EU to slap new sanctions on Russia

EU to slap new sanctions on Russia

Kiev (AFP) - The European Union has agreed to slap a new round of sanctions on Russia on Friday despite the ceasefire in Ukraine, triggering a swift threat of retaliation from Moscow.

However, European Council president Herman Van Rompuy said Thursday the punitive measures, which target Russian oil and defence companies, could be lifted after a review of the truce at the end of September.

The announcement came as Kiev and NATO said around 1,000 Russian troops remained in Ukraine after allegedly crossing the border to bolster the pro-Moscow rebellion in what has been described as an invasion by stealth.

Ukrainian authorities also acknowledged that the insurgents have extended their control over territory on the eastern border to the Sea of Azov after a lightning counter-offensive last month reportedly backed by elite Russian forces.

The EU move had been delayed after some member states -- wary that further reprisals by the Kremlin could hit their own fragile economies -- had said they wanted to wait and see what happened on the ground in Ukraine.

Among the latest punitive measures, major Russian oil companies and defence companies will be barred from seeking finance on European capital markets.

Twenty-four people including rebel leaders in eastern Ukraine, the government in Russian-annexed Crimea, "as well as Russian decision-makers and oligarchs," were added to a list of individuals facing EU travel bans and asset freezes.

The EU announcement sent the ruble plunging to new record lows while stocks in Russia, where the economy is already on the brink of recession, slid.

- 'Amend, suspend or repeal' -

Russia has already threatened to bar EU airlines from its airspace and responded to the latest measures by saying it has drawn up a list of new anti-Western sanctions targeting imports of consumer goods and second-hand cars.

Van Rompuy said the EU could "amend, suspend or repeal" the sanctions depending on the results of a comprehensive review of the ceasefire at the end of the month.

The stepped up restrictions reflect deep Western suspicions over Moscow's territorial ambitions in its western neighbour after the seizure of Crimea in March in the chaotic weeks that followed the ouster of a pro-Kremlin leader in Kiev.

But last Friday's peace pact -- the first backed by both Kiev and Moscow since the insurgency erupted across Ukraine's industrial heartland in April -- has so far held despite accusations of violations on both sides.

The conflict has so far killed more than 2,700 people, forced at least half a million from their homes and sent tensions between Russia and the West soaring to post-Cold War highs.

- 'Good first step' -

Ukrainian President Petro Poroshenko said Wednesday the situation had drastically improved since the truce, and even announced that the bulk of Russian troops had been removed, a potentially significant development in the crisis.

A NATO military officer said the withdrawal would be "a good first step" but that about 1,000 Russian troops remained in Ukraine with another 20,000 massed on the border.

Kiev also acknowledged Thursday that in the days before the ceasefire the rebels had made a dramatic push south from their stronghold in Donetsk, given them control of the border all the way to the Sea of Azov.

The sudden shift in fortunes after Kiev's forces had claimed a series of military successes prompted suggestions that Kiev had negotiated the peace deal from a position of weakness.

Poroshenko pledged Wednesday he would submit a bill to parliament granting parts of the east temporary self-rule, although he insisted this did not mean that Ukraine would be partitioned.

However leaders of the self-declared "people's republics" in mainly Russian-speaking Donetsk and Lugansk say they have no intention of abandoning the fight for full independence.

Rattling the truce, Kiev said Thursday its military positions had come under attack 20 times in the past 24 hours, while AFP correspondents reported hearing artillery fire overnight near Donetsk.

Since the ceasefire, Kiev said the lives of eight servicemen and one civilian had been lost.

The pan-European security body the OSCE said it will use drones to monitor the border as part of plans to boost its mission in Ukraine to help "de-escalate" the crisis.

Sanctions against Moscow, first imposed over Crimea, were ratcheted up after the July downing of a Malaysian jet over rebel-held territory that claimed 298 lives.

A preliminary report by Dutch investigators Tuesday did not apportion blame for the crash but appeared to back claims the plane was hit by a missile.