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Published: Monday March 3, 2014 MYT 5:55:05 PM
Updated: Monday March 3, 2014 MYT 5:55:57 PM

EU pushes mediation rather than sanctions against Russia

BRUSSELS (Reuters) - The European Union is unlikely to match the United States in threatening sanctions against Russia when its foreign ministers meet to discuss Ukraine on Monday, instead pushing for mediation between Moscow and Kiev, officials say.

The emergency talks, convened as Russian President Vladimir Putin seized the Crimean peninsula and said he had the right to invade his neighbour, are expected to result in a strongly worded statement of condemnation, but no immediate punitive measures.

Instead, German Chancellor Angela Merkel, who spoke by telephone to Putin late on Sunday, is pushing for high-level mediation and a "fact-finding" mission to Ukraine, possibly led by the Vienna-based Organization for Security and Cooperation in Europe, currently chaired by Switzerland.

By contrast, U.S. Secretary of State John Kerry threatened visa bans, asset freezes and trade restrictions against Russia, which he accused of "19th century" behaviour in Ukraine.

"American businesses may well want to start thinking twice about whether they want to do business with a country that behaves like this," Kerry said on Sunday.

European governments will take a more cautious approach, diplomats said, with any prospect of sanctions against Russia unlikely to be spelled out directly.

Several EU member states including Germany, France, Britain, the Netherlands and Finland are expected to push for mediation to calm the crisis, diplomats indicated. The OSCE said on Monday it was ready to play a role.

The seizure of Crimea has created the greatest confrontation between Russia and the West since the collapse of the Soviet Union in 1991, an event Putin has described as the worst geopolitical catastrophe of the 20th century.

Speaking to Merkel by phone on Sunday, U.S. President Barack Obama underscored the "complete illegitimacy" of Russia's actions. A senior U.S. official said Obama would make the same point to the leaders of Britain and Poland.

But many Europeans are concerned about pushing Putin too far, mindful of their deep economic links with Russia, including a heavy dependence on Moscow's gas and oil exports. There is also concern about the time required for sanctions and the legal hurdles that must be cleared.

EU sanctions also require unanimity among the 28 member states, something that would be extremely difficult to achieve when it comes to Russia, with some small countries, such as Cyprus, having close ties to Moscow.

Moscow has said it is protecting the lives of Russian-speakers, who are in the majority in Crimea and numerous in much of eastern Ukraine, and appears to be calculating that the West cannot afford to risk a wider conflagration by taking anything approaching military action.

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Russia is the EU's biggest trading partner after the United States and China, with 123 billion euros ($170 billion) of goods exported there in 2012. It is also the EU's most important single supplier of energy products, accounting for more than a quarter of all EU consumption of oil and gas.

Relations between Brussels and Moscow have deteriorated over the last year, with EU governments expressing anger over Moscow's pressure on former Soviet republics hoping to forge closer economic ties with Europe, including Ukraine.

Tensions reached new heights when Moscow persuaded Ukrainian President Viktor Yanukovich to reject a trade deal with the EU in November, a decision that sparked three months of mass protests that ended with his overthrow.

One decision that could be agreed by EU foreign ministers is asset freezes against Ukrainians accused of misappropriating public funds, similar to measures taken by Austria, Switzerland and Lichtenstein last week.

Austria announced on Saturday that it was blocking the bank accounts of Yanukovich and 17 others, following a request by Ukraine's new authorities. Ukraine's new leaders have accused Yanukovich of embezzling as much as $37 billion in three years.

(Editing by Will Waterman)

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