Photographer: Jock Fistick/Bloomberg

As Trump Weighs Thaw With Putin, EU Set to Renew Its Blacklist

  • Russian oligarchs Rotenberg, Kovalchuk among people sanctioned
  • EU to extend travel, asset curbs as Trump seeks Russia ties

The European Union plans to renew asset freezes and travel bans against key allies of Russian President Vladimir Putin who are accused of destabilizing Ukraine, at a time when Donald Trump is weighing warmer ties with Moscow.

Arkady Rotenberg

Photographer: Alexander Nemenov/AFP via Getty Images

Four EU officials said member governments intend by mid-March to prolong the sanctions for another six months on more than 100 Ukrainians and Russians. Among them: Arkady Rotenberg, co-owner of SMP Bank and InvestCapitalBank, and Yury Kovalchuk, the biggest shareholder in Bank Rossiya, the Brussels-based officials said. The officials spoke on condition of anonymity because the deliberations are confidential.

Trump, who had a phone call with Putin on Jan. 28, has left open the possibility of easing the U.S.’s sanctions against Russia. Former President Barack Obama drew up the American penalties in coordination with the 28-nation EU after Putin annexed the Ukrainian region of Crimea in 2014 and lent support to separatist rebels.

“The Europeans are waiting to see what hand grenade Trump throws into the Russia-Ukraine pond,” Michael Emerson, a foreign-policy expert at the CEPS think tank in Brussels, said by phone. With the asset freezes and travel bans due to expire on March 15, “European politicians and diplomats will be cautious and stick to the status quo,” he said.

Yuri Kovalchuk

Photographer: Alexander Nikolayev/AFP via Getty Images

The planned renewal of the blacklist highlights the EU’s political commitment to a policy that German Chancellor Angela Merkel and French President Francois Hollande guided in step with Obama. The European sanctions against Russia resemble the U.S. penalties and include a separate set of curbs -- prolonged for another six months just before Trump took office on Jan. 20 -- on Russia’s financial, energy and defense industries.

Read more on U.S.-Russia relations: QuickTake

After Trump’s one-hour call with Putin a week ago, White House press secretary Sean Spicer said no U.S. decision had been made on sanctions against Russia and “that really wasn’t brought up” in the discussion between the two leaders. A Bloomberg survey of 27 economists last month found a 60 percent chance that the U.S. will begin easing sanctions in the next 12 months, compared with a 44 percent likelihood that the EU will do the same.

Trump and his Ukrainian counterpart Petro Poroshenko on Saturday discussed an escalation in fighting in eastern Ukraine and talked about bolstering their partnership, according to a readout of the conversation. “We will work with Ukraine, Russia and all other parties involved to help them restore peace,” Trump said.

Vice President Mike Pence said in an interview with ABC News broadcast on Sunday that the question of whether sanctions remain in place will depend on Russia’s actions and the opportunity to work together on matters such as defeating Islamic State. The U.S. is “very troubled” by fighting in eastern Ukraine and is watching how Russia responds in the months ahead to make a determination on sanctions, Pence said.

As the Republican Party’s presidential candidate, Trump made controversial remarks about Ukraine. In a television interview in late July, more than two years after Russia’s annexation of Crimea, he said Putin is “not going into Ukraine.” Trump also said that he would “take a look” at recognizing the Russian territorial takeover and that, were he to become president, “we’ll have a better relationship with Russia.”

The three-year war in eastern Ukraine between government forces and Russia-backed militants has killed more than 9,600 people. It simmers on because a 2015 peace plan brokered in Belarus by Germany, France and Russia has failed to take hold.

Rising Conflict

On Jan. 30, Poroshenko broke off a visit to Germany after the government in Kiev reported the bloodiest day in 1 1/2 months in the conflict. Three days later, EU President Donald Tusk sounded an alarm about the fighting, referring to “a new level of intensity and brutality” and citing “the continued challenge posed by Russia’s aggression.”

U.S. Ambassador to the United Nations Nikki Haley took a hard line toward Russia on the same day as Tusk did, describing the situation in eastern Ukraine as “dire” and pointing the finger at Moscow. While saying “We do want to better our relations with Russia,” Haley also called for “an immediate end” to the Russian occupation of Crimea.

EU governments have mustered the unanimity needed to introduce sanctions against Russia over its encroachment in Ukraine, expand the measures and renew them a number of times since early 2014. Skeptical member countries such as Hungary, Italy and Cyprus have so far refrained from exercising their veto power.

Legal Challenges

Some of the European penalties have also survived legal challenges. Last November, the EU’s General Court upheld the asset freeze and travel ban against Rotenberg, who had sought to get them lifted.

With the possible thaw in U.S.-Russia relations and continued efforts by Russia to weaken the political consensus behind the European sanctions, the prospect arises of an ever-shakier resolve in the bloc to maintain the measures for much longer.

In an interview published in Austrian magazine Profil this weekend, Russian Foreign Minister Sergei Lavrov opposed the idea that the EU could gradually lift its sanctions while Moscow could ease a tit-for-tat ban on European farm goods. He also said overcoming the “heavy damage” done to U.S.-Russia ties will require a sustained effort.

Putin conferred with Hungarian Prime Minister Viktor Orban in Budapest on Feb. 2. At a briefing by the two leaders, Orban said the European penalties on Russia’s finance, energy and defense industries are the wrong approach to a problem that is “non-economic in nature,” while reiterating the EU line that lifting the curbs requires implementation of the peace accord.

Yet Trump -- who has also questioned the value of the North Atlantic Treaty Organization, predicted more countries will join the U.K. in opting to leave the EU and criticized German economic policy -- could end up strengthening the bloc’s resolve over the sanctions, said Emerson of CEPS.

“The Trump effect also is making many Europeans say ‘We have to try hard to pull together,”’ said Emerson, a former EU envoy to Russia. “That may work.”

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