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EU suspends visa talks with Russia, warns of sanctions

Thursday, March 06, 2014 - 02:38

Mar 6 - EU leaders meet in Brussels to formulate the bloc's response to the Ukraine crisis. David Pollard looks at the challenges they face.

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Demonstrators outside the European Council in Brussels demand drastic action against Russia. Whilst inside, EU leaders say they're going to suspend visa talks with Moscow and halt preparations for the G8 meeting in Sochi. Further measures - including sanctions - could come later, they say, if Russia fails to engage in talks with Ukraine. SOUNDBITE (English) EUROPEAN COUNCIL PRESIDENT, HERMAN VAN ROMPUY, SAYING: "Any further steps by the Russian federation to destabilise the situation in Ukraine would lead to severe and far-reaching consequences for relations between the European Union and its member states on the one had and the Russian federation on the other hand, which will include a broad range of economic areas." British profits from Russian finance - and a French deal to sell warships to Russia - meant an EU agreement now on sanctions was a hard sell. Plus, of course, Germany's close ties for business and energy supplies. ING's Carsten Brzeski. SOUNDBITE (English) CARSTEN BRZESKI, ING (BRUSSELS), SAYING: ''Germany is highly dependent on gas coming from Russia also through the Ukraine. So the ties are there. You also have lots of German companies, actually, investing in Russia, because Russia was supposed to the growth market for many, many corporates''. One measure taken by the EU could hit a company here, in London's famous Harley Street. It's alleged to be a front for funds plundered by ousted President Yanukovich. Those and other assets of former Ukrainian officials have now been frozen. Otherwise, the EU's policy of ''targeted measures' appears to have little traction. Russia so far has snubbed attempts to bring it to talks with Ukraine. At the same time, key deadlines are looming. On Friday, Kiev will face a demand to pay Moscow a two billion dollar energy bill it can ill afford. In ten days' time, Crimea is due to vote on whether to join itself to Russia - the region's parliament has already backed that move. And the EU appears out of step with the tougher stance of the U.S. Commerzbank's Peter Dixon. SOUNDBITE (English) PETER DIXON, ECONOMIST, COMMERZBANK, SAYING: ''Mr Putin knows very well that the Western powers are divided on this issue. And he's proving very adept at playing the US and Europe off against each other over the course of recent years, and I think he'll be able to do that quite nicely this time around, too.'' Germany could still hold an important card in dealing with Russia's leadership. Chancellor Angela Merkel grew up in formerly Communist East Germany. SOUNDBITE (English) CARSTEN BRZESKI, ING (BRUSSELS), SAYING: ''Mrs Merkel, given her background, is probably one of the few European leaders who can understand how Mr Putin works.'' In the meantime, the rouble has weakened further - potentially undermining Russia's already ailing economy - that posing a threat Mr Putin may see as rather more serious.

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EU suspends visa talks with Russia, warns of sanctions

Thursday, March 06, 2014 - 02:38