Putin unveils counter-EU option for post-Soviet states

"We propose a model of a powerful supranational union capable of becoming one of the poles of the modern world and of playing the role of effectively 'binding' Europe and the dynamic Asia-Pacific region," he said.

In a signal to other post-Soviet nations in the region - Armenia, Azerbaijan, Georgia, Moldova, Turkmenistan, Ukraine and Uzbekistan - he added: "The Eurasian Union is an open project. We welcome the accession of other partners, notably the [former Soviet] commonwealth countries. This does not mean pushing anyone or rushing them into something. It should be a sovereign decision of the state dictated by its own long-term national interests."

Putin noted the plan sounds like an attempt to rebuild the Soviet Union.

He said the group of 12 countries have "spiritual threads that unite [their] peoples" and that the 70-year-long period of Soviet domination in the last century left the "inheritance" of a joint infrastructure and manufacturing base.

But he added: "We are not talking about recreating the Soviet Union. It would be naive to try to restore or copy what is already past ... The Eurasian alliance will be based on universal principles of integration, as an integral part of greater Europe, united by common values of freedom, democracy and market laws."

Moscow's gambit comes at a sensitive time in EU-Ukraine relations.

The EU is in December planning to finalise a trade and association pact with Ukraine, by far the largest and most populous of its eastern neighbours. The treaty aims to pull Ukraine out of Russia's sphere of influence and put it on a path to EU membership 10 to 20 years down the line.

The pact is in jeopardy on two fronts, however. The EU is angry at what it calls Ukrainian President Viktor Yanukovych's persecution of his political rivals. And Ukraine is angry over the EU's refusal to promise future accession in the preamble to the treaty, while at the same time asking it to make pro-EU reforms set to cost tens of billions of euros.

The Ukrainian foreign ministry is considering confronting the EU with a make-or-break decision by submitting a formal application for EU membership early next year.

But with anti-enlargement countries such as France, Germany and the Netherlands highly unlikely to endorse the move, the confrontation could end in Ukraine turning towards Putin's union instead.

"It's a dangerous situation. It [an EU refusal] would give pro-Russian elements in Ukraine all the excuse they need to abandon the European project. At the same time, with Putin becoming president [of Russia] again next year, he will be in a powerful position to exert influence on Kiev and other capitals in the region," an EU diplomatic source told EUobserver.

Georgia and Moldova are the most pro-EU in the group. But pro-EU Georgian President Mikhail Saakashvili's popularity has waned after the 2008 Russia-Georgia war and powerful pro-Russian opposition forces exist in Moldova, with the country facing zero prospect of EU membership so long as more than 1,000 Russian troops remain parked on its territory in the frozen conflict over Transniestria.