LEAD: EU, eastern neighbours set for summit amid Ukraine tensions By …

Vilnius (dpa) – Leaders of the European Union and its eastern
neighbours were gathering in Lithuania Thursday for the start of a
two-day summit meant to boost their ties, but set to be overshadowed
by uncertainty about which way Ukraine will turn.

The country – the largest among the six nations involved in the
EU‘s Eastern Partnership project – announced last week that it was
suspending work on a landmark association and free trade deal, which
was due to be signed at the Vilnius summit.

The move was widely attributed to pressure from Ukraine‘s giant
neighbour, Russia, raising the spectre of a battle for influence in
post-Soviet countries and testing the reach of European diplomacy.

“Russia wants to rebuild the old empire,” Elmar Brok, the German
chairman of the European Parliament‘s foreign affairs committee,
charged at a pre-summit Vilnius meeting of the conservative European
People‘s Party. “That is the fight taking place these days.”

Top EU officials were set to meet privately with Ukrainian
President Viktor Yanukovych shortly before the start of the summit
dinner on Thursday.

“This will be an opportunity … to take stock and have a direct
dialogue together on where we go next in our relationship,” European
Commission spokeswoman Pia Ahrenkilde said in Brussels.

The EU has expressed disappointment at Kyiv‘s actions, but also
insists that it remains keen for closer ties with the country.

“The door is still open,” Swedish Prime Minister Fredrik Reinfeldt
told journalists in Vilnius.

“Our commitment to bring EU-Ukraine relations to a new level …
remains firm,” Stefan Fule, the EU‘s commissioner for neighbourhood
policy, also said at a business forum. “The agreement is ready for
signature as soon as Ukraine is ready.”

The country‘s vice prime minister, Serhy Arbuzov, insisted in
Vilnius that the goal remains “European integration,” noting that
“Ukraine needs Europe.”

The association agreement would enhance political ties between the
two sides and pave the way for trade liberalization. EU officials
predict that this will attract more investment for the country‘s
troubled economy.

But the move also comes at a cost, Ukrainian officials have
argued. Arbuzov complained that the EU has not offered Kyiv
compensation for the losses the country will suffer by losing its
trade benefits in Russia.

There are also Ukrainian estimates that the modernization needed
domestically will cost at least 160 billion euros (218 billion
dollars). Fule, however, dismissed that figure on Thursday as
“neither proportionate nor credible.”

“This was never a bazaar for billions,” Swedish Foreign Minister
Carl Bildt added. “This was a question of giving Ukraine and the
Ukrainian economy access to the biggest integrated economic market in
the world.”

The association deal would have been the first of its kind to be
finalized between the 28-country EU and an eastern neighbour. The
other countries in the Eastern Partnership are Armenia, Azerbaijan,
Belarus, Georgia and Moldova.

Armenia has also dashed EU hopes by announcing that it intends to
join a Russia-led customs union. Georgia and Moldova, on the other
hand, are expected to initial their association and free trade
agreements at the Vilnius summit.

“It puts us on a completely new path,” Moldovan Prime Minister
Iurie Leanca said. “It helps us to integrate into the EU economy and
prepares us for future European political integration.”

He argued that it would also be “in the best interest” of Ukraine
to proceed down this path because it would help pave the way towards
a “predictable and stable region.”

Ukrainian opposition figures were in Vilnius pushing for progress.
Boxer-turned-politician Vitaly Klitschko accused Yanukovych of being
“afraid of democracy and the move towards Europe.”

Arseny Yatsenyuk, who heads the parliamentary faction of jailed
ex-premier Yulia Tymoshenko‘s Fatherland party, said the president
deceived the EU by claiming he would sign the agreement.

“After Viktor Yanukovych has spit into the face of the whole
European community, I think their hands will be busy with wiping
clean,” he said.

Tymoshenko, in a message published late Wednesday, argued that the
association agreement could be “a singular time machine that can
propel us from the past into the European reality and the family of
free societies.”

Her daughter also was in Vilnius. Meanwhile, in Kyiv, up to 1,000
pro-European protesters were hunched up on Independence Square – some
of them sipping tea, others dancing to keep warm, the Interfax news
agency reported.