Hours later the European Union said it was cancelling a Thursday visit by the Ukrainian leader to Brussels, bringing relations to a new low.

Ukraine was hoping to sign off on an association agreement with the European Union at a December summit in Kiev, a first step towards membership, but that plan is now also in limbo.

Analysts say the widening rift between Kiev and Brussels plays into the hands of Russia, which has long pressured Ukraine to join a Moscow-led customs union with Belarus and Kazakhstan.

On Tuesday, officials said talks to renegotiate a gas deal were at an advanced stage.

"The search for compromise is going on. There is encouraging information, let's be patient," Putin's spokesman Dmitry Peskov told AFP, adding that Putin would meet his Ukrainian counterpart Mykola Azarov during a regional summit in the Russian city of Saint Petersburg either later Tuesday or Wednesday.

Yevhen Bakulin, chief executive of Ukrainian state energy firm Naftogaz, said on the sidelines of talks between Yanukovych and Medvedev that he hoped to reach a compromise in "the very near future".

Ukrainian Energy Minister Yury Boiko said a new price would be the result of a compromise.

"Our main task is to ensure a price which would let our economy develop," he said.

Officials declined to put a deadline on the negotiations but analysts expect the two countries to agree a new deal in the coming weeks.

Russia has repeatedly said it could agree to sell Kiev gas at lower prices if Ukraine ceded control of its prized Soviet-era pipeline grid.

Ukraine has repeatedly resisted the pressure.

In Donetsk, Russian and Ukrainian officials were scheduled to sign several cooperation agreements but no commercial deals were expected.

The talks follow a landmark three-way meeting between the two leaders and Putin at a hunting lodge outside Moscow last month.

© 2011 AFP

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