* EU ratchets up pressure but U.S. goes further
* EU to suspend new loans for Russia through EIB, EBRD
* Merkel says Russia has not done enough for peace
(Adds EU summit decisions)
By Barbara Lewis and Adrian Croft
BRUSSELS, July 16 European Union leaders agreed
on Wednesday to sanction Russian companies that help destabilize
Ukraine and to block new loans to Russia through two
The decision is a significant ratcheting-up of European
pressure on Russia although it falls short of the hard-hitting
economic measures against Russia for which the United States and
hawks in the EU were pushing.
Simultaneously, U.S. President Barack Obama announced the
most wide-ranging sanctions yet on the Russian economy,
targeting key institutions including Gazprombank and
Rosneft Oil Co, as well as other energy and defense
German Chancellor Angela Merkel, arriving for the summit,
said the EU leaders would talk about new sanctions "because we
believe that the Russian contribution to peace in Ukraine is not
British Prime Minister David Cameron said the situation in
Ukraine was unacceptable. "The territorial integrity of that
country is not being properly respected by Russia and we need to
send a very clear message with clear actions," he said.
The EU leaders said that pro-Russian separatists had failed
to take all the steps the EU had demanded to defuse the
situation in eastern Ukraine.
As a result, they agreed to expand EU sanctions "with a view
to targeting entities, including from the Russian Federation,
that are materially or financially supporting actions
undermining or threatening Ukraine's sovereignty," they said in
a statement issued during the summit in Brussels.
The EU will draw up by the end of July a first list of
companies and people to be hit with asset freezes under the new
Asked if Russian energy companies like Gazprom or Rosneft
could be targeted for sanctions, an EU official said, "This is a
significant broadening of the criteria, which enables a much
broader list than we have yet seen, but I cannot speculate what
kind of additional entities would be added."
OTHER ACTIONS EYED
The EU will also look into the possibility of targeting with
sanctions companies and people that support Russian
decision-makers responsible for annexing Ukraine's Crimea region
or destabilising eastern Ukraine.
EU leaders also decided to ask the EU's bank, the European
Investment Bank (EIB), to suspend new lending for Russia and to
seek the suspension of new lending to Russia by the European
Bank for Reconstruction and Development (EBRD).
Russia has traditionally been the biggest recipient of the
London-based EBRD's funds - it lent 1.8 billion euros ($2.46
billion) there last year. The EIB pledged to lend more than 1
billion euros to Russia last year.
Russia is one of 64 countries that are shareholders of the
EBRD but, if it wins the support of other pro-Western countries,
the EU should be able to block loans for new Russian projects.
The leaders also asked the EU's executive Commission to look
into suspending some of the cooperation programmes that are set
to benefit Russia to the tune of around 450 million euros ($609
million) between now and 2020.
The EU will also draw up proposals for further measures to
restrict investment in Crimea, whose annexation by Russia is not
recognised by the EU.
The EU leaders said they expected international financial
institutions to refuse to finance any project that recognises
the annexation of Crimea.
The leaders also agreed to remove restrictions they had
placed in February on the export of military equipment to
Until now, the EU has imposed measures targeting 72 people
in Russia and Ukraine with asset freezes and travel bans, as
well as two energy companies in Crimea.
The 28-nation EU has been under strong pressure from the
United States and Ukraine to take a harder line against Russia
but some EU governments are wary of potential retaliation from
Russia, the bloc's biggest energy supplier, if they imposed
Lithuanian President Dalia Grybauskaite said on arrival at
the summit that the EU was "still far away" from a decision to
impose sanctions on sectors of the Russian economy, or an arms
or technology embargo.
Blocking loans to Russia through the EIB and EBRD marks a
tightening of EU pressure but analysts said it would not have a
severe economic impact on Russia.
"EBRD and EIB assistance is useful for Russia as it targets
good projects that are aimed at modernising the economy and
improving the investment climate," said Tatiana Orlova, a
strategist at RBS in London.
"But the scope of those projects is relatively modest and
Russia is not dependent on these banks' assistance," she said.
"Unless we see names of important companies, markets won't
really react too much."
Both banks declined to comment.
($1 = 0.7394 Euro)
(Additional reporting by Justyna Pawlak, Jan Strupczewski,
Martin Santa and Paul Taylor in Brussels, Marc Jones and Sujata
Rao in London, Alexandra Hudson and Noah Barkin in Berlin;
Editing by Mike Peacock, Toni Reinhold)