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EU to give Russia days to make peace before new sanctions -sources
September 5, 2014 / 9:01 AM / 3 years ago

EU to give Russia days to make peace before new sanctions -sources

5 Min Read

* EU set to agree new sanctions but delay implementation

* Leaders could give Putin a week, some sources say

* EU wants to see if ceasefire can be agreed and respected

By Tom Körkemeier and Paul Taylor

BRUSSELS/NEWPORT, Wales, Sept 5 (Reuters) - The European Union is set to agree new economic sanctions against Russia on Friday but will wait before implementing them to give Moscow time to show if it is respecting a proposed ceasefire in Ukraine, diplomats said.

How long it would hold off has yet to be decided, and if a peace holds then the package might not be implemented at all.

Two diplomats said EU leaders could give President Vladimir Putin a week to demonstrate he was resolving the conflict, another spoke of 72 hours. Envoys from member states meet in Brussels on Friday afternoon and the diplomats said the details of the sanctions package should be settled then.

"They want to give the ceasefire a chance," one said of hopes of a deal between Russia and Ukraine in Minsk on Friday.

Another said: "If the ceasefire holds, then there is a possibility of not implementing sanctions at all."

Ukraine's President Petro Poroshenko and the main pro-Russian rebel leader both announced on Thursday they would call a ceasefire on Friday if a peace deal is signed in Minsk, which would be the first such breakthrough in the five-month war.

The European Union and United States imposed sanctions against Russia after Moscow annexed Ukraine's Crimea peninsula in March, and tightened them since then, accusing Russia of supporting pro-Russian separatists in Ukraine's east.

The latest wave of sanctions was announced after Western countries said they believed Russia had send ground troops into Ukraine, helping the rebels launch a major advance last week.

Once EU ambassadors agree the next wave of sanctions, it would take a decision by the 28 national leaders to put the measures into effect.

British Foreign Secretary Phillip Hammond told the BBC he favoured going ahead with the immediate implementation of sanctions and then lifting them if the ceasefire held.

But other EU states favour postponing implementation as long as a ceasefire is on the table.

French President Francois Hollande said on Thursday shortly after Poroshenko's ceasefire announcement that sanctions would be activated "if there is no progress (on Ukraine), but everything will depend on the coming hours."

EU leaders agreed at a summit last Saturday to prepare the new, third, set of sanctions within the week and diplomats said the 28 ambassadors should be able to iron out outstanding differences on a text of measures later on Friday.

Governments are wrangling over details, partly in the hope of limiting the effects of sanctions on their own economies and businesses operating in their own markets. Several smaller EU countries, notably the Czech Republic and Slovakia, have expressed scepticism about sanctions.

Among the most contentious areas is a proposed tightening of an export ban on goods that can have both a military as well as a civilian purpose.

There are also differences over the wording of measures to ban Russian state-owned companies from borrowing through syndicated loans in the EU, sources said, as well as over a list of Russians to be subject to a ban on entry to the bloc.

Financing Embargo

One key element of the new sanctions will be expanding a ban on raising money in the EU capital market to all Russian state-owned firms. An existing ban applies only to banks. Expanding the ban could affect major oil Russian oil companies, including Rosneft.

Other measures include: banning syndicated EU loans to Russian government-owned banks and institutions, and banning the sale of Russian derivative instruments in the bloc. A ban on selling debt instruments with a maturity of longer than 90 days would be extended to debt for longer than 30 days.

Outside the financial sector, the proposals include an expansion of an export ban on goods that could have military uses to all potential Russian importers, not just companies in the defence sector.

And a ban on selling advanced technologies in the energy sector to Russia could be extended to include servicing agreements, affecting EU companies working in Russia.

Some member states have suggested barring Russian Defence Minister Sergei Shoigu from entering the EU, diplomats said.

And some have floated an EU cultural and sports boycott of Russia - though that is not expected to be agreed on soon. (Additional reporting by Jan Strupczewski and Robin Emmott in Brussels; Writing by Alastair Macdonald; Editing by Peter Graff)

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