EU diplomats preparing next level of sanctions on Russia
* EU officials preparing ground for further Russia sanctions
* European Commission will also offer trade benefits to Kiev
* Full free-trade agreement only to be discussed after May
By Luke Baker
BRUSSELS, March 10 (Reuters) - The European Union is preparing to impose travel bans, asset freezes and other restrictions on Russia for its failure to "de-escalate" the crisis in Crimea, officials said on Monday.
While the formal decision to impose the sanctions is only expected to be taken when EU foreign ministers next meet on March 17, preparations on the measures have already started.
"There is no sign of de-escalation from Russia's side and so the EU may have no choice but to move immediately to travel bans, asset freezes and the cancellation of the EU-Russia summit," an EU official said.
At a summit last week, EU leaders agreed to a three-stage process of increasing pressure on Russia over its incursion in Ukraine, beginning with the suspension of visa talks and negotiations over a new investment agreement.
A statement from the leaders said Russia had to start negotiating with Ukraine's interim government on a solution to the crisis "within the next few days" or face additional sanctions. It is those measures which are now being prepared.
The United States said on Monday it wanted to see "concrete evidence' that Russia was prepared to engage in a diplomatic solution to the stand-off over Crimea.
Reports from the ground suggest Russia is not yet "de-escalating" its presence on the peninsula. Moscow says it has no control over the Russian-speaking units that have seized Crimea.
Asked when the EU was likely to impose further sanctions on Russia, a spokeswoman for the EU's external action service said there was no fixed date at this stage.
"I can't confirm any precise time frame at the moment, but I can confirm that the preparatory work has started," Maja Kocijancic told reporters.
The preparation of EU sanctions usually takes several days to work its way through specialist committees and EU ambassadors before going to ministers. As well as asset freezes and travel bans, the steps are likely to include the cancellation of all EU-Russia summits.
If the measures are not ready for EU foreign ministers on March 17, they could be discussed by EU leaders at a summit on March 20-21.
The measures, if imposed, would mark the second stage in the European Union's three-step response. The next would likely involve an arms embargo, trade restrictions and other measures targeted at Russia's elite, diplomats said.
At the same time, the EU is taking steps to bolster Ukraine's access to the EU market.
On Tuesday, the European Commission is expected to approve measures that would allow Ukraine freer export access to Europe's single market, which would bring benefits of nearly 500 million euros a year.
However, a fully fledged free-trade agreement between Ukraine and the EU will only be discussed after Ukraine has held presidential elections in May and appointed a new, permanent government, EU officials say. (Writing by Luke Baker; Editing by Toby Chopra)