* New meeting of EU governments may be required for decisive
* Meeting Tuesday could decide on names, companies
* Next summit scheduled for end-August
* Economic sanctions could have heavy price for fragile EU
By Barbara Lewis
BRUSSELS, July 21 For all the tough talk, Europe
is not likely to punish Russia over last week's downing of an
airliner over Ukraine beyond speeding up the imposition of
already agreed individual sanctions when the bloc's foreign
ministers meet on Tuesday.
The severity of future European Union sanctions could depend
on the Netherlands, which suffered the greatest loss of life
when the Malaysia Airlines flight was brought down.
U.S. President Barack Obama has piled pressure on Europe for
a more forceful response and the three leading EU powers -
Britain, France and Germany - said they should be ready to
ratchet up sanctions.
Britain, in particular, said it was willing to suffer the
But diplomats said Tuesday's meeting was not expected to go
further than agreeing on companies and people to be hit with
asset freezes under a more aggressive framework agreed last
week. Previously, they had only said they would decide on the
list by the end of July.
Several diplomats said moving towards more sweeping economic
sanctions could only be decided by heads of government. The
attitude of the Netherlands, which lost 193 people in the
incident, would be critical, diplomats said.
The next scheduled summit of EU leaders is on Aug. 30,
although EU members could call for another emergency meeting.
"The impulse must come from The Hague because they have the
moral mandate to demand a resolute, firm reaction. Everything
depends on that," one EU diplomat said on condition of
"I think the events will serve to speed up sanctions, but as
long as no new European council (of leaders) is called,
ministers cannot go further even if they want to," another EU
A summit of EU leaders on July 16, the day before the
airliner was shot down, agreed the EU would sanction Russian
companies that help to destabilise Ukraine and block new loans
The wording was deliberately vague as the meeting agreed to
target "entities, including from the Russian Federation, that
are materially or financially supporting actions undermining or
threatening Ukraine's sovereignty".
The United States and its allies have blamed pro-Russian
rebels and Moscow itself over the downing of the plane. Russia
has denied involvement.
Speaking in parliament on Monday, Dutch Prime Minister Mark
Rutte said the EU would impose further sanctions on Russia if it
were proved that Russia was directly or indirectly responsible
for bringing the plane down.
His words cast doubt over whether the disaster would prove
to be a turning point for international pressure to resolve the
crisis in Ukraine, which has killed hundreds since pro-Western
protests toppled the Moscow-backed president in Kiev in February
and Russia annexed the Crimea peninsula a month later.
On Monday, EU diplomats made clear sectoral sanctions would
still be extremely difficult for some of Europe's poorer
nations. They are especially nervous about the energy sector,
central to the Russian economy, but also to the European Union.
EU nations rely on Russia for about 30 percent of their gas
demand and have intertwined interests based on decades of energy
reliance. According to U.N. data, excluding Russian gas exports
- around $60 billion a year - the Netherlands was Russia's
biggest export destination last year, mostly oil and metals.
"Energy sanctions would most likely derail the fragile
European recovery in general and could even lead to a complete
economic collapse in certain member states," one diplomat said.
"I don't see how collective economic suicide serves us or the
While some member states, such as Britain, do not rely on
Russian gas, others are 100 percent dependent on Russia, having
no other suppliers. In volume terms, Germany and Italy have the
Diplomats said that if energy had to be part of any
sanctions regime, the European Union would have to agree ways to
share the financial burden.
Britain has said it too would suffer from any economic
sanctions but it is willing to pay the price.
"I would say ... any sanctions will have an economic impact,
and we are prepared to undertake further sanctions," British
Finance Minister George Osborne told BBC radio's Today programme
on Monday. "But think of the economic hit ... of allowing
international borders to be ignored, of allowing airlines to be
shot down - that's a much greater economic hit for Britain and
we're not prepared to allow that to happen."
London is a prime destination for Russian businesses and
Russian oligarchs are major property owners in Britain.
Energy major BP already faces the prospect of fallout
following the U.S. decision to sanction Russia's largest oil
firm Rosneft, of which BP owns a fifth.
Another sensitive area is defence. France has said so far it
is going ahead with a 1.2 billion euro ($1.6 billion) contract
to supply Mistral helicopter carriers to Russia because
cancelling the deal would do more damage to Paris than to
On Monday, a French defence ministry official said any
decision on whether to suspend the delivery of the first warship
would only take place in October.
($1 = 0.7395 Euros)
(Additional reporting by Jan Strupczewski and Justyna Pawlak in
Brussels and Marine Pennetier in Paris, Tom Miles in Geneva and
Thomas Escritt in Amsterdam; editing by Philippa Fletcher)