* Chancellor issues 'clear call' for Russia to help peace
* Says Malaysian airline appears to have been shot down over
* But Merkel says too soon to decide on tougher sanctions
(Adds quotes, EU officials and analysis)
By Stephen Brown and Annika Breidthardt
BERLIN, July 18 Germany's Angela Merkel
challenged Moscow's attempt to pin the downing of a Malaysian
airliner on Ukraine, pointing to Russia as a source of
But she said it was too soon to talk about retaliatory
The chancellor said there was evidence that the Malaysian
Airlines Boeing 777, which crashed into a field in
Ukraine killing all 298 people on board, had been shot down.
It needed a ceasefire between Ukrainian government forces
and the pro-Russian rebels to permit a full, independent
investigation into the tragedy, Merkel said, issuing a "very
clear call" for Russian President Vladimir Putin to help make
"These events have once again shown us that what is required
is a political solution and above all that it is also Russia
that is responsible for what is happening in Ukraine at the
moment," Merkel told her pre-summer holiday news conference on
The incident could mark a pivotal moment in the worst crisis
between Russia and the West since the Cold War. Putin put the
blame on Kiev for renewing an offensive against rebels two weeks
ago after a ceasefire collapsed. He urged an "unbiased" inquiry.
A U.S. official said Washington strongly suspected the plane
was downed by a sophisticated surface-to-air missile fired by
Ukrainian separatists backed by Moscow. An Italian government
source said "there are no doubts" it was shot down by rebels.
Merkel said it should be a top priority to stop the eastern
Ukrainian separatists getting weapons from Russia.
"It is indeed the case that the separatists are heavily-
armed and there are many indications that some of these weapons
have come across the border from Russia," she said.
The crash happened a day after European Union leaders
stepped up sanctions on Moscow, agreeing to penalise Russian
companies that help destabilise Ukraine and to block new loans
to Russia through two multilateral lenders.
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
Merkel said that provided leeway for action against Russian
firms and individuals, but when pressed on whether the airline
incident would trigger wider sanctions, she was cautious.
"Regarding sanctions, I'd like to point out that the events
with the plane, as far as I remember, were not even 24 hours ago
and at the moment we need to sort out an independent
investigation," Merkel told reporters.
"So it's perhaps premature to draw conclusions
before we have access to the remains of the plane," she said.
Merkel and Putin are in regular telephone contact over the
Ukraine crisis and spoke as recently as Thursday, Merkel said,
though it was not clear whether that was before or after news of
the passenger plane being downed.
The German leader has urged Putin to use his influence with
the separatists to help bring about an end to the fighting in
the east in which hundreds of people have been killed.
But her influence on the European Union is seen as one of
the reasons why Brussels has been more reluctant than Washington
to impose wider economic sanctions. Critics say this is partly
because of Germany's strong trade links with Russia, which
provides more than a third of its gas imports.
EU diplomats say it is too early to decide on tougher
sanctions but the issue will be discussed by EU ministers on
Tuesday who are tasked with preparing a first list of people and
entities from Russia that would be targeted. That leaves scope
to decide which companies, and how many, should be penalised.
Chris Weafer, a partner of the Moscow-based consultancy
Macro-Advisory, said that until now it had looked unlikely that
Europe or the United States would move on to broader trade and
economic measures, known as "stage three" sanctions.
"But the Malaysian airliner tragedy is a potential game
changer," he said, adding that if the accusations were proven,
it could define what he called "the most dangerous phase in the
conflict in eastern Ukraine".
However, Otilia Dhand at the Teneo political risk
consultancy in London expected limited fallout.
"It is a horrible tragedy, but in two or three days' time,
everyone will fall back to the positions they held before it
happened, including the Russians," she said.
(Additional reporting by Michelle Martin in Berlin, Steve
Scherer in Rome and Justyna Pawlak in Brussels. Writing by
Stephen Brown and John Stonestreet. Editing by Mike Peacock)