Brussels - The European Union and Ukraine could sign a new strategic deal by the end of the year, bringing Kiev and Brussels even closer on issues such as trade and travel, the EU's foreign-affairs commissioner said in Brussels on Thursday.

"If things do not slow down for political reasons, hopefully we will be done by the end of the year," Benita Ferrero-Waldner told journalists in Brussels.

"Negotiations with Ukraine proceeded very well in 2008 and we are continuing to make very good progress today. Large parts of the text have been provisionally closed," the commissioner said.

Complex issues such as the creation of a "deep and comprehensive" free-trade area and the management of individual economic sectors remain to be finalized, she said.

Ukraine's pro-Western government has been pushing for a closer relationship with the EU ever since the "Orange Revolution" which brought it to power in early 2005.

In September, the EU offered its former-Soviet neighbour an "association agreement" strengthening ties in a number of areas such as travel and free trade in return for European-style reforms to the country's political, economic and judicial systems.

Ukraine, which wants to join the EU in the long term, especially welcomed the fact that the proposed agreement was given the same name as a deal offered to former-Communist states such as Poland in the years before they joined the bloc.

However, Ukraine's image in the EU has been battered in recent months by the ongoing power struggle between its president and prime minister, and January's bitter row over Russian gas deliveries.

The country has also been hard hit by the financial crisis, with some experts warning that it could be on the verge of bankruptcy.

The EU is considering whether it should activate a scheme to provide guarantees for foreign loans aimed at keeping neighbours such as Ukraine from financial meltdown as a last resort in case international lenders cannot step in, Ferrero-Waldner said. (dpa)