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Published: Tuesday May 27, 2014 MYT 2:15:04 AM
Updated: Tuesday May 27, 2014 MYT 2:15:04 AM

Ukraine vote slows momentum for further Russia sanctions in EU

BRUSSELS (Reuters) - Sunday's election in Ukraine, deemed a success by the European Union, is likely to ease pressure for far-reaching sanctions against Russia as Europe worries about how punitive steps might hurt its own economy.

Hours after Petro Poroshenko won an overwhelming election victory to claim the presidency, Ukraine launched air strikes and a paratrooper assault on Monday in a defiant response to pro-Russian rebels who seized an airport.

Leaders of EU governments are expected to discuss Ukraine's problems and possible future sanctions at an informal summit in Brussels on Tuesday evening, but diplomats said there was little chance of a strong push for more punitive measures.

"We are not going to go forward on this for the moment," one senior EU diplomat told reporters.

The election had been billed as a crucial test of whether Europe needed to step up pressure on Russian President Vladimir Putin.

But deep trade ties with Russia and widespread dependence on its energy reserves mute any EU enthusiasm to tighten sanctions.

The bloc's most senior officials said on Monday they saw the vote as a major step towards reducing tensions between Kiev and Moscow.

"We welcome statements by the Russian Federation indicating that it will respect the will of the Ukrainian people and engage in a dialogue with the new Ukrainian president," European Commission President Jose Manuel Barroso and Herman Van Rompuy, head of the body representing the EU's 28 governments, said in a statement.

Barroso later called Poroshenko to congratulate him that the election took place "largely in line with international standards", his office said, and reiterated the EU's commitment to support Ukraine, a reference to the 11 billion euro (8.9 billion pounds) aid package the EU has offered Kiev.

German Chancellor Angela Merkel welcomed preliminary results showing Poroshenko, a billionaire owner of chocolate factories, could win enough support to avert a run-off election.

An international observer mission, whose verdict was keenly awaited by the EU, praised Ukraine for holding an election it said was largely in line with international commitments despite hostile activity by armed groups in the east.

So far, the EU has imposed limited measures, targeting 61 people in Russia and Ukraine with asset freezes and travel bans, as well as two energy companies in the Ukrainian peninsula of Crimea, taken over by Moscow earlier this year.

In recent weeks, discussions among the EU's 28 governments focused on specific steps they could take against Russia, including restrictions ranging from luxury goods imports to an oil and gas ban.

But there was no consensus on how to proceed.

DEEP RELUCTANCE

Some countries with close trade and energy ties with Russia, such as Italy, Greece and Germany, are worried about the potential impact on their economies of stricter sanctions, and others, such as Cyprus and Austria have close financial links.

"It will become more difficult to argue for sanctions given the fact that it was a fairly decent election," one EU diplomat told Reuters, speaking on condition of anonymity.

Without unanimous backing for stricter sanctions, the EU cannot move ahead - a hurdle that has been frustrating the United States, which is keen for Europe to impose more restrictions on Moscow.

The diplomat added, however, that the EU will closely watch whether tensions in Ukraine are subsiding and whether Poroshenko can bring greater stability to the torn country.

That would allow the EU to hold in reserve the threat of broad economic sanctions that could be imposed quickly if fresh troubles flare.

"We have to see how Poroshenko will be able to work in the east," he said.

(Additional reporting by Adrian Croft and Robin Emmott; Editing by Ruth Pitchford and Susan Fenton)

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