By Richard Balmforth
KIEV (Reuters) - The party of Ukraine's jailed opposition leader Yulia Tymoshenko on Monday rejected President Viktor Yanukovich's terms for her release and European envoys said time was running out to solve a row threatening agreements with the European Union.
Tymoshenko, 52, a former prime minister, was jailed for seven years in 2011 for abuse of office after what Western governments say was a political trial.
EU envoys have asked Yanukovich to pardon his arch-foe so she can travel as a free person to Germany for treatment for back problems, a compromise seen as guaranteeing signature of landmark deals on association and free trade on November 28 in Vilnius, Lithuania.
With pressure mounting on him, Yanukovich on October 17 said he was ready to sign a law to allow her to go abroad for treatment, if such a draft was adopted by parliament.
But he did not mention granting her a pardon and floated drafts have indicated she would be allowed to go only as a convicted criminal and would be expected to return to Ukraine to complete her sentence after treatment.
On Monday, Yanukovich confirmed his move, telling visiting Czech President Milos Zeman that a draft law on the question would go to parliament soon.
Though there was no direct word from Tymoshenko, her party Batkyvshchyna said a solution lay solely in Yanukovich's hands and did not require any new laws being passed.
Nor, it said, did Yanukovich's offer meet the EU's requirement to end the application of "selective justice" in Ukraine under which politicians could pressure courts to victimize their opponents.
"We again emphasize that ending the problem of politically-motivated justice and solving the problem of Yulia Tymoshenko lies exclusively with President Viktor Yanukovich," it said in a statement.
The agreements due to be signed with the EU will mark a big shift in Ukraine's trade policy westwards away from its old Soviet master Russia, and failure to sign in Vilnius would be a huge setback for Yanukovich's policy of Euro-integration.
At the same time, he is anxious to keep Tymoshenko out of action as a political force as he prepares for the run-up to a bid for re-election in February 2015.
She has made it clear she envisages returning to the political fray if and when the verdict and sentence against her is quashed.
Two European envoys, who have shuttled in and out of Kiev for a year and a half to nail down a compromise to save the Vilnius summit, broadcast a message of urgency when they arrived in the Ukrainian capital on Monday for talks.
"Time to secure a viable settlement is running out," Irish politician Pat Cox and former Polish President Aleksander Kwasniewski said in a statement.
Apart from seeing members of Yanukovich's administration, and possibly Yanukovich himself, they were also scheduled to travel to the northern town of Kharkiv to see Tymoshenko, who is being treated in hospital there under prison guard.
Moves by the ruling Party of the Regions to begin drawing up a draft law as envisaged by Yanukovich ran into opposition from pro-Tymoshenko supporters at a parliamentary meeting.
Former economy minister Arseny Yatsenyuk, who leads the pro-Tymoshenko faction in parliament, said there was a request for a pardon before Yanukovich and therefore a solution lay with him and not with parliament.
"We need a compromise between the government, our European partners and one which Yulia Tymoshenko agrees with," he said.
Urging Yanukovich's leadership to solve the issue through the EU mediation mission, he said: "We can now draw a line under (a period of ) shameful Ukrainian history in which the political opponent of an acting president was locked up, and close the Pandora's box opened by your government."
EU ministers meeting in Luxembourg urged Kiev to move quickly to resolve the row but appeared divided over how to approach it.
Sweden's Carl Bildt said there was "not much" time left for Kiev to placate Europe and suggested Stockholm may not by satisfied by any plans to allow Tymoshenko to seek medical treatment in Germany on condition she returns later.
"That opens up the question what happens thereafter. Will Ukraine demand she is extradited and brought back to prison? That would be a detour not a solution," he told reporters.
Dutch Foreign Minister Frans Timmermans said Ukraine had yet to meet all conditions related to its justice system before it can win the trade deal with Europe in November.
"There are other requirements on the table. The Tymoshenko case is important but that's not the only criterion," he said.
(Reporting by Natalya Zinets, Additional reporting by Adrian Croft, Tom Koerkemeier and Justyna Pawlak in Brussels)