Europe desperately seeking credible response to Russia

19th March 2014, Comments 0 comments

Europe's leaders will seek to hit back at Russia for its annexation of Crimea at a summit this week but are likely to stop short of biting economic sanctions that come with a cost to member states.

As the 28 heads of state and government prepare to gather Thursday and Friday for their second round of talks on the Ukraine crisis in less than two weeks, a diplomat said "the key issue is that the EU stays united."

At a crisis summit March 6, European Union leaders agreed a three-step scenario against President Vladimir Putin that began with the suspension of talks on easing visas into Europe for Russian travellers.

This week, the EU ratcheted up its response by slapping an asset freeze and travel ban on 21 Russians and Ukrainians deemed behind Moscow's absorption of Crimea, including three top military brass.

EU leaders had vowed a third stage of "additional and far-reaching consequences" including "a broad range of economic areas" should Moscow further "destabilise" the region.

Diplomats from several member nations say "phase three" had not been reached, despite the Crimea seizure.

Unlike Russians targeted by US sanctions this week, none on the EU list were part of Putin's inner circle.

"We need to keep channels open for dialogue in order to de-escalate the crisis but open Putin's eyes to the economic consequences," said a senior diplomat speaking on condition of anonymity.

More Russians were likely to be hit by EU punitive measures this week, the source said, although many capitals were wary of targeting Russian oligarchs due to wide splits in Europe over resorting to economic sanctions that hurt some countries more than others.

"The most effective economic measures in the short term could be a combination of targeted sanctions on individuals and business interests and potentially limiting sales to Russia of products on which they are extremely reliant -- such as machinery, chemicals and medical products," said the Open Europe think-tank.

But this is a nightmare idea in Germany, which alone accounts for about a third of EU exports to Russia -- worth more than 123 billion euros ($170 billion) in 2012.

Total EU imports came to 215 billion euros, giving Russia a massive trade surplus of more than 91 billion euros.

And while Britain for instance imports only one percent of its gas from Russia, Bulgaria is dependent on Moscow for 80 percent of its gas supplies and along with Greece and Finland sees economic sanctions as a double-edged sword capable of hurting both sides.

- Putin: 'We will respond' -

Brushing off Western threats of reprisals, Putin this week said: "We will respond."

Europe's leaders should show Putin that the continent was willing to take the pain by cutting gas imports, a move that would "defuse Russia's gas weapon at a stroke", said the influential Brussels-based Bruegel think-tank.

This would be "a convincing signal of unity and determination," Bruegel said as diplomats noted that "weeks or even months of serious work" were needed to discuss the implications of economic sanctions or arms and energy embargoes.

"If there is escalation there will be pain," one diplomat said. "To bear those consequences the pain must be equitably shared. There has to be a recognition that we are all in this together."

Ukraine's interim premier Arseniy Yatsenyuk will be present at the summit, with leaders on Friday signing the political chapters of an EU partnership accord with Kiev.

It was the sudden rejection of this pact, years in the making, by now-ousted president Viktor Yanukovych that triggered pro-EU protests that eventually swept him from power last month.

© 2014 AFP

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