Austria takes harder line on Russia as EU sanctions loom

VIENNA, Sept 2 Tue Sep 2, 2014 4:49am EDT

VIENNA, Sept 2 (Reuters) - Austrian Chancellor Werner Faymann took a tougher line on Russia's role in Ukraine on Tuesday, blasting Moscow's "deception and salami tactics" in the conflict and saying Austria was prepared to pay the price of tougher sanctions.

It was a significantly harder line from neutral Austria, which until now has been reluctant to hit Russia hard with economic sanctions designed to punish what Western leaders have called unacceptable Russian behaviour.

"You cannot say we are all for freedom but the rouble has to roll," the Social Democrat chancellor told reporters after a cabinet meeting, using a German expression for money has to keep flowing.

"If it is necessary to defend freedom and international law, then Austria will be in the forefront."

Austria had been walking a careful line between showing solidarity with European Union peers and keeping the lines of communication open with Moscow, with which it has traditionally had good political and business ties.

Russian President Vladimir Putin visited Vienna in June, when Russia's Gazprom and Austria's OMV sealed a deal to build a branch of the giant Russian South Stream gas pipeline to Austria.

Austrian lenders such as Raiffeisen Bank International and Bank Austria, the eastern European arm of Italy's UniCredit, depend heavily on Russia for profits, but Russia accounts for less than 3 percent of Austria's foreign trade.

Faymann told broadcaster ORF that Moscow's explanations of how Russian troops and tanks had entered Ukraine were "getting more and more obviously provocative. Nobody can believe this, so it is fitting to have a clear political message here."

He reiterated he was against using force against Russia and said the EU should sharpen sanctions, but the question was in which fields.

Asked about potential sanctions on gas supplies, he said:

"They are an issue but you have to know that gas supplies also have a massive effect on Europe's economy. The priority for me is political dialogue, negotiations, exerting pressure, and perhaps not delivering any more weapons."

He said he would be disturbed should the Western military alliance NATO also decide to intervene in Ukraine, adding: "I don't want to contribute anything to accelerate this military logic." (Reporting by Michael Shields and Shadia Nasralla; Editing by Dominic Evans)