EU may scrap new Russia sanctions if peace plan holds

The European Union has agreed to introduce new sanctions against Russia on Friday targeting oil and defence firms, but could lift them if a Ukraine ceasefire holds, EU head Herman Van Rompuy said.

AFP| Updated: Sep 11, 2014, 21:08 PM IST

Brussels: The European Union has agreed to introduce new sanctions against Russia on Friday targeting oil and defence firms, but could lift them if a Ukraine ceasefire holds, EU head Herman Van Rompuy said.

A further 24 people including Russian oligarchs and Ukrainian separatists have been slapped with travel bans and asset freezes under the sanctions, which have been delayed for the past week by disagreements between EU countries. 

The sanctions come into force on Friday, Van Rompuy said in a statement Thursday, after sharp differences over whether their introduction might undercut peace efforts and with Moscow promising a forceful response.

Russia said on Thursday that it had already drawn up new anti-Western sanctions targeting imports of consumer goods and second-hand cars.

Van Rompuy said Thursday that the EU could propose to "amend, suspend or repeal the set of sanctions in force, in all or in part," depending on the results of a "comprehensive review" of the ceasefire at the end of September.

The 28 member states would then look at any such proposal "urgently", he said.

"We have always stressed the reversibility and scalability of our restrictive measures," he said.

The sanctions coming into effect on Friday are a toughening up of measures adopted in July after the shooting of Malaysia Airlines flight MH17 over rebel-held east Ukraine.
Under the latest round, the EU said three major Russian oil companies and three top defence companies would be barred from seeking debt financing from Europe.

Striking at the energy industry, Russia`s major export earner, EU companies will be barred from providing services for deep water and arctic oil exploration and production.

EU nationals and companies are also barred from extending loans to the top five Russian state-owned banks.

They will also no longer be able to trade in the banks` bonds, shares or financial instruments with maturities of more than 30 days, a significant step up from the previous 90 days which could make it even more difficult for companies to raise fresh financing.

The move will likely make borrowing more expensive still for Russian companies, undermining an economy already in the doldrums.

A ban on the export of dual-use goods and technology was extended.

Twenty-four people including the rebel leadership in eastern Ukraine`s Donbass region, the government in Russian-annexed Crimea, "as well as Russian decision-makers and oligarchs," were added to a list of individuals facing EU travel bans and asset freezes, it said.

The full details of the sanctions and which companies and individuals are on the list will be available Friday when they are published in the EU`s Official Journal, which gives them legal effect.EU leaders agreed at a summit late last month on the need for another package of economic sanctions after Russia allegedly sent troops and tanks into eastern Ukraine to support pro-Moscow rebels there.

The sanctions were finalised last Friday, but on the same day Kiev and Moscow agreed a ceasefire and peace plan, forcing a rethink and a string of meetings in Brussels to discuss when they should be introduced.

The problem for the EU was how to justify implementation of new, tough sanctions just when it seemed as though peace efforts were making headway in Ukraine, diplomatic sources said.

The 28 member state ambassadors to the EU formally agreed Monday on implementing the package -- but with the caveat that it be linked to the ceasefire and only introduced "in a few days," rather than immediately as had been expected at first.

Amid confusion about what that meant in practise and with some member states apparently preferring to wait and see, rather than introduce the sanctions straight away, the ambassadors met Wednesday without result.

Russia is a major trading partner for the EU and many member states, especially in eastern Europe, rely heavily on Russian oil and gas supplies to keep their economies going.

The EU first introduced sanctions in March this year after Russia`s annexation of Crimea but they only involved travel bans. However Brussels adopted much broader economic sanctions advocated by Washington after MH17.