EU Adopts New Sanctions Against Russia's Top Oil Companies

Sanctions will enter into force in the next few days, EU president says.

AP

REUTERS - The European Union formally adopted the new package of sanctions against Russia over its involvement in Ukraine on Monday evening, EU President Herman Van Rompuy said.

Van Rompuy added that the sanctions will enter into force in the next few days. "The entry into force (of the new sanctions) through the publication in the Official Journal will take place in the next few days. This will leave time for an assessment of the implementation of the ceasefire agreement and the peace plan," Rompuy said in a statement.

"Depending on the situation on the ground, the EU stands ready to review the agreed sanctions in whole or in part," he said. 

Earlier, it was reported the EU governments delayed signing off on the sanctions, because some governments wanted to discuss how to suspend the sanctions if a Ukraine cease-fire holds.

EU envoys were due to meet again at 6:00 P.M. (4:00 P.M.) in Brussels to decide whether the sanctions - agreed in principle on Friday - should be first implemented and then suspended if the cease-fire holds or whether they should not be implemented at all at this stage, diplomats said.

While the discussions appear largely procedural, many countries opposed to further punishment of Moscow for sending troops into Ukraine see it as an opportunity to block the package and avoid retaliatory measures from Russia, diplomats said.  

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

The sanctions, however, would not encompass the gas sector and in particular state-owned Gazprom, the world's biggest gas producer which is also the biggest gas supplier to Europe.

In general, the EU sanctions on raising money in the European Union for Russian companies will apply to firms that have turnover of more than 1 trillion roubles ($26.95 billion) and half of that is generated from the sale or transport of oil, the diplomat said.

The sanctions deal was reached by ambassadors of the 28 EU countries already on Friday night. The sanctions will enter into force after being published in the official journal of the European Union, which could happen at midnight.

Russia hints at flight ban

Earlier on Monday, Russia signaled it might ban Western airlines from flying over its territory as part of an "asymmetrical" response to the new sanctions. 

Blaming the West for damaging the Russian economy by triggering "stupid" sanctions, Prime Minister Dmitry Medvedev said Moscow would press on with measures to reduce reliance on imports, starting with increasing output of domestic aircraft. 

Medvedev suggested Russia should have hit back harder over the action by the United States and European Union to punish Moscow for its role in Ukraine, saying it had been too patient in the worst confrontation with the West since the Cold War. 

"If there are sanctions related to the energy sector, or further restrictions on Russia's financial sector, we will have to respond asymmetrically," he told Russian daily Vedomosti, adding the airlines of "friendly countries" were allowed to fly over Russia. 

"If Western carriers have to bypass our airspace, this could drive many struggling airlines into bankruptcy. This is not the way to go. We just hope our partners realize this at some point," he said in the interview published on Monday.

Medvedev, who was once seen as the liberally-minded foil to Putin but now increasingly delivers harsh messages, said leaders in Ukraine should seize on Russian proposals for a peace plan which would leave separatists in control of large areas of territory in eastern Ukraine.

"Now comes the delicate work of achieving a durable peace," he said. "I hope that these efforts will succeed."  

Meanwhile, Ukrainian President Petro Poroshenko visited the eastern Ukrainian port of Mariupol on Monday in a show of solidarity with its embattled citizens and vowed to defend it from pro-Russian separatists who advanced towards it last week before a ceasefire agreement. 

"This is our Ukrainian land and we will not give it up to anybody," he wrote on Twitter.  

On arriving in the city of 500,000, which is vital for Ukraine's steel exports, Poroshenko said: "I have ordered (the military) to secure the defense of Mariupol with ... multiple rocket-launchers, tanks ... and air cover ... The enemy will suffer a crushing defeat."

Poroshenko added that Pro-Russian separatists have so far handed over about 1,200 prisoners-of-war to the Ukrainian side under the terms of a ceasefire agreement. The two sides are meant to exchange all their POWs under the terms of the ceasefire accord, clinched last Friday.