* EU leaders meet on Thursday for two-day summit
* Russia, Ukraine and energy to top the agenda
* Leaders may add names to Russia travel-ban, asset-freeze
* No consensus on imposing stricter financial sanctions
By Luke Baker
BRUSSELS, March 20 As Russian President Vladimir
Putin celebrates his seizure of Crimea, European Union leaders
hold critical talks on Thursday on how to respond amid growing
doubts over whether they are united enough to impose
hard-hitting sanctions on Moscow.
The EU's foreign ministers agreed this week to subject 21
Russians and Crimeans to travel bans and asset freezes, but it
was a relatively minor response mocked by Russian officials as
ineffectual and ultimately meaningless.
EU Leaders will discuss their next move at a dinner in
Brussels on Thursday evening, when they will likely agree to add
more names to the travel-ban and asset-freeze list, possibly
including political and military figures close to Putin.
That would be something, but would still fall far short of
the stricter financial, business and trade sanctions many
diplomats and analysts believe are necessary to make Putin think
twice and put a stop to his creeping involvement in Ukraine.
"To remain credible, we have to deliver on what we
promised," one EU ambassador said on Wednesday, referring to a
statement on March 6 when the EU said it would consider
financial sanctions if there were "any further steps by the
Russian Federation to destabilise the situation in Ukraine".
When leaders made that statement two weeks ago, it was still
not clear to them whether the Russian-speaking forces in Crimea
were sent by Putin and if he had plans to occupy the peninsula.
Since then, Putin has not only seized the region, but a
referendum has been held in which Crimeans voted 97 percent in
favour of seceding from Ukraine, and Putin has officially
incorporated Crimea and its 2 million people into Russia.
Yet rather than seeing those events as sufficient
justification to move to the next stage of sanctions, most EU
member states appear inclined to hold off for now, keeping stage
three - as the financial sanctions are called - for any move by
the Russian military into eastern parts of Ukraine.
"There's no appetite, no consensus to move to stage three at
this point," said one European official involved in preparing
for the summit discussions on Thursday.
Instead, leaders will have a debate about what the trigger
for the further phase of sanctions would be, what specific
measures might be included in such a step, and how to mitigate
against the retaliation Moscow has promised.
"What we're looking at is something in between phase 2 and
phase 3," said a French diplomat. "Something that is efficient,
makes a point and is understandable to the average European."
The problem Europe faces is maintaining its unity. While
Russia or the United States can largely act on the directions of
one person, the European Union can only act with the unanimous
agreement of 28 prime ministers and presidents.
While Germany, Britain, France, Poland and one or two other
countries may be largely in agreement about the need to take
tough action against Russia, potentially including financial and
trade sanctions, most of the rest have deep reservations.
The message that emerged from a range of briefings by member
states on Wednesday was that the time is not yet ripe for stage
three sanctions. What that means in practice is that Putin's
annexation of Crimea may have to be quietly accepted.
"Even if we never recognise Crimea, I guess Crimea has been
digested by Russia. It is very unfortunate what has happened,"
said a senior diplomat from an east European member state.
"We have to accept the Russian way of thinking is not the
same as ours. Their values are different from our values."
While there is not the appetite to move to stricter
sanctions yet, officials are taking the long view.
It takes time to identify the right targets for financial
and trade sanctions, and the legal net must be woven very
precisely. Detailed work will continue on that, even if there is
no consensus yet on implementing the measures.
"It's important to ratchet the pressure up gradually, step
by step," said a northern European diplomat. "You can't just
seize people's bank accounts without evidence."
And it's also critical that EU member states agree a means
of sharing the impact of any Russian retaliation, which is
likely to fall disproportionately on those with closer trade
ties with Moscow and more dependent on its energy exports.
"What is certain," said the French diplomat, "is that
relations with Russia will be cold for several years to come, so
we have to think about how we deal with that moving forward."
(Additional reporting by Adrian Croft, Martin Santa and Robin
Emmott in Brussels and Paul Taylor and John Irish in Paris;
Writing by Luke Baker; Editing by Giles Elgood)