EU leaders to slap initial sanctions on Russia

JUERGEN BAETZ MIKE CORDER Associated Press Published:

BRUSSELS (AP) -- European Union leaders were poised Thursday to impose sanctions on Russia to protest its military incursion into Ukraine's Crimean peninsula, according to European officials.

The Brussels talks came as the U.S. government piled its own pressure on Russia, and lawmakers in Crimea declared their intention to split from Ukraine and join Russia instead.

A senior diplomat said the bloc's leaders were considering suspending talks with Russia on a wide-ranging economic agreement and on granting Russian citizens visa-free travel within the 28-nation bloc, a goal that Moscow has been pursuing for years.

But European leaders were unlikely to take more drastic steps like freezing assets and imposing travel bans on Russian officials. Those steps could still be taken if Russia refuses to pull back its troops from the Crimean peninsula and engages in meaningful negotiations toward resolving the crisis, the diplomat said.

The diplomat spoke on condition of anonymity because of the confidentiality of the closed-door talks. A diplomat from another major EU country confirmed the emerging compromise in the negotiations.

Ukraine's Prime Minister Arseniy Yatsenyuk called a planned referendum called by Crimea's lawmakers to decide the fate of the disputed peninsula "illegitimate."

"Crimea was, is, and will be an integral part of Ukraine," he told reporters.

While EU leaders debated how to resolve the crisis on their eastern doorstep, the Obama administration put more pressure on Moscow by slapping visa restrictions on pro-Russian opponents of the new Ukrainian government in Kiev and clearing the way for financial sanctions. The restrictions target a number of unidentified people and entities accused of threatening Ukraine's sovereignty and borders.

Similar to the approach favored by some EU leaders, the U.S. sanctions are flexible: The penalties will increase if Russia continues its aggressive policies but could also be ratcheted down if Moscow pulls back its troops in Crimea and recognizes Ukraine's new government.

At the outset of the Brussels summit, EU leaders still appeared widely divided between nations close to Russia's borders and some western economic powerhouses -- notably Germany and the Netherlands -- that were taking a more dovish line.

"Whether (sanctions) will come into force depends also on how the diplomatic process progresses," German Chancellor Angela Merkel said, noting that foreign ministers including U.S. Secretary of State John Kerry and Russia's Sergey Lavrov were meeting again in Rome on Thursday. But Merkel also said the EU could not just "go back to business as usual."

Others such as Poland and Lithuania urged more decisive action.

"We need to send a very clear message to the Russian government that what has happened is unacceptable and should have consequences," British Prime Minister David Cameron said.

Lithuanian President Dalia Grybauskaite said Moscow is seeking to expand its borders.

"Russia today is dangerous," she insisted. "After Ukraine will be Moldova, and after Moldova will be different countries."

The United States had already suspended talks on an investment treaty and threatened further steps. NATO on Wednesday suspended most of its meetings with Russian officials, halting military cooperation and deciding to review all aspects of its relationship with Moscow.

The stakes are high for all sides.

Russia is Europe's third-largest trading partner and its biggest gas and oil supplier. EU exports to Russia in 2012 totaled 123 billion euros ($170 billion), and European banks have about 200 billion euros in outstanding loans to Russia.

The 28 EU leaders opened their emergency meeting with talks with Yatsenyuk, who then traveled across Brussels to NATO headquarters for a meeting with Secretary-General Anders Fogh Rasmussen.

Yatsenyuk urged the EU to do its utmost to rein in Russia.

"Having Russian boots and tanks on the ground is unacceptable in the 21st century. Who knows the limits? Probably near the Ukrainian-EU border," he told reporters.

The EU proposed a $15 billion aid package for Ukraine Wednesday. The U.S. has so far pledged $1 billion and is working on a more comprehensive package, in coordination with the EU and the International Monetary Fund.

Ukraine's economy is faltering and the country is running out of cash. The government in Kiev estimates it will need $35 billion in bailout loans for this year and next.

The EU also offered Ukraine a wide-ranging free trade and economic agreement that would draw Kiev closer to Europe and help boost its economy.

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Associated Press Writer Angela Charlton contributed reporting.

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