Ukrainian forces trucks burn on September 9, 2014 after shelling by pro-Russian militants in the eastern Ukrainian region of Lugansk. Russia said on September 9 it did not want Ukraine to become a NATO member, describing such a possibility as an "unprecedented challenge to European security".SERGEY BOBOK/AFP / Getty Images
European Union governments meet today to consider pulling the trigger on tougher Russian sanctions as the bloc weighs the viability of President Vladimir Putin's truce in Ukraine.
The talks in Brussels among the 28 member nations follow the EU's abrupt decision this week to put on hold for at least a "few days" a second package of economic penalties against Russia over its encroachment in Ukraine. The delay offered more time to assess the effectiveness of the cease-fire without risking further trade retaliation by the Kremlin.
The planned sanctions, originally due to be published in the Official Journal yesterday, include barring some Russian state-owned defense and energy companies from raising capital in the EU, according to a European official who spoke on the usual condition of anonymity. The diplomatic deliberations are due to start at 10 a.m. CET today.
Alexander Stubb, prime minister of Russia's neighbor Finland, said he's "very worried" about the possibility of Russian counter-sanctions should the EU enact the new package. At the same time, "we are strongly of the opinion that the cease-fire has so far not been permanent," Stubb told reporters in Helsinki.
Putin, Poroshenko
The Sept. 5 truce between Ukraine and pro-Russian separatists has raised the prospect of ending a conflict that has killed at least 3,000 people, displaced more than 1 million more and soured Russia's ties with former Cold War foes.
"Now it's up to the member states to look at this situation again and examine the implementation of the cease-fire agreement and decide how to take this forward," Maja Kocijancic, spokeswoman for EU foreign-affairs chief Catherine Ashton, told reporters in Brussels yesterday.
The agreement to halt fighting came in the midst of an EU push to ratchet up penalties against Russia in coordination with the U.S. in a bid to force Putin to end support for the rebels in eastern Ukraine. Putin's backing of Ukrainian separatists and his annexation of Crimea have jolted the security order in Europe.
Putin and his Ukrainian counterpart, Petro Poroshenko, agreed on the need to sustain the truce during a phone call late yesterday, the Kremlin said on its website. Putin reiterated Russia's "readiness to continue to contribute to the peaceful settlement of the crisis."
'Not Optimistic'
The U.S. is finishing measures to "deepen and broaden" its penalties across Russia's financial, energy and defense sectors, State Department spokeswoman Marie Harf told reporters in Washington yesterday. So far the cease-fire is "mostly holding," Harf said.
In a sign the cease-fire accord has been shaky, Ukrainian Defense Ministry spokesman Oleksiy Dmytrashkovskyi said in a YouTube video that pro-Russian rebels overnight on Sept. 8 shelled government positions near the airport of the eastern city of Donetsk, as well as four more positions of Ukrainian soldiers in other areas, without causing troop casualties.
"I am not optimistic at all - I have not been optimistic from the beginning," Didier Burkhalter, chairman of the Organization for Security and Co-operation in Europe, which helped mediate the cease-fire and is monitoring it, told reporters in Geneva. Even so, "we want to give it a chance."
Russia hopes the truce "will be consolidated" within days, Foreign Minister Sergei Lavrov said in Moscow.
Farm Goods
In an initial set of sanctions imposed in late July, the EU barred five state-owned Russian banks from selling shares or bonds in Europe; restricted the export of equipment to modernize the oil industry; prohibited new contracts to sell arms to Russia; and banned the export of machinery, electronics and other civilian products with military uses - so-called dual-use goods - to military users.
Those measures prompted Russia to ban imports of some EU farm goods, a step that has cut off about 5 billion euros ($6.5 billion) of annual trade and left the bloc scrambling to aid its producers. In a statement on Sept. 6, the day after EU member- state diplomats drew up the latest sanctions plan, the Russian government signaled it would take further retaliatory action should the extra penalties be enacted.
"In the case that they are introduced, a reaction from our side will undoubtedly follow," the Foreign Ministry said in a statement in Moscow.
EU sanctions decisions require the support of all EU governments, giving any one nation leverage to seek concessions. Several European leaders including Stubb and his Hungarian counterpart, Viktor Orban, have expressed concerns the penalties against Russia will hurt the their own economies.
Defense Companies
The delayed EU package would extend to three energy companies - OAO Gazprom Neft, OAO Rosneft and OAO Transneft - as well as to nine defense companies the ban on share or bond sales in the EU, according to a European official.
It would also shorten to 30 days from 90 days the threshold for the maturity of debt whose sale in the bloc by the targeted Russian businesses is banned; prohibit European banks from offering syndicated loans to sanctioned Russian companies; expand the restrictions on dual-use goods and widen the curbs on technologies for the oil industry, according to the official.
EU governments on Sept. 8 approved the measures in principle while stopping short of giving the green light for their publication in the Official Journal and entry into force. The Ukrainian government yesterday pressed the bloc to complete the process for enacting the sanctions, saying they are key to countering Russian aggression.
In a sign of the political sensitivities of applying the tougher measures, EU diplomats met on short notice on Sept. 8 to discuss the package they had approved three days earlier.
An additional outcome was that the EU put on hold a parallel plan to expand a blacklist of people and companies subject to asset freezes in Europe in connection with the Ukrainian unrest. EU leaders on Aug. 30, beyond calling for more economic penalties against Russia to be prepared, asked for proposals to blacklist people and institutions "dealing with" separatist groups in the Donbass region of eastern Ukraine.
'Oligarchs, Cronies'
The latest people who would be targeted include the new leadership in Donbass, the government of Crimea and "Russian decision-makers and oligarchs," EU President Herman Van Rompuy said in a Sept. 5 statement after the EU diplomats had approved the new measures and sent them to the bloc's national governments for final approval on Sept. 8.
The new blacklist would add 24 people, including two additional Kremlin "cronies," according to a second European official who spoke on the usual condition of anonymity.
Like the tougher economic penalties, the latest blacklist targets had been due to be disclosed yesterday in the Official Journal. The economic penalties would normally take effect the day after publication, while the blacklist decisions would enter into force the same day.