* 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
(Updates with Cameron comments on French warship deal)
By Barbara Lewis
BRUSSELS, July 21 For all the tough talk, Europe
is unlikely 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.
But demonstrating the difficulty of getting agreement from
28 member states, London clashed with Paris over France's
decision to press ahead with the sale of warships to Russia.
British Prime Minister David Cameron said on Monday such an
order had become "unthinkable".
"We need to put the pressure on with all our partners to say
that we cannot go on doing business as usual with a country when
it is behaving in this way," Cameron said.
He also said the European Union should consider hard-hitting
economic sanctions and that Russia could not expect access to
European markets, capital and technical expertise.
Diplomats said Tuesday's meeting in Brussels was still not
expected to go much further than agreeing on the people and
possibly companies 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, the diplomats said.
"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
The next scheduled summit of EU leaders is on Aug. 30,
though EU members could call for another emergency meeting.
A summit of EU leaders on July 16, the day before the
airliner was shot down, agreed the EU would punish 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".
Adding companies to any sanctions list is more complicated
than naming individuals because of the risk of legal challenges.
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 had been directly or indirectly
responsible for bringing the plane down.
Analysts say it could be extremely difficult to prove
responsibility for the disaster, which has been viewed as a
potential turning point for international pressure to resolve
the crisis in Ukraine.
Hundreds have died in a pro-Russian insurgency in eastern
Ukraine, which broke out after Russia annexed the Crimea
peninsula following the toppling of a Moscow-backed president in
Kiev in February by pro-Western protesters.
Britain has said it is ready to pay the price of moving
towards a new phase of EU economic sanctions because much bigger
costs were at stake.
London is a prime destination for Russian businesses, and
Russian oligarchs are major property owners in Britain.
Britain's 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.
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 Moscow.
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.
EU diplomats made clear sectoral sanctions would be
extremely difficult for many EU 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 pipeline gas
exports to the EU - around $60 billion a year - the Netherlands
was the biggest destination for Russian exports last year,
mostly of 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.
($1 = 0.7395 Euros)
(Additional reporting by Jan Strupczewski, Adrian Croft and
Justyna Pawlak in Brussels and Marine Pennetier in Paris,
Michelle Martin in Berlin and Kylie MacLellan and William James
in London and Tom Miles in Geneva and Thomas Escritt in
Amsterdam; Editing by Philippa Fletcher and Will Waterman)