The European Union has signed an historic free-trade pact with Ukraine, and warned it could impose more sanctions on Moscow unless separatists act to wind down the crisis in the east of the country by Monday.

Ukrainian President Petro Poroshenko came to Brussels to sign a far-reaching trade and political cooperation agreement with the EU that has been at the heart of months of deadly violence and upheaval in his country, drawing an immediate threat of “grave consequences” from Russia.

CLICK HERE FOR MORE CCTV COVERAGE OF THE UKRAINE CRISIS

Georgia and Moldova signed similar deals, holding out the prospect of deep economic integration and unfettered access to the EU’s 500 million citizens. However, they have alarmed Moscow, which is concerned about losing influence over former Soviet republics.

EU leaders meeting in Brussels demanded that, by Monday, Ukrainian rebels agree to ceasefire verification arrangements, return border checkpoints to Kiev authorities, free hostages, and launch serious talks on implementing Poroshenko’s peace plan.

“We are talking about possible sanctions against Russia but we do not have to introduce sanctions for the sake of sanctions. We do have a need for a dialogue. I hope this dialogue will take place and we will have a real ceasefire.”

Ukrainian President Petro Poroshenko

“We expect progress in the next hours,” German Chancellor Angela Merkel said. “If we don’t see any steps forward on any of the points, then we are also prepared to take drastic measures.”

EU leaders said they were ready to meet again at any time to adopt significant sanctions on Russia. Diplomats said they could target new people and companies with asset freezes as early as next week. More than 60 names are already on the list.

Although it has drawn up a list of hard-hitting economic sanctions against Russia, the EU is still hesitating over deploying them because of fears among some member states of antagonizing their major energy supplier.

Poroshenko has drawn up a 15-point peace plan to defuse the crisis in eastern Ukraine, where hundreds of people have been killed in clashes between security forces and pro-Russian rebels. A week-long ceasefire is due to expire later on Friday.

Poroshenko said on Friday he would take a decision on extending a ceasefire in the east of the country when he returns to Kiev following an EU summit in Brussels.

But, according to two EU diplomats, Poroshenko told the leaders of France and Germany he was proposing to extend the ceasefire by 72 hours, coinciding with the EU’s deadline.

Ukraine, Georgia and Moldova have made clear their ultimate goal is EU entry but Brussels, under pressure from voters weary of further expansion, has made no promise it will allow them in.

Report compiled with information from Reuters.