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EU May Avoid Economic Sanctions on Russia, Germany’s Erler Says

May 8 (Bloomberg) -- Russian President Vladimir Putin’s shift of tone on Ukraine’s planned election may make economic sanctions by the European Union unnecessary, said Gernot Erler, the German government’s envoy for relations with Russia.

“This is a new situation,” Erler said in a phone interview today, referring to Putin’s backing yesterday for holding the presidential vote in Ukraine scheduled for May 25. Erler spoke before Putin said in Moscow he was testing the Russian army’s combat readiness.

“You can’t call Russia’s position destructive anymore,” said Erler, the German Foreign Ministry’s coordinator for ties with Russia. “If things stay this way and Russia doesn’t actively try to prevent the elections anymore, there’s no reason to enter into stage three of sanctions.”

Erler’s comments underscore the German government’s reluctance to press for economic penalties on Russia even after pro-Russian separatists took up arms against the Ukrainian government. Chancellor Angela Merkel said in German television interview today that her priority is to ensure the election is held on May 25 and wins “the greatest possible acceptance.”

The EU enacted two rounds of sanctions in March as Russia annexed the Crimea peninsula from Ukraine, starting with a halt to visa and trade talks and moving to targeted asset freezes and travel bans that were later expanded. While divided over how far to go, EU leaders have kept up the threat of a third stage of sanctions with a broader economic impact.

Erler, a Social Democrat whose party is Merkel’s junior coalition partner, welcomed Putin’s call for separatists in Ukraine’s Donetsk and Luhansk regions to postpone autonomy ballots scheduled for May 11.

That’s “a possible indication that Russia isn’t seeking to grab further parts of Ukraine after all,” Erler said. “You can interpret that as change of view. The question now is whether the separatists put off the ballots.”

To contact the reporter on this story: Birgit Jennen in Berlin at bjennen1@bloomberg.net

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net Tony Czuczka

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