Europe

Ukraine crisis: EU to adopt new Russia sanctions soon

  • 8 September 2014
  • From the section Europe
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Media captionEC's Pia Ahrenkilde-Hansen: "The sanctions package can be extended or stopped, depending on developments in the field"

The EU says new sanctions against Russia should be adopted shortly and take effect on Tuesday, despite a Kremlin warning of retaliation.

But an EU spokeswoman said the sanctions would be "reversible", depending on the situation in Ukraine.

Pro-Russian separatists and government troops are observing a fragile truce.

Ukraine's President Petro Poroshenko has arrived in the strategic port city of Mariupol, parts of which have been shelled as rebel forces edge closer.

Announcing his arrival in a tweet, Mr Poroshenko said: "We won't hand over this Ukrainian land to anyone."

The separatists have recently made big gains in eastern Ukraine. But a ceasefire agreed on Friday appears to be holding despite some sporadic shooting.

Fighting in the east has killed some 2,600 people since April.

Image copyright AFP
Image caption A building in Mariupol witnesses said was hit overnight

Major state-owned oil firms including Rosneft are on the new EU sanctions list, but gas is not affected, diplomats say. US sanctions already target Rosneft.

Russia has warned that it could block international flights through its airspace if the EU goes ahead with new measures over the Ukraine conflict.

Russia has repeatedly denied accusations by Ukraine and the West that it has been sending troops into Donetsk and Luhansk regions to help the rebels, who want to establish an independent state.

Image copyright AFP
Image caption Donetsk airport has been the scene of constant battles between rebels and government forces

Analysis: Andrew Walker, BBC economics correspondent

Rosneft calls itself the leader of the Russian petroleum industry. That makes it a very important player in the European Union's energy market. About 90% of the crude oil used in the EU is imported and Russia is, by a large margin, the biggest supplier.

The sanctions don't appear to directly affect that relationship. They would prevent Rosneft raising money in European financial markets.

But as crude oil is mainly transported by sea, if the trade were disrupted any losses from Russian suppliers could potentially be replaced. It would almost certainly be more expensive, but it could be done, up to a point.

Gas is another story, which may explain why Gazprom's main business is reported not to be on the new sanctions list. Russian gas is delivered to Europe by pipeline. There is a trade in gas transported by sea, but it would be very difficult to compensate for a major disruption of supplies from Russia.


Oil firms targeted

A European Commission spokeswoman said the new sanctions package targeting Russian firms and officials "is due to be formally adopted by member states through a written procedure later today, so the procedure is ongoing".

"It will then be published in the official journal of the EU, which should happen in the course of tomorrow at the latest as plans currently stand," she said.

Media captionThe BBC's Fergal Keane in Mariupol: "People fear the war is coming to them"

Publication in the journal puts the sanctions into effect.

Diplomats say the new package will target Russian oil companies Rosneft and Transneft and the petroleum unit of state gas monopoly Gazprom.

Their access to financial markets will be restricted - a serious matter for Rosneft, which last month asked the Russian government for a $42bn (£25.2bn) loan.

The sanctions would also expand the visa bans and asset freezes on Russian officials and entities, including separatist leaders in Ukraine.

Earlier Russian Prime Minister Dmitry Medvedev warned that Moscow would respond "asymmetrically" to further sanctions.

A Russian airspace ban "could drive many struggling airlines into bankruptcy", he told a Russian daily.

"If there are sanctions related to the energy sector, or further restrictions on Russia's financial sector, we will have to respond asymmetrically... For example, restrictions in the transport sector.

"We work on the basis of friendly relations with our partners, and that's why Russia's skies are open to flights. But if we are restricted then we'll have to respond," he told Vedomosti (in Russian).

Airlines would have to pay far more for fuel if Russia blocked their routes to Asian destinations, and flight times would be longer in many cases.

Last week an EU official told the BBC that further sanctions would deepen the existing measures, affecting Russia's access to capital markets, dual-use goods which can be used for military purposes, defence equipment and some other sensitive technologies.

Media captionRichard Galpin in Donetsk: "We've heard the sound of quite a number of mortars being fired"

Mr Poroshenko's visit to Mariupol comes after some shelling was reported there at the weekend.

It is the last city in Donetsk region still held by the Ukrainian government and is a strategic port on the route to Crimea, the peninsula annexed by Russia in March.

On Sunday, Ukrainian security official Volodymyr Poliovyi said 864 Ukrainian soldiers had been killed since the conflict began.

So far there have been no big prisoner exchanges since the ceasefire took effect.


12-point peace roadmap - key elements

  • Ensure an immediate bilateral ceasefire
  • Carry out decentralisation of power, allowing temporary local self-government in areas of Donetsk and Luhansk in eastern Ukraine under a "special status" law
  • Immediately free all hostages and illegally detained persons
  • Ensure monitoring on the Ukrainian-Russian border and a security zone
  • Ensure the holding of snap local elections in Donetsk and Luhansk
  • Remove illegal armed groups, military hardware, and all fighters and mercenaries from Ukrainian territory
  • Pass a law against the prosecution and punishment of people over certain events in Donetsk and Luhansk region

Posted by the OSCE on its website (in Russian).


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