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 The EU also imposed travel bans and asset freezes on the chiefs of
Russia's FSB security service and foreign intelligence service and a
number of other top Russian officials, saying they had helped shape
Russian government policy that threatened Ukraine's sovereignty and
national integrity.
FSB director Alexander Bortnikov and Mikhail Fradkov, a former prime
minister who now heads the foreign intelligence service, were among
15 Russians or Ukrainians and 18 companies and other organizations
named in the EU's latest sanctions list.
Also sanctioned were the secretary of Russia's Security Council,
Nikolai Patrushev, Chechen leader Ramzan Kadyrov, who the EU said
had made statements supporting Russia's annexation of Ukraine's
Crimea region and the insurgency in eastern Ukraine, and several
Ukrainian separatist leaders.
After months of hesitation, the EU is set to go beyond asset freezes
by imposing sanctions on sectors of the Russian economy.
The 28-nation EU toughened its stance towards Moscow following last
week's downing of a Malaysian airliner, killing 298 people, in an
area of eastern Ukraine held by Russian-backed separatists.
 EU ambassadors reached a preliminary agreement on Friday.
European Council President Herman Van Rompuy wrote to EU leaders
asking them to authorize their ambassadors to complete an agreement
by Tuesday. That would avoid the need for leaders to hold a special
summit to approve the sanctions.
Van Rompuy said the proposed sanctions package "strikes the right
balance" in terms of costs and benefits to the EU and in its
flexibility to ramp up sanctions or reverse them over time.
"It should have a strong impact on Russia's economy while keeping a
moderate effect on EU economies," he wrote in the letter, seen by
Reuters.
But Van Rompuy said the sanctions on access to capital markets, arms
and hi-tech goods were likely to apply only to future contracts,
leaving France free to go ahead with the controversial delivery of
Mistral helicopter carriers being built for Russia.
The narrowing of the proposed measures highlighted the difficulty of
agreeing to tough sanctions among countries which have widely
different economic interests and rely to varying degrees on Russian
gas.
European Commission President Jose Manuel Barroso said late on
Friday that following the ambassador's discussions the Commission
had adopted a draft legal text for the Russia sanctions package.
"The final decision now lies with the EU's member states, but I
believe that this is an effective, well-targeted and balanced
package providing the flexibility to adjust our reaction to changes
on the ground. I hope that member states will agree on this package
of restrictive measures next week," he said in a statement.
The measures are not an end in themselves, "but a means to achieve a
negotiated and political solution to the crisis ... I call on Russia
to take decisive steps to stop the violence and genuinely engage in
peace plan discussions," he said.
EU ambassadors will try to reach a final deal at a meeting on
Tuesday.
Key measures include closing EU capital markets to state-owned
Russian banks, an embargo on arms sales to Moscow and restrictions
on the supply of dual-use and energy technologies. They would not
affect current supplies of oil, gas and other commodities from
Russia.
Van Rompuy said there was an "emerging consensus" among EU
governments that "the measures in the field of sensitive
technologies will only affect the oil sector in view of the need to
preserve EU energy security."
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The Commission had proposed restricting equipment for deep-sea
drilling, shale oil and Arctic energy exploration. PIPELINE
PROJECTS
If the sanctions had applied to gas technology, they could have
affected Gazprom's huge South Stream pipeline project to Europe and
Novatek's Arctic Yamal liquefied natural gas (LNG) facility.
That in turn would have hit large EU energy suppliers and
manufacturers with an interest in the project, including in Germany,
Austria and Italy. The prospect of EU sanctions sent shares in
French energy services firm Technip plunging 8 percent on Thursday.
Gazprom's main partners in South Stream are Italy's Eni, France's
EDF, Austria's OMV and Germany's Wintershall [WINT.UL], a subsidiary
of German chemical giant BASF.
Van Rompuy said EU governments also agreed that the sanctions should
not be applied retroactively, particularly in the area of arms trade
and restrictions on access to capital markets.
France was determined to uphold existing contracts with Russia to
preserve a 1.2 billion euro ($1.6 billion) 2011 deal to supply two
Mistral helicopter carriers.
EU governments also agreed that a ban on exports of dual-use
technology - that can be used in both military and civilian products
- would be limited at this stage to military users, Van Rompuy said.
The EU's latest list brought the number of people under EU sanctions
to 87 and the number of companies and other organizations to 20.
FURTHER SANCTIONS LIST
A further sanctions list could be agreed as early as Monday under
new criteria targeting companies and people who support Russian
decision-makers responsible for annexing Crimea or destabilizing
eastern Ukraine, Van Rompuy said. New restrictions on trade and
investment in Crimea could also be agreed on Monday, he said.
Dutch Prime Minister Mark Rutte, whose country is seen as having a
key role in shaping the EU response because it lost 194 citizens in
the plane crash, said he would back sanctions unless Moscow halts
weapons supplies to the rebels.
"We want as a country that has acquired a certain moral obligation
as a result of this tragedy to promote Europe taking a common line
on this," he told parliament in The Hague.
(Additional reporting by Thomas Escritt in Amsterdam, Alexandra
Hudson in Berlin, Justyna Pawlak, Martin Santa, Paul Taylor and
Julia Fioretti; Editing by Paul Taylor, Mohammad Zargham and Ron
Popeski)
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