September 3, 2014 / 6:25 PM / 5 years ago

Europe seeks accord on Russian capital markets embargo

BRUSSELS (Reuters) - Envoys of European Union governments held further discussions on Wednesday on widening a ban on Russian state-owned firms raising capital in the bloc among a range of other sanctions, diplomats and officials said.

Following a decision by EU leaders at a weekend summit to prepare heavier penalties unless Moscow pulls forces from Ukraine, the European Commission, the EU executive, said it had completed proposals for what measures should be taken.

Ambassadors from the 28 member states discussed those on Wednesday and would review detailed, written versions of the legal proposals on Thursday, diplomats said. The EU leaders set a deadline of the end of the week to agree on a new set of sanctions, which could be implemented when leaders see fit.

There has been disagreement among EU states about whether and how far to increase sanctions, and so a final accord among the governments may not include all the Commission proposals. It could also include some measures not proposed by the executive.

The sanctions proposed by the Commission were in line with those outlined by diplomats earlier in the week, including adding all remaining state-owned Russian firms to the state-owned banks already barred from the EU capital markets.

That could affect, notably, the Russian energy giants Gazprom and Rosneft.

Other measures include: banning syndicated EU loans to Russian government-owned banks and institutions; shortening to 30 days from 90 the minimum maturity of Russian state-owned banks’ debt instruments that cannot be sold in the EU; and banning Russian derivative instruments being sold in the bloc.

Outside the financial sector, the proposals include an expansion of a export ban on goods that can have both military and civilian use to all potential Russian importers, not just companies in the defense sector.

And a ban on selling advanced technologies in the energy sector to Russia could be extended to include servicing agreements.


Aside from those penalties prepared by the Commission, some member states have suggested barring Russian Defence Minister Sergei Shoigu from entering the EU, diplomats said.

And Russia might be subjected to an EU cultural and sports boycott - something that might, were it to continue long-term, threaten even its hosting of the 2018 World Cup soccer finals.

The new EU sanctions package against Russia could be coordinated with the three other members of the Group of Seven - the United States, Canada and Japan.

The United States is considering limiting hi-tech exports to Russia’s Arctic oil and gas industry as part of plans to strengthen sanctions against Moscow over the crisis in Ukraine, the U.S. ambassador to the European Union said on Wednesday.

Russia’s retaliatory ban on imports of food from the Europe Union could cost the European Union 5 billion euros ($6.6 billion) a year, according to an internal EU document seen by Reuters on Wednesday.

In a mark of deepening resolve to accept pain for their own faltering economies in order to pressure Moscow to pull back in Ukraine, France said on Wednesday it would not deliver a helicopter-carrying warship to Russia as planned in October.

Paris had hitherto resisted calls from EU allies to halt the handover, in line with an EU embargo on future arms sales.

Writing by Alastair Macdonald; Editing by Andrew Heavens

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