By Khaled Yacoub Oweis
DAMASCUS, Feb 3 (Reuters) - European Union president Spain expects the EU to sign by June a major economic deal with Syria that has been on ice for the last five years, Spanish Foreign Minister Miguel Angel Moratinos said on Wednesday.
The two sides came close in October to sealing the pact, which centres on economic and legal reform as well as respect for human rights and democratic values.
But Syria backed out and refused to attend the signing ceremony in Brussels, saying the draft needed more study.
"We are working so that the European Union and Syria association agreement could be signed during the Spanish presidency," Moratinos said in the Syrian capital.
Spain, an ardent proponent of a detente that started two years ago between the EU and Syria, took over the union's six month presidency from Sweden on Jan 1.
Syrian Foreign Minister Walid al-Moualem said Syria would reactivate talks with the EU on the deal, known as the Euro-Mediterranean Association Agreement.
"We expect to reach an understanding about this (signing the agreement) during the Spanish presidency," he said.
A similar agreement exists between the EU and Israel and between the EU and several Arab countries.
The deal aims to support economic and political reform in Syria and requires dialogue on human rights, democracy, terrorism and nuclear non-proliferation.
On the economic side, it would establish a free trade area, remove restrictions on investment including telecommunications.
Syria has been ruled since 1963 by the Baath Party, which nationalised large parts of the economy, banned all opposition and imposed emergency laws still in force.
Unlike some European nations that occasionally condemn Syria's jailing of opposition and independent figures, Spain has refrained from criticising Damascus.
President Bashar al-Assad, who succeeded his late father, Hafez al-Assad, in 2000, partially liberalised the economy after failed Soviet-style policies, but international investors still regard Syria as a difficult place to do business.
Assad has kept a the authoritarian political system he inherited intact, and the authorities have intensified in the last two years a campaign of arrests against dissidents. (Editing by Charles Dick)