reuters.com/New sanctions against Russia to take effect on Friday

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SHAFAQNA (International Shia News Association)-European Union governments agreed on Thursday that new sanctions on Russia over the Ukraine crisis will take effect on Friday but held out the prospect of cancelling some – or even all – of them next month if they believe a peace plan is working.

Russia’s foreign ministry said the approval of new penalties showed the European Union had “made its choice against” the peace roadmap, which is aimed at ending the worst confrontation between Moscow and the West since the Cold War.

Western powers have accused Russia of sending tanks and troops into eastern Ukraine to prop up a rebellion by pro-Moscow separatists – a charge denied by the Kremlin which has responded with its own sanctions and threats of more retaliation.

After EU ambassadors gave the go-ahead to the new sanctions, European Council President Herman Van Rompuy said EU officials would conduct a review before the end of September of how the truce agreed last week between Ukraine government forces and rebels was working. If Russia was complying, some or all sanctions could be lifted.

“If the situation on the ground so warrants,” he said, officials may submit to EU leaders “proposals to amend, suspend or repeal the set of sanctions in force, in all or in part”.

That enticement to Moscow to cooperate, while immediately imposing new measures, reflects impatience on the part of some leaders not to pull punches after less than a week of the truce but also concern among others, especially those most heavily dependent on Russian trade, not to provoke Moscow’s retaliation.

The EU agreement on the timing of the sanctions followed a phone call on Thursday involving Van Rompuy, British Prime Minister David Cameron, German Chancellor Angela Merkel, French President Francois Hollande and Italian Prime Minister Matteo Renzi, Cameron’s spokesman told reporters in London.

“If Russia genuinely reverses course then of course the European Union and others will return to the subject but there unfortunately has been very little evidence so far and that is why you have the European Union going ahead,” he said.

Washington will also apply new sanctions either on Thursday or Friday on Russia that aim to stop billions of dollars in oil exploration in Siberia and Russia’s Arctic, a U.S. official said.

The sanctions seek to ban cooperation with Russian oil companies on energy technology and services by companies including Exxon Mobil and BP Plc.

Britain’s Europe Minister David Lidington said he had told the Russian ambassador to London, Alexander Yakovenko, on Thursday that EU sanctions were being imposed as a direct response to Russian actions and “would remain in place until we see evidence of a change of direction”.

POLISH GAS SUPPLIES DOWN

Moscow would take comparable measures in response to new EU sanctions, Russian news agencies quoted a Foreign Ministry spokesman as saying.

“Today Brussels and the leaders of the EU nations need to give a clear answer to EU citizens as to why they are putting them under the risks of confrontation, economic stagnation and unemployment,” the Russian ministry said in a statement.

That response could include caps on used car imports and other consumer goods, Kremlin economic aide Andrei Belousov was quoted by state-run RIA news agency as saying. But he added: “I hope common sense will prevail and we will not have to introduce those measures.”

Some European officials believe Moscow could use disruptions to the gas deliveries on which the EU depends as its trump card in the confrontation over Ukraine.

Poland’s state-controlled gas importer PGNiG said on Thursday it had received 45 percent less natural gas than it requested from Russia’s Gazprom on Wednesday.

Although Gazprom said Russian gas flows to Poland were unchanged from the previous week, Poland said later that Gazprom had promised to deliver contracted gas supplies to PGNiG on Friday.

Slovak Prime Minister Robert Fico said he had asked officials to find the reason for a drop of around 10 percent in supplies of Russian gas to Slovakia in recent days.

“There are various explanations. On the one hand there is talk about technical solutions; some people can see politics in it,” Fico told reporters.

A spokeswoman for the European Commission said the EU was looking into the details and the possible cause of the Polish disruption. She said Ukrainian, Russian and EU officials would meet in Berlin on Sept. 20 to discuss gas supplies and the EU could raise the issue then.

Ukraine imports around half of its gas needs from Russia, and the EU meets a third of its demand through imports from Russia, with 40 percent of that gas flowing through Ukraine.

The new EU sanctions are expected to put Russia’s top oil producers and pipeline operators Rosneft, Transneft and Gazprom Neft on a list of Russian state-owned firms that will not be allowed to raise capital or borrow on European markets, an EU diplomat said.

EU sanctions do not include the gas sector and in particular state-owned Gazprom, the world’s biggest gas producer and the biggest gas supplier to Europe.

But under the EU penalties, firms in the bloc will be barred from providing drilling or well testing services for deep water oil exploration, Arctic oil exploration or production and shale oil projects in Russia.

Battle-tank maker Uralvagonzavod, aerospace company Oboronprom and state-controlled United Aircraft Corporation (UAC) are also expected to face sanctions, according to a draft obtained by Reuters.

The EU sanctions would prohibit the companies from raising capital in Europe via “financial instruments with a maturity exceeding 30 days”, the draft document said.

An earlier round of EU sanctions barred EU nationals and companies from buying or selling new bonds or equity with a maturity of more than 90 days issued by major state-owned Russian banks – Sberbank, VTB Bank, Gazprombank, Vnesheconombank (VEB) and Russian Agriculture Bank (Rosselkhozbank).

Under the new sanctions, EU nationals and companies may no longer provide loans to the five banks. Trade in new bonds or equity with a maturity exceeding 30 days, issued by the same banks, will now be prohibited.

A further 24 people will be added to a list of those barred from entry to the bloc and whose assets in the EU are frozen. Their names should be known when the text appears on Friday.

The rouble hit a record low against the dollar on news of the new sanctions.

European Commission President Jose Manuel Barroso will discuss the ceasefire and Ukraine’s economic situation in talks in Kiev on Friday and Saturday with President Petro Poroshenko and Prime Minister Arseny Yatsenyuk, the Commission said.

The EU will offer Russia more time to adjust to a European trade pact with Ukraine at talks with Ukraine and Russia in Brussels on Friday, diplomats say.

Ukraine made an historic shift away from Russia in June by signing a free-trade accord with the European Union.

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