NEW YORK, December 20, 2013 /PRNewswire/ --

A leading American think-tank has concluded President Yanukovych's $15 billion deal with Russia will boost the Ukrainian economy while the Association Agreement with the EU would have left it "mired in a new recession".

The Atlantic Council's verdict on the Ukraine's two short-term options - Europe or Russia - is definitive. Senior Fellow Adrian Karatnycky says the E.U. deal would have left Kiev paying $3-4 billion a year more for Russian gas with trade shrinking up to 1.7% per year as Russia, its biggest trading partner, imposed "legitimate" trade restrictions.

On top of this concludes Karatnycky, Ukraine would have been flooded with European goods while GDP falls more than three percent.

Instead he says, Yanukovych has managed to secure real assistance from Moscow without having to commit Ukraine's future to Russia.

"There are no secret, ironclad commitments such as entry by Ukraine into Russia's Customs Union," writes Karatnycky on the Atlantic Council website.

"In my view this deal buys time for Mr Yanukovych without closing the door to a future E.U. deal."

While Karatnycky declared the Russian deal a win for President Yanukovych, he was especially critical of the way the E.U. and the United States have handled the issue of Ukraine's future.

"The inability of Europe and the U.S. to grasp the geopolitical importance of Ukraine and to understand how crucial it is to Russia's ambitions to re-emerge as a world power, contributed to the diplomatic debacle," he writes.

"Instead of pursuing a policy to woo Ukraine away from Russia and then seek to reform it over the long haul, Europe and the U.S. chose moralising and hectoring without results."

At the end of November Yanukovych walked away from the Association Agreement citing the damage it would wreak on the Ukrainian economy. It came with less than one billion euros in financial assistance while failing Eurozone nations including Greece and Spain have so far received 350 billion euros from Europe and the IMF.

Karatnycky says President Yanukovych's political fortunes are improving, pointing to last weekend's by-election results in which pro-Government candidates were returned in four out of five contests.

SOURCE Ukraine Monitor