EU agrees sanctions ‘to hurt Russia’ over Ukraine crisis

By John Chalmers, Sabine Siebold and Robin Emmott

BRUSSELS (Reuters) -The European Union agreed new sanctions on Russia that will blacklist more politicians, lawmakers and officials, ban EU investors from trading in Russian state bonds, and target imports and exports with separatist entities.

However, EU foreign ministers chose not to sanction Russian President Vladimir Putin, the EU’s foreign policy chief Josep Borrell said following a meeting in Paris on Tuesday.

Russia’s formal recognition of two breakaway regions in eastern Ukraine was an unacceptable breach of Ukraine’s sovereignty, Borrell said.

“This package of sanctions that has been approved by unanimity by the member states will hurt Russia, and it will hurt a lot,” Borrell told a news conference alongside France’s foreign minister Jean-Yves Le Drian at a meeting in Paris.

Separately, Estonian Prime Minister Kaja Kallas told Reuters that further Russian aggression in Ukraine would result in more sanctions, in coordination with the United States.

The package of sanctions includes all members of the lower house of the Russian parliament who voted in favour of the recognition of the breakaway regions, freezing any assets they have in the EU and banning them from travelling to the bloc.

It was not immediately clear when the sanctions would take effect, but diplomats expect them in the coming hours or days, when names and details will be made public.

Borrell also said: “We are going to target 27 individuals and entities who are playing a role in undermining or threatening Ukrainian territorial integrity, sovereignty and independence.”

Borrell said those individuals and entities were in Russia’s defence, banking and financial sector.

“We target the ability of the Russian state and government to access our capital and financial markets and services,” Borrell said.

Banks involved in financing separatist activities in eastern Ukraine would also be targeted.

The two regions could also be removed from a free-trade deal between the EU and Ukraine, “to ensure that those responsible clearly feel the economic consequences of their illegal and aggressive actions,” an EU statement said.

PRAISE FOR GERMANY

Borrell congratulated Germany’s decision to put the Nord Stream 2 gas pipeline project on ice, arguably the most far-reaching reaction to Moscow’s move late on Monday. European Commission President Ursula von der Leyen also praised Berlin.

Taking steps to limit or ban Russia’s access to the Belgium-based SWIFT global interbank payments system used for Russian money flows was not immediately part of the EU sanctions.

The EU had repeatedly said it was ready to impose “massive consequences” on Russia’s economy if Moscow invaded Ukraine but has also noted that, given the EU’s close energy and trade ties to Russia, it wanted to move in stages.

Not all of the bloc’s 27 member states have the same relation to Russia or dependency on its gas, which could eventually complicate the adoption of further sanctions.

EU officials and diplomats have said some EU countries, including Austria, Hungary and Italy, Russia’s closest allies in the bloc, would prefer more limited sanctions in response to Putin’s move on eastern Ukraine.

Italian Prime Minister Mario Draghi, whose country relies on Russia for much of its gas, told a news conference in Rome that any sanctions should not include energy imports.

(Reporting by John Chalmers, Robin Emmott, Sabine Siebold, Francesco Guarascio, Ingrid Melander, Marine Strauss, Bart Meijer, Padraic Halpin and Crispian Balmer, Andrius Sytas, writing by Ingrid MelanderEditing by Tomasz Janowski)