The EU's longstanding policy towards post-Soviet states has been shredded - and now needs a radical rethink

Two months ago Ukrainians took to the streets and squares of Kiev because of Europe. They felt betrayed and cheated by their president, who capped years of negotiating strategic political and trade agreements with the European Union by ditching them and instead turning to Moscow for a lifeline in the form of money and energy and trade privileges.

With Kiev burning and blood on the streets in the fierce mid-winter, Europe now appears at a loss over how to respond to a crisis it played a big role in creating.

José Manuel Barroso, the head of the European commission, said he was shocked at the bloodshed. Barroso spoke to Ukraine's president, Viktor Yanukovych, on the phone on Thursday, warning of "possible consequences if the situation is not stabilised". The Ukrainian leader told Brussels that he would not declare a state of emergency "at this moment", according to the commission.

Barroso's options appear very limited. What can Europe do except put Yanukovych in the same box as the dictator next door, Alexander Lukashenko of Belarus, and blacklist his cronies and oligarch financiers to stop them shopping in London, skiing in Switzerland or holidaying in the Mediterranean?

Whether Iran, Zimbabwe, Belarus or Syria, travel, financial,and economic sanctions have in recent years become the EU's default option in dealing with unsavoury regimes.

Carl Bildt, the activist Swedish foreign minister who is outspoken on Ukraine, is calling for sanctions against the Yanukovych regime, although broadly and regularly he is sceptical about the utility of sanctions as a diplomatic tool. The German government official dealing with Ukraine pooh-poohed the idea of sanctions.

The EU's longstanding policy towards Ukraine and several other post-Soviet states, known as the eastern neighbourhood policy, has been shredded as a result of the past two months. Brussels has been outwitted by Moscow and Kiev. That much is likely to be demonstrated next week when Russia's president, Vladimir Putin, comes to Brussels for a summit with the EU.

If Europe is split, its policy also appears half-baked and in need of a radical rethink.

"There remains deep uncertainty over the longer-term nature of the relationship between the EU and the countries of the eastern partnership, such as Ukraine," says a new study, not yet published, by the European Leadership Network and signed by several former foreign and defence ministers of Britain, France, Germany, Poland, and Russia.

"The absence of a vision for Europe's future as a whole increases the risk that the current sense of drift will become a fundamental drifting apart. This could embed a conflictual and competitive dynamic in Europe."

Senior diplomats in Brussels admit that Ukraine has triggered unusually red faces and agonising at the top of the EU. They just did not see the Yanukovych volte-face coming, whereas Putin knew exactly what was happening. It was the same, if less noticed, in September when Armenia abruptly ditched years of negotiations on similar pacts with the EU and collapsed into Moscow's arms.

The Ukrainian conflict is conventionally seen as cultural and geographical – Yanukovych and the pro-Russian east against the educated classes of Kiev and the pro-European west of the country.

But it is as much about power and money for the Yanukovych clan faced with broad popular disgust at the corrupt and self-serving regime the president embodies.

In terms of quick and easy fixes to such a contest, the EU struggles to be nimble, while Putin can open the gas taps and write cheques instantly. Putin offered Yanukovych €15bn (£12bn) , cheaper gas supplies, and trade benefits now, while the EU pacts amount to a medium-term modernisation and reform programme which may benefit Ukraine once Yanukovych is long gone.

The anger in the west is mounting, not only over the killings, but also over the battery of repressive laws Yanukovych summarily introduced a week ago and already being enforced.

"Overnight, Ukraine stripped its citizens of key democratic protections and fundamental freedoms that are non-negotiable," the US government said on Thursday. "The people of Ukraine want and deserve better."

Bildt called the legislation the most repressive set of laws to go through a parliament anywhere in Europe in decades.

In unusually strong language, Christian Democrats in the European parliament on Thursday demanded sanctions.

"We call for the murderous snipers and the armed forces of the ministry of the interior to be removed from the streets. The army should refuse to take any part in the oppression … It is clear that President Yanukovych and his administration carry the responsibility for the deaths and casualties."

But the angry words appear to be filling a policy vacuum.

In their study, the former EU government ministers calls for a root-and-branch overhaul of arrangements between the EU and its big troubled strategic neighbours such as Ukraine, Russia, and Turkey, away from the current zero-sum game contest.

"The greater European space as a whole risks being dragged back into a struggle over spheres of interest and influence with the EU/Nato and Russia on either side and countries like Ukraine and to some extent Turkey, sitting uncomfortably alongside or between both," it said.

"The additional danger is that such continued divisions on our continent will condemn the countries of Europe to global irrelevance or at least to peripheral status."