BRUSSELS (Reuters) - The leaked recording of senior U.S. officials dismissing the European Union's role in Ukraine may be deeply embarrassing but it has exposed a very real split between Brussels and Washington over how to handle Kiev.
Both the United States and the EU have launched diplomatic campaigns to end the violence gripping Ukraine since President Viktor Yanukovich rejected an EU trade deal last November and committed himself to Russia instead.
Yet while they agree Yanukovich must end his crackdown on protesters and start talking to the opposition, Washington and Brussels are at odds over how to put pressure on Kiev.
The United States favours sanctions against senior Ukrainian officials and oligarchs, while the EU is wary, having seen such a policy fail to deliver results in neighbouring Belarus.
For its part, Washington is already preparing financial measures that could quickly be imposed if the violence escalates, congressional aides say.
Some European governments say sanctions should not be ruled out. But the overwhelming preference among the EU's 28 member states is to continue diplomacy and avoid the risk of driving Ukraine's elite further into Russia's arms.
"It would be naive to say sanctions was not an option but actually it is not what we are focused on," said one EU diplomat closely involved in drafting policy on Ukraine.
"We think Ukraine needs to be firmly encouraged along the path of reduction of violence, political reform and dialogue and we don't see sanctions as being the key tool the EU has."
Asked whether the European Commission, the EU's executive, had any plans to move towards sanctions, foreign affairs spokeswoman Maja Kocijancic said that was not the intention.
"We have said very often that we are following the developments very closely. If the situation deteriorates, we will have to look at various measures. But the focus is now on diplomatic engagement," she said.
EU foreign ministers are due to discuss the crisis in Brussels on Monday, with sanctions likely to be raised for discussion. But there are no official proposals and any decision to impose restrictions has to be unanimous. In the current environment, that is extremely unlikely.
Many EU governments argue sanctions against high-profile Ukrainian officials are unlikely to be sufficient to persuade Yanukovich to embark on reforms.
They point to long-standing measures against dozens of officials in Belarus, another former Soviet republic, over human rights abuses, which have failed to persuade Minsk to change course and pursue meaningful democratic reforms.
In another leaked conversation posted on YouTube, senior EU official Helga Schmid is heard complaining to the EU ambassador in Ukraine that U.S. diplomats were criticising the EU for being "too soft" on the sanctions question.
The EU has not confirmed the veracity of that leaked conversation, but Victoria Nuland, the U.S. assistant secretary of state caught in the other recording, has described it as "pretty impressive tradecraft", indicating it is genuine.
There also seems to be little agreement between Brussels and Washington over what kind of financial incentives, if any, could be extended to Ukraine if it changes path.
Earlier this week, the EU played down reports that it was working on a large-scale assistance package to help Kiev through an economic crisis. It has given no indication of having plans for any immediate financial aid, unless Ukraine reaches an agreement with the IMF on emergency loans.
The political fallout from the secret recordings rose on Friday after German Chancellor Angela Merkel described Nuland's comments, which included the phrase "f*** the EU", as "absolutely unacceptable".
In Brussels, senior officials have sought to defend Europe's policy in Ukraine, pointing to intense shuttle diplomacy between the EU's foreign policy chief Catherine Ashton, the bloc's top neighbourhood policy official, Stefan Fuele, and the Ukrainian government and opposition.
"We are very active. We have been, we are and we will be," one senior official said.
(Additional reporting by Adrian Croft; editing by Luke Baker and Giles Elgood)