Merkel Sees EU Unity on Russia Sanctions as Cyprus Warns of Cost

German Chancellor Angela Merkel said the European Union will agree on further sanctions on Russia if needed as the Cypriot president cited risks to his country’s economy, exposing EU discord in the Ukrainian crisis.

Cypriot President Nicos Anastasiades pointed to his country’s dependence on Russian financial flows after talks with Merkel in Berlin today. Merkel suggested the 28 EU member countries may face “difficult negotiations” on sanctions policy, “but we will be able to take action.”

“It would be a unanimous decision,” Merkel said at a joint news conference. “We know that each country has its own level of dependence. We have to show that we can take action, though we also have to look at the impact it has on each country.”

As Ukraine’s conflict intensifies in the buildup to elections on May 25, Merkel reinforced her dual message that Europe must be ready to punish Russia economically while seeking a diplomatic solution in Ukraine, where the interim government is struggling to restore control over parts of its east and south from pro-Russian separatists.

Russian energy and retail companies have moved tens of billions in corporate assets to Cyprus, making the Mediterranean country vulnerable to economic sanctions. While the Cypriot economy is recovering after receiving a euro-area bailout package last year, that would be at risk if the EU tightens the vise on Russia, Anastasiades said.

“Unfortunately, Cyprus is very dependent on Russia,” he said though a German interpreter. “Each country should have the option of taking the measures it deems necessary that don’t harm its economy.”

Merkel said it would be “a shame” if Russian President Vladimir Putin attended a military parade in Crimea marking the 1945 Soviet defeat of Nazi Germany on May 9. She said she attended the commemoration in Russia four years ago to acknowledge the suffering caused by Germany during World War II and to “show that we’ve understood history and it won’t be repeated.”

“I’d find it a shame if such a day were to be used to hold a parade in the context of such conflict,” Merkel said, referring to Ukraine and Russia’s annexation of Crimea.

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