EU threatens Russian economy after MH17 disaster

BRUSSELS - EU foreign ministers on Tuesday (22 July) gave Russia a few days to stop arming Ukrainian rebels, believed responsible for the downing of the Malaysia Airlines plane, or face sanctions on its financial, high-tech and defence industries.

They also decided to add more names and companies to an existing blacklist, which are to be agreed by the end of July.

The EU demands say Russia must: stop the flow of weapons to eastern Ukraine; withdraw its "additional troops" from the Ukrainian border, use its influence on pro-Russian separatists to grant international investigators full access to the crash site of flight MH17; and fully co-operate with the probe.

According to the ministers’ conclusions, the EU "remains ready to introduce without delay a package of further significant restrictive measures, if full and and immediate co-operation on the above mentioned demands fails to materialise."

"To this end, the foreign affairs council requests the EU commission and the European External Action Service to finalise the preparatory work on possible targeted measures and to present proposals for taking action including access to capital markets, defence, dual use goods and sensitive technology including in the energy sector”.

The exact proposals are to be tabled at a meeting of EU ambassadors in Brussels on Thursday.

Speaking on his way out of Tuesday’s meeting, Dutch foreign minister Frans Timmermans i said that "this [the new EU threat] is a logical consequence ... of the lack of progress that we have seen on the Russian side" since a previous ultimatum ran out at the end of June.

The Netherlands has been hit the hardest by the crash, as 193 out of the 298 victims of flight MH17 were Dutch citizens.

Timmermans said he was happy for the solidarity expressed by his colleagues and that the "decision was reached unanimously."

Diplomatic service paper

The EU diplomatic service (EEAS) is not starting from scratch on the stage three sanctions.

In a confidential paper dating back to April, and seen by EUobserver, the EEAS outlined three scenarios: “low-intensity … medium-intensity [and] … high-intensity”.

Under the third option, the paper lists "capital market restrictions", "restriction or prohibition of new investment in Russia", "strict application of EU regulatory rules to Russian assets in EU companies" and import bans on oil and gas.

Member states provided their own assessment individually on what impact these scenarios would have on their economies.

At the crux of the matter is that financial services sanctions affects countries like Britain and Austria, a ban on weapons exports hits France - Paris has already signed off on a €1.2 billion sale of two warships - while gas is sensitive for eastern EU countries and for Germany.

Speaking in a hearing with the Ukrainian foreign minister on Tuesday, Dutch MEP Marietje Schaake i said "the question is do we continue to allow economic interests and a contract to deliver warships to go before anything else or take a strong stance for our values."

German foreign minister Frank-Walter Steinmeier said a first stage of sanctions could be adopted very quickly, "even this week" and without EU leaders requiring to meet again.

His Austrian counterpart Sebastian Kurz, however, said it is not excluded that leaders will have to meet again, while the Irish foreign minister said this could happen before 1 August.