European Union agrees on tough new sanctions against Russia

Brussels: The European Union said on Friday it had agreed on a tough new package of economic sanctions against Russia, despite a ceasefire between government forces and pro-Kremlin rebels in Ukraine.

The sanctions tighten existing measures imposed in July, targeting more individuals with travel bans and asset freezes, as well as tightening access to capital markets for Russian oil and defence companies.

European Council president Herman Van Rompuy and European Commission chief Jose Manuel Barroso said in a letter to European leaders that the new measures were an "effective tool" to "reinforce the principle that EU sanctions are directed at promoting a change of course in Russia's actions in Ukraine".

US President Barack Obama and British Prime Minister David Cameron had both said at a Nato summit in Wales on Friday that the sanctions should go ahead in spite of the truce signed in Belarus on Friday.

But they both said that the sanctions could be lifted if there was evidence that Russia was taking steps to solve the situation in Ukraine. The new EU sanctions will be formally approved on Monday, although the full details of the people and organisations targeted will not be released for another day, diplomats said.

Leaders of the 28-nation EU had asked officials at a summit last Saturday to draw up fresh sanctions after alleging that Russia had sent troops and tanks to support a rebel counteroffensive in Ukraine, a claim Moscow denies.

Five months of fighting in Ukraine has killed some 2,600 people. The new blacklist targets more people linked to the rebel leadership in the Donbass region of eastern Ukraine, the government of Crimea, which was annexed by Russia in March, and Russian "decision-makers and oligarchs", Van Rompuy and Barroso said.

The "enhanced measures" cover the same four areas as the previous set in July: capital markets, defence, dual-use goods with both military and civilian capabilities, and oil technology, Van Rompuy and Barroso said.

But EU diplomats said they went further in restricting the access that Russian defence and oil firms would have to raising vital capital in European markets. An EU diplomat told AFP: "This is evidence that EU governments are prepared to do what it takes to show Russia the consequences of its actions."

The July sanctions were imposed in the wake of the shooting down of Malaysia Airlines flight MH17 over eastern Ukraine, allegedly using a missile fired by pro-Russian rebels.

The European Union meanwhile said that it welcomed the Ukraine truce. "The ceasefire agreement must now be respected and fully implemented by all sides," a spokeswoman said in a statement.

"We hope that this will be a first step towards a sustainable political solution, based on respect for Ukraine's sovereignty and territorial integrity."

'Will react'

Earlier on Saturday, Russia warned that it would react if the European Union imposed fresh economic sanctions against it over the situation in Ukraine.

"As for the new list of sanctions from the European Union, if they are passed, there will undoubtedly be a reaction from our side," the Russian foreign ministry said in a statement.

Moscow criticized the European Union for drawing up the tougher sanctions despite a truce agreed in Minsk that was appearing to hold in eastern Ukraine on Saturday.

But by announcing new sanctions that are expected to be formally approved on Monday, the EU's leadership "is practically sending a signal of direct support to the 'party of war' in Kiev, which is not happy with the results of the Minsk meeting," Russia's foreign ministry said.

"Instead of feverishly searching for ways to hurt the economies of its own countries and Russia, the European Union would do better to work on supporting the economic revival of the Donbass region" of eastern Ukraine, it added.