Germany Limits Outlook for EU Accord on Punishing Russia

Germany and the U.K. sought to limit expectations that European Union foreign ministers will agree on punishing Russia for its alleged role in the shooting down of a Malaysian airliner over Ukraine.

German Foreign Minister Frank-Walter Steinmeier said the EU’s 28 member states have to “increase pressure” on Russia, though “it’ll be no easy meeting” tomorrow in Brussels. A U.K. official, speaking on condition of anonymity because the discussions were private, said the Dutch government had requested the EU delay actions that might provoke Russia until the bodies of passengers and crew on flight MH17 are recovered.

“I don’t fundamentally expect that there will be a decisive resolution tomorrow on the larger dispute” on ratcheting up pressure, Steinmeier told reporters in Berlin today. “Decisions over sanctions aren’t a replacement for a political process, rather they’re an attempt to accelerate it.”

Turning anger over the downing of a Malaysian jetliner into further sanctions on Russian President Vladimir Putin is an elusive task for the EU ministers. In Germany, Chancellor Angela Merkel hasn’t publicly said whether she favors expanded penalties and Steinmeier said a cease-fire in Ukraine is the main goal.

‘Cronies and Oligarchs’

In Parliament in London today, Prime Minister David Cameron raised the prospect of a European Union-wide block on defense exports to Russia, as well as targeted sanctions against the “cronies and oligarchs” around Putin. Asked about a 1.2 billion euro ($1.6 billion) French contract to sell two Mistral-class helicopter carriers to Russia, Cameron said it was “unthinkable” such a deal should now go ahead.

“President Putin faces a clear choice in how he decides to respond to this appalling tragedy,” Cameron said. “If he does not change his approach to Ukraine in this way then Europe and the West must fundamentally change our approach to Russia. Those of us in Europe should not need to be reminded of the consequences of turning a blind eye when big countries bully smaller countries.”

German Economy Minister Sigmar Gabriel said the risk that sanctions might harm trade with Russia shouldn’t be a barrier. The threat of full-scale economic sanctions on Russia isn’t having a “quantifiable impact” on the German economy, Gabriel told reporters.

Immediate Focus

The U.K. official said the immediate focus for EU countries was the recovery of bodies, and persuading Russia to apply pressure on Ukrainian separatists to facilitate this. According to Malaysian Air, 211 EU citizens were killed in the crash, 193 of them Dutch, 10 of them British, and four each from Germany and Belgium. The official said the U.K. would want to return to the issue once the bodies were recovered if Russia’s behavior remained unchanged.

“The impact on the German economy is the uncertainty and that means companies hold back with investments,” Gabriel, a Social Democrat who is vice chancellor, told reporters. “But the economic aspect isn’t decisive; it’s secondary. What’s decisive is ending the civil war in Ukraine.”

Malaysian Prime Minister Najib Razak said rebels in eastern Ukraine agreed to hand over bodies of crash victims and grant access to the site where the plane was brought down on July 17.

Refrigerated train cars carrying corpses and body parts of crash victims will be moved to the Ukrainian city of Kharkiv, where Dutch representatives will take control, according to Najib. Rebels had been preventing their departure, Ukrainian authorities said.

Steinmeier decried the “inhuman” treatment of the victims’ remains and the rebels’ refusal to turn over the bodies to international observers.

“None of this is acceptable, and indicates in all clarity what kind of people we’re dealing with,” Steinmeier said at the press conference alongside his Hungarian counterpart, Tibor Navracsics.

Before it's here, it's on the Bloomberg Terminal.