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Published: Tuesday July 29, 2014 MYT 4:00:09 AM
Updated: Tuesday July 29, 2014 MYT 4:00:09 AM

EU reaches preliminary deal on new names for Ukraine sanctions

BRUSSELS (Reuters) - EU diplomats reached a preliminary agreement on Monday on a list of associates of Russian President Vladimir Putin and companies that will face sanctions as part of tougher measures over Moscow's actions in Ukraine, EU sources said.

During more than three hours of talks, they also agreed on new measures to restrict trade and investment in Crimea, which Russia annexed from Ukraine earlier this year.

Diplomats will hold more talks on Tuesday to try to forge agreement on broader economic sanctions on Russia, targeting capital markets, defence and sensitive technology, provided all 28 EU member states can agree.

Speaking on condition of anonymity, the sources said they could not give full details of the new list, which is expected to be published late on Wednesday, and is in addition to 87 people and 20 organisations already subject to EU sanctions against Russia.

Two diplomats said that the new list contained fewer than 12 names in total and one said there were eight names and three entities.

The trade and investment restrictions also agreed in principle on Monday would ban investment in certain sectors in Crimea, including infrastructure and the energy sector. They would also ban the export of equipment to those sectors in Crimea.

After months of hesitation, EU resolve to punish Russia strengthened after the downing in Ukraine earlier this month of a Malaysia Airlines passenger plane, killing all 298 people on board.

Western leaders say pro-Russian rebels almost certainly shot the airliner down by mistake with a Russian-supplied surface-to-air missile. Moscow has blamed Kiev for the tragedy.

Of those who died, 194 were from the Netherlands and the grief and anger of the Dutch people marked a turning point in the European Union's attitude to Russia.

Still, EU diplomats say they cannot be expected to impose measures as tough as the United States has agreed given the risk of pushing fragile EU economies back into recession.

In a letter to EU leaders last week, European Council President Herman Van Rompuy said the proposed sanctions package "should have a strong impact on Russia's economy while keeping a moderate effect on EU economies".

There was "an emerging consensus", he said, on some key principles, including only targeting future contracts, which would leave France free to go ahead with the controversial delivery of Mistral helicopter carriers being built for Russia.

Another principle was that the EU would also only target sensitive energy technologies in the oil sector, avoiding Russian gas.

The European Union is Russia's biggest gas market. Germany, as the biggest customer in volume terms relies on affordable gas for its huge industrial sector.

"One of the most complicated issues is new technology in the energy sector because every time anyone says the word energy, that makes countries like Germany nervous," one European source said on condition of anonymity.

(Additional reporting by Justyna Pawlak, Martin Santa and Tom Koerkemeier in Brussels, Emmanuel Jarry in Paris, Kylie MacLellan in London, Georgina Prodhan in Vienna; Editing by Susan Fenton)

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