EU suspends usual business with Russia

Merkel says asset freezes on Russian officials could follow within days.

The European Union today suspended usual business with Russia, in a move that it says was co-ordinated with the United States in a bid to persuade Russia to “de-escalate” the situation in Ukraine.

Russian troops currently control Ukraine’s Crimean peninsula.

In a sign of support for Ukraine’s new government, leaders of the EU’s 28 member states promised at the end of a crisis summit in Brussels that they would sign a political agreement with Ukraine within weeks.

Although Germany’s chancellor, Angela Merkel, and US President Barack Obama said that the EU and US actions were co-ordinated, the EU’s step falls short of the measures taken by the US, which today announced a visa ban on Russian officials “responsible for or complicit in threatening the sovereignty and territorial integrity of Ukraine”.

Before the summit, Russia’s ambassador to the EU had already dismissed the suspension of ‘business as usual’ as a recognition of the de facto state of affairs. The major talks affected are on easing visas for Russians entering the EU and on a long-term agreement to frame the EU’s relations with Russia. Both sets of talks have languished for many years. The last framework agreement expired in 2007, but has been rolled over annually ever since.

However, Merkel made clear that the EU is prepared to move swiftly to match – and possibly go beyond – the US’s response. She said that leaders could within the coming days – possibly at another extraordinary summit or at the next scheduled summit on 20-21 March – decide to freeze the assets of Russian officials and bar them from entering the EU.

The US has yet to announce any freeze on the assets of Russian officials.

A move to freeze assets could also be spurred, Merkel said, by a failure by Russia to respond to a diplomatic initiative on which the EU’s leaders placed great stress, the formation of an international ‘contact group’ that is being created in an effort to spearhead efforts to find a diplomatic solution to the crisis.

In a third phase, further destabilisation of the situation in Ukraine would lead to “additional and far-reaching consequences” for Russia across “a broad range of economic areas”, the EU’s leaders said.

Crimea’s referendum

It is not clear whether a pending referendum ordered for 16 March by the separatist local parliament in Ukraine would trigger EU action. Crimea’s new pro-Russian authorities today brought forward the referendum from 30 March and changed the question, to ask Crimeans whether they wanted Crimea to become part of Russia. Previously, the vote was to have been on greater autonomy in Ukraine. 

However, the EU’s leaders stated bluntly that the referendum was “illegal”, a point that Merkel elaborated upon. She said that the referendum had been called suddenly by a local government, without consultation with the national government “on a basis that is non-existent”.

She continued: “This has nothing to do with reasonable or acceptable referendums…If you then hear that any Ukrainian soldier [in Crimea] is considered to be an occupationist [a description applied by the new Crimean authorities], that appears to pre-empt the results of this so-called referendum. This has nothing to do with what we understand as democracy.”

Support for Ukraine

In two moves to support Ukraine’s government as it struggles to cope with military, financial and political crises, the EU’s leaders promised to sign a political agreement within weeks and lent their support to an €11 billion package of financial support pulled together yesterday by the European Commission.

The political agreement had been readied for signature in November, but the now ousted president of Ukraine, Viktor Yanukovych, baulked at signing just seven days beforehand, under pressure from Russia.

The EU’s leaders decided, however, to de-couple the political deal with Ukraine from its trade element, which had until now been twinned. The trade element was the ostensible cause of Yanukovych’s decision not to put pen to paper, and the benefits of the trade pact for Ukraine – substantial, in the EU’s view – have been the subject of much debate in Ukraine, with Russia insisting that the pact would hurt Ukraine’s economic interests and Russia’s.

The EU says that, without waiting for the trade deal to be signed, it will immediately take unilateral measures to ease Ukrainian businesses’ access to EU markets.

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The course of debate

Today’s agreement on measures against Russia was substantially stronger than seemed likely at the start of the day, as the draft from which the leaders were working was in some respects weaker than the text agreed on Monday by EU foreign ministers.

Officials attribute the discrepancy partly to a desire for a free-flowing debate, and partly to a wish to avoid leaks to the press.

However, they also say that Crimea’s decision to press ahead with a bid to become part of Russia and the US decision to impose visa bans changed the dynamic of the debate.

The draft text gradually became stronger to the point where the discussion became “fiery”, in one diplomat’s words. Poland’s prime minister, Donald Tusk, also referred to the debate as “stormy”.

The initial division – broadly between the EU’s eastern and western halves – gradually shifted, with western European leaders divided among themselves.

Critically, the big old states – France, Germany and the UK – advocated a relatively strong line, a diplomat said. Belgium, the Netherlands, Luxembourg and Austria were among the states that were more reluctant.

The leaders had entered the room with Germany seemingly the leading voice opposed to an immediate suspension of ordinary business with Russia. Germany’s foreign minister, Frank-Walter Steinmeier, had been relatively isolated on Monday in opposing a suspension of the EU’s institutional contacts with Russia.

The prime ministers of Finland and the Netherlands also indicated before the summit began that they were reluctant to take immediate strong measures against Russia. Finland’s Jyrki Kaitanen rejected the idea of economic sanctions, noting that the financial markets have been punishing Russian assets, while the Netherland’s Mark Rutte said that the EU should do everything to give de-escalation a chance, before turning to sanctions.

When forced to clarify his change of position during the summit, Rutte said: “It is a logical development concerning the evolving situation during the day,” an apparent reference to Crimea’s referendum to join Russia. In addition, observers from the Organisation for Co-operation in Europe (OSCE) were today denied entry to Crimea by Russian troops.

Foreign ministers on Monday discussed the possibility of a ban on the sale of arms to Russia, but the debate floundered on the objections of one small country. The results of today’s summit give little hint of an arms embargo.

However, France’s President François Hollande was pressed today to clarify whether his country would follow through on an agreement to supply Russia with warships. He said that France would honour its commitments.

The UK’s prime minister, David Cameron, said that he had “instituted an immediate review of any arms licences from the UK to Russia”, continuing: “I would urge other European countries to do the same.”