By Gabriela Baczynska

BRUSSELS (Reuters) - Dutch Prime Minister Mark Rutte will ask European Union leaders on Thursday to rule out Ukraine joining the bloc for now and to place clear limits on the rewards they offer Kiev under a landmark cooperation agreement, diplomatic sources told Reuters.

Failure to meet the Dutch demands would jeopardize the agreement, which establishes closer political ties and envisages a gradual freeing-up of trade to bind Ukraine closer to western Europe and draw it away from Russia's orbit.

Rutte is trying to free himself from a political bind after Dutch voters, concerned about the costs, rejected the so-called association agreement in a referendum in April. If his demands are met, he plans to go back to his parliament to win an endorsement that would overwrite the negative vote.

The Dutch are therefore seeking a legally binding decision by the 28 EU leaders that the association agreement is "not a stepping stone" to EU membership for Kiev, one source said. This is not to the liking of Poland, a key supporter of Ukraine.

"For us it is hard to accept. If it were not to lead to membership at some point in the future, then why bother with all that?" Polish Foreign Minister Witold Waszczykowski told reporters.

"For now of course the prospect of Ukraine's membership is quite distant. But one day, after Ukraine implements all the provisions of the association (and) introduces all the EU recommendations, we will return to this issue."

A draft document for the EU leaders to approve, prepared by the Dutch and seen by Reuters, also rules out financial or security guarantees for Ukraine and spells out that Ukrainians are not being given the right to live and work in the bloc.

"The stakes are high," one diplomat said. "At the end of the day, if the association agreement is not ratified by the Dutch, it will be a defeat for Ukraine, a defeat for the EU and a victory for Russia."

Another diplomat said: "It's expensive but worth it. At this stage, it's either this or nothing."

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For that reason, diplomats expect a deal, even if some governments - especially Ukraine's close allies in eastern Europe - are concerned and irritated by the Dutch demands. EU ambassadors were discussing the issue further on Monday in Brussels.

NO GUARANTEES

The draft Dutch document says the Ukraine association agreement "does not contain an obligation for the Union or its member states to provide collective security guarantees or other military aid or assistance to Ukraine", and nor does it require additional EU financial support.

While these were not specifically promised to Ukraine in the agreement, the Dutch want them clearly placed off-limits in order to reassure their voters.

The draft also says that fighting corruption in Ukraine is key to fostering closer ties between Kiev and the bloc.

The association agreement is being provisionally applied but the Dutch have said they will strike it down unless their requirements are met. The Netherlands is the only EU state not to have ratified the accord.

Even if Rutte gets the EU decision he is seeking, he may still struggle to push it through the Dutch parliament, where he lacks the necessary majority.

The deal has huge importance in Ukraine as a symbol of the country's future direction, 25 years after the break-up of the Soviet Union.

A pro-Russian Ukrainian president, Viktor Yanukovich, was toppled by street protests in Kiev in 2014 after he decided at the last minute to walk away from the accord in favor of a deal with Moscow.

Russia responded to his overthrow by annexing the peninsula of Crimea from Ukraine and supporting a separatist rebellion in eastern Ukraine, a conflict which has killed nearly 10,000 people to date.

(Reporting by Gabriela Baczynska; Editing by Mark Trevelyan)