EU may scrap new Russia sanctions if peace plan holds

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

AFP| Last Updated: Sep 12, 2014, 00:43 AM IST

Brussels: The European Union has agreed to introduce new sanctions against Russia on Friday tomorrow 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 tomorrow, Van Rompuy said in a statement today, after sharp differences over whether their introduction might undercut peace efforts and with Moscow promising a forceful response.

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

Van Rompuy said today 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 tomorrow 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.