EU Set to Roll Over Sanctions on Russia, Officials Say

The Wall Street Journal The Wall Street Journal

BRUSSELS—The European Union is, in the coming weeks, looking to roll over its broad economic and targeted sanctions against Russia over the Ukraine crisis until late January, according to a number of senior officials and diplomats.

The continuation of the sanctions are part of an effort to maximize the bloc’s leverage in pushing the Kremlin to fully implement its side of the Minsk cease-fire agreement, the officials say.

The decisions are likely to deepen tensions with the Kremlin, which had appeared to be hoping to split the EU over sanctions policy and was hoping the relative quiet in eastern Ukraine since the cease-fire accord was signed on Feb. 12 would encourage its friends in the bloc to at least lighten the measures.

While the plans aren’t finalized—some haven’t even been formally discussed yet at EU level—the officials say there is growing confidence in Brussels that the bloc is united behind a policy which would ensure no weakening of EU pressure on Russia until Moscow has fully met its cease-fire commitments. These include pulling troops out of Ukraine and handing back control to Kiev of the Ukrainian side of the border between the two countries.

After weeks of debate, EU leaders agreed at a March summit that any easing of the economic sanctions, which expire at the end of July, “should be clearly linked to the complete implementation of the Minsk agreements, bearing in mind that this is only foreseen by 31 December 2015.”

However some capitals had continued talking about allowing a modest relaxation of the economic measures if the cease-fire in eastern Ukraine largely holds.

The EU measures, approved last summer, included tight restrictions on financial, energy and defense links with Russia, as well as a ban on sales of products with dual military or civilian use. Washington imposed similar sanctions.

However officials said the debate over easing sanctions has largely evaporated.

“You don’t have that doubt any longer,” one senior official said.

Under the current plans, the bloc would take a political decision at a summit on June 25-26 to extend the economic sanctions to the end of January, the officials said. That date hasn’t been nailed down yet. But several officials said it would give member states proper time to assess Russia’s Minsk compliance.

The plans would also see the bloc extend next month the targeted travel bans and asset freezes on individual Russians and Ukrainian separatists from the current mid-September expiry date probably to the end of January, some of the officials said.

By acting in July, the bloc would avoid a major debate on Russia policy straight after the summer break. Officials said the blacklist will be reviewed to see if any names should be dropped, before the extension.

Russia has taken retaliatory measures against 89 prominent EU current and former officials, banning them from Russia. After repeated requests, it handed over a list of the people it was targeting to EU authorities last week.

Later this month, the EU is also widely expected to roll over for a year sanctions specifically targeted at Crimea and Russian firms and people doing business there.

One official said that, while the violence in eastern Ukraine has calmed, there is now broad acceptance within the bloc that regular cease-fire violations and the continued flow of weapons and people to back the separatists there signal Russia hasn’t swung behind the Minsk deal. Moscow denies its forces are in Ukraine.

In addition, while some leaders have publicly criticized the sanctions and their effectiveness, there is agreement that the sanctions have hurt Russia’s economy.

A recently circulated EU paper on sanctions estimated Russia’s economy would shrink 3.8% this year, in part because of the bloc’s measures, according to several officials.

Russia’s retaliatory ban on EU agricultural exports was estimated to have cost the bloc around €5 billion since they were imposed last summer, the people said. Russia’s President Vladimir Putin has admitted that western sanctions, along with the diving oil price, have hurt its economy.

After an active campaign to split the 28-nation bloc, Russian officials have turned in recent days to issuing warnings to the bloc about its June decisions. Mr. Putin has met with the leaders of some of his closest allies in the EU in recent months including Greece, Slovakia, Hungary and Italy.

“If any new decisions are made, we will answer them symmetrically,” Russian Prime Minister Dmitry Medvedev said Tuesday at a joint news conference with Slovak Prime Minister Robert Fico. “If no decisions are made, that means we’ll keep the position that we have now.”

Until now, the biggest wild card in the EU sanctions debate has been Greece, which is entrenched in a bitter fight with some of its EU partners over its financial situation. Greek Prime Minister Alexis Tsipras made a point of criticizing the Russia restrictions when he visited Moscow in April.

However senior officials in Brussels say they have seen no sign that Athens is set to block a sanctions renewal, which needs the backing of all member states.

They say Athens’ red line is likely to be any ratcheting up of sanctions measures.

“There has been absolutely no indication previously that the Greeks are taking a different position” on sanctions, an official said.