EU agrees economic sanctions on Russia
The European Union has reached agreement on the bloc's first broad economic sanctions on Russia over its role in Ukraine, diplomats said, marking a new phase in the biggest confrontation between Moscow and the West since the Cold War.
The measures will shut major state-owned Russian banks out of European capital markets and target the defence sector and sensitive technologies, including oil, but exclude the vital gas sector, on which Europe is heavily dependent.
In contrast to the United States, the 28-nation EU, with bigger economic interests at stake, hesitated for months to take decisive action against Moscow.
But the mood changed radically after the downing of a civilian flight in an area of Ukraine controlled by pro-Russian separatists earlier this month, killing all 298 people on board, including 194 Dutch citizens.
Washington believes flight MH17 was shot down in error by the separatists with a missile supplied by Russia. Moscow has denied any involvement and sought to deflect the blame to Kiev.
The president of the European Commission, Jose Manuel Barroso, and European Council President Herman Van Rompuy said the sanctions were means as a "strong warning" that Russia's actions in Crimea were not unacceptable and would bring "heavy costs" to its economy.
"The European Union will fulfil its obligations to protect and ensure the security of its citizens. And the European Union will stand by its neighbours and partners," the EU's top two officials said in statement.
Several European diplomats, speaking on condition of anonymity, said sanctions could be ratcheted up further if necessary.
EU ambassadors clinched their agreement as intense fighting between Ukrainian troops and pro-Russian rebels in eastern Ukraine killed dozens of civilians, soldiers and rebels.
It is expected to be finalised tomorrow and the measures published in the bloc's Official Journal.
Dutch Foreign Minister Frans Timmermans, whose call for justice swayed EU peers last week, said the capital market restrictions "will have a far-reaching and immediate effect".
The sanctions will initially last a year but will be reviewed after three months on Oct. 31 to determine their impact on Moscow's behaviour, diplomats said.
"We have to keep a consistent review of the political aspect and provide legal certainty," one senior EU diplomat said.
The deal, which does not require endorsement at a special EU summit, followed an agreement to widen sanctions on Moscow between US President Barack Obama and the leaders of Britain, France, Germany and Italy in a telephone conference on Monday.
President Barack Obama said today the United States has expanded sanctions against Russia over its support for rebels in eastern Ukraine.
Speaking at the White House, Obama said the new sanctions targeted "key sectors of the Russian economy" - energy, arms and finance.
Obama said the new US sanctions block the exports of specific goods and technologies to the Russian energy sector, expand sanctions to include more Russian banks and defense companies, and formally suspend credit that encourages exports to Russia and financing for economic development projects in Russia.
"If Russia continues on this current path, the costs on Russia will continue to grow," Obama said.
The United States slapped sanctions on VTB, the Bank of Moscow, the Russian Agriculture Bank and the United Shipbuilding Corp over Moscow's support for separatists in eastern Ukraine, the Treasury Department said.
"Russia's actions in Ukraine and the sanctions that we've already imposed have made a weak Russian economy even weaker," Obama said.
"Major sanctions we're announcing today will continue to ratchet up the pressure on Russia, including the cronies and companies that are supporting Russia's illegal actions in Ukraine," Obama added.
The EU does more than 10 times as much trade with Russia as the United States does, relying in particular on Russian natural gas to fuel its industry and power its cities.