* Mogherini calls for strong sanctions response against
* Sanctions to include Russian defence, finance sectors
* EU could ban syndicated loans to Russian state banks
(Adds sanctions proposals discussed by EU)
By Robin Emmott
BRUSSELS, Sept 2 The European Union is
considering widening to all Russian state-owned firms a ban on
borrowing or raising capital in Europe, as a means of stepping
up pressure on Russia over its involvement in Ukraine, diplomats
said on Tuesday.
The bloc is also looking at barring Russian Defence Minister
Sergei Shoigu from entering the EU, the diplomats said.
The proposals were floated at a meeting of EU ambassadors in
Brussels on Monday.
EU leaders decided on Saturday that the direct engagement of
Russian troops in the war in eastern and southern Ukraine called
for a stepping up of the sanctions imposed so far unless Russia
pulled its soldiers back.
They asked the EU's executive arm, the Commission, to
prepare proposals on new sanctions within a week.
The European Commission is to prepare a final draft of new
sanctions against Moscow over its invasion of Ukraine by
Wednesday and EU governments will make a decision on the final
shape of the package by Friday, Italian Foreign Minister
Federica Mogherini said.
Ambassadors will meet on Wednesday, Thursday and Friday to
hone the new sanctions package.
"We need to respond in the strongest possible way,"
Mogherini, who will be the EU's next foreign policy chief, told
reporters following a presentation to EU lawmakers in the
Other measures discussed at Monday's meeting included
banning syndicated EU loans to Russian government-owned banks
The European Commission also proposed a shortening of the
minimum maturity of Russian state-owned banks' debt instruments
that cannot be sold in the EU under a decision from July to 30
days from the previously agreed 90 days.
The EU would also be considering imposing a ban on buying
Russian derivative instruments too.
Other ideas floated on Monday included an expansion of a
export ban on goods that can have both military and civilian use
to all potential Russian importers, not just companies in the
defence sector as agreed by the EU sanctions package from July.
A ban on selling advanced energy technologies to Russia
could be extended to include servicing agreements, diplomats
Russia could also no longer be invited to cultural, economic
and sports events.
The new EU sanctions package against Russia could be
coordinated with other G7 countries -- the United States, Canada
Cutting off Russia from the SWIFT international bank
transaction system was not discussed, because the measure is
considered too radical.
"Things on the ground are getting more and more dramatic. We
speak about an aggression and I think sanctions are part of a
political strategy," Mogherini said. She also described the
situation as "a time of complete darkness."
Mogherini declined to give details of the sanctions package
but said they would target Russia in four sectors, which include
defence, dual use goods and finance.
German Chancellor Angela Merkel, who led the push for a
tougher EU response, said on Monday that Moscow's behaviour in
Ukraine must not go unanswered, even if sanctions hurt the
German economy, heavily dependent on imported Russian gas.
However, the Czech Republic wants to modify some parts of
the EU's proposed new trade measures against Russia, Prime
Minister Bohuslav Sobotka said on Tuesday, warning that
escalating sanctions was risky.
An equity analyst at a Russian bank said there was little
market reaction to news of the latest EU sanctions proposal.
Shares in energy giants Gazprom and Rosneft were up slightly and
government bonds were steady.
"The capacity to raise new equity is pretty trivial because
most of these companies don't raise equity anyway. And the
capacity to raise debt in capital markets - you can get round
it. It's the capacity to raise syndicated loans, particularly
for the banks, that would be most important," the analyst,
speaking on condition of anonymity, said.
Mogherini, whom some eastern European states have criticised
for being too soft on Russia, sought to strike a firm tone on
Tuesday, saying the situation in Ukraine had changed because of
Russia's behaviour and the EU-Russia relationship was no longer
"A strategic partnership is over. Clearly it's over and that
was Moscow's choice ... We have a problem on the Ukrainian
territory. We have a conflict, clearly," she said.
Mogherini also said she spoke by telephone on Monday to
Russian Foreign Minister Sergei Lavrov, who congratulated her on
her appointment as EU foreign policy chief, but said she did not
discuss policy in detail.
(Reporting by Jan Strupczewski, Robin Emmott, Adrian Croft;
additional reporting by Jason Bush in Moscow; editing by Giles