By Laurence Norman and Matthew Dalton
BRUSSELS--European nations are coalescing behind a plan to impose wider economic sanctions on Russia as early as Tuesday, a top European Union official said Friday.
The movement came after a meeting of ambassadors from EU member states to discuss ratcheting up pressure on Moscow because of what the West says is its support for pro-Russia rebels in eastern Ukraine.
Herman Van Rompuy, president of the European Council, sent a letter to EU leaders saying the ambassadors had found "emerging consensus" on a plan to restrict Russian access to European capital markets, and an embargo on trade in weapons, militarily sensitive goods and energy-sector technologywith Russia. A copy of the letter was seen by The Wall Street Journal.
The trade embargo won't affect existing contracts, the letter says. That is important for France, which doesn't want to cancel the planned delivery of a Mistral warship to Russia scheduled for the fall. Some Eastern European nations also worried they could lose access to parts needed to maintain Soviet-era military equipment.
An export ban on goods with dual civilian-military use will apply only to Russian military customers at first, the letter adds. Restrictions on energy technology will only apply to oil-industry equipment, since the EU depends in particular on Russian natural-gas exports, the letter says.
"My assessment is that this package strikes the right balance when it comes to cost/benefit ratio and scalability/reversibility over time. It should have a strong impact on Russia's economy while keeping a moderate effect on EU economies," Mr. Van Rompuy wrote.
He asked the leaders to direct ambassadors to approve the sanctions when they meet on Tuesday, avoiding the need for another high-level summit. The European Council represents member state governments in Brussels.
The expected move to hit the Russian economy with tougher measures follows the shooting down of a Malaysia Airlines jet over eastern Ukraine, allegedly by Russia-backed separatists, with more than 200 EU citizens among the dead.
The EU on Thursday agreed to add 18 entities to its sanctions list, including the separatist groups People's Republic of Luhansk and Donetsk People's Republic and some Crimea-based companies that benefited from the Russian annexation of the region, diplomats said.
Also targeted were 15 individuals, including the chief of the Federal Security Service, the KGB's successor agency, EU diplomats said.
EU officials said their names were to be published late Friday in the bloc'sofficial journal, after which the visa ban and asset freeze takes immediate effect.
The EU also agreed Thursday to clear the way for sanctions on people they determine to be actively supporting Russian decision makers on actions in Ukraine, including the annexation of Crimea in March. That could include Russian oligarchs close to the Kremlin and more of Russian President Vladimir Putin's senior advisers and aides.
People familiar with the discussions said the ambassadors wanted to focus Friday's discussions on the broader economic sanctions before opening a fresh debate over who else to target among Mr. Putin's inner circle. However Mr. Van Rompuy said in his letter the additional targeted sanctions would be ready for adoption by Monday.
Officials said the detailed legal text for broader sanctions could reach capitals later Friday, allowing the EU's 28 governments to consider the details over the weekend.
"We are still on track but discussions could become more tricky when we discuss the legislative text," one senior EU official involved in Friday's discussions said.
One of the issues that governments will need to address is how to scale up or down the sanctions as the situation in Ukraine changes. The draft legal decisions won't set out any detailed conditions, leaving such delicate political decisions as they arise to member states.
The proposals for economic sanctions, described in a document distributed to member states and seen by the Journal on Thursday, include investment restrictions and a prohibition on listing Russian financial instruments on European markets or exchanges--measures that could hit Sberbank, Russia's largest bank and one of the biggest in Europe.
Russian financial institutions that are more than 50% owned by the Russian government would also be subject to the restrictions, the document says. Those financial institutions raised EUR7.5 billion ($10 billion) in bonds from EU capital markets in 2013, 47% of all the bonds they issued, the document says. EU citizens would be forbidden from buying their equity or debt with a maturity longer than 90 days.
Write to Laurence Norman at firstname.lastname@example.org and Matthew Dalton at Matthew.Dalton@wsj.com
(END) Dow Jones Newswires
July 25, 2014 15:29 ET (19:29 GMT)
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