EU Mulls New Russia Sanctions Over Crimea, Denmark Says

The European Union is considering stepping up its restrictions on business with Crimea to make clear that the bloc doesn’t accept Russia’s annexation of the Ukrainian peninsula, Danish Foreign Minister Martin Lidegaard said.

The EU aims to maintain its existing sanctions regime in general, Lidegaard said in a telephone interview today. Current sanctions need time to take their full effect and therefore there is no need to move to a more intense phase, he said. At the same time, there are steps the EU can take to increase its pressure on Russian President Vladimir Putin over Ukraine, he said.

“When it comes to Crimea, I hope we will be able to agree on some action when it comes to making it very clear that the European Union does not accept the annexation of Crimea and will continue to put sanctions on Crimea in order to show that,” Lidegaard said from Copenhagen.

EU foreign ministers will gather in Brussels on Dec. 15 to discuss Ukraine and other issues, before a Dec. 18-19 meeting of the bloc’s 28 leaders. Draft conclusions for the summit say that “the EU’s policy of not recognizing Russia’s annexation of Crimea and Sevastapol was further strengthened,” signaling moves to resist Russian integration of the territory.

The EU also must tackle the matter of Ukraine’s financing needs, which diplomats say the International Monetary Fund has estimated at an additional $15 billion. These funds must be assembled from a patchwork of sources, such as the U.S. and the EU, coupled with Russian assurances that it won’t seek early repayment of an existing loan.

IMF Talks

Kostiantyn Yelisieiev, Ukraine’s ambassador to the EU, today urged the bloc today to keep “significant sanctions” on the table. Ukraine continues talks with the IMF over its existing aid program and its additional funding needs, with a goal of a deal in early 2015, he said.

“We can speak first about reforms, then about how much these reforms cost Ukraine,” he said.

Lidegaard said the EU needs to shore up the Ukrainian economy and also encourage governance changes to stabilize the country in the long run. For example, he said, Ukraine needs to stamp out corruption in its energy sector to reduce dependence on Russia and attract private investment.

“We need to give solid ground to the Ukrainian economy,” Lidegaard said. “This only makes sense if we at the same time can be sure that the new Ukrainian government will take through and carry out massive reforms.”

Oil Price Impact

Falling oil prices are deepening the impact of the existing sanctions on Russia, Lidegaard said. The point of the sanctions is to put pressure on Putin’s policy and not to encourage a collapse of the Russian economy, he said.

“Keeping the present sanctions regime is also a choice and will have an increasing effect on the Russian economy,” Lidegaard said. “I see no reason to lift sanctions because Russia has not delivered on the ground; I think that it doesn’t make sense right now to increase the level of sanction.”

Denmark will continue to show support to Poland, the Baltic nations and other countries whose security is threatened by Russian incursions into their airspace, Lidegaard said. There so far has been no decision about whether maintaining the Danish land, sea and air presence would require additional funding, he said.

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