By Laurence Norman and Matthew Dalton
BRUSSELS--Europe is coalescing behind a plan to impose wider
economic sanctions on Russia as early as Tuesday, European Union
officials said Friday.
The movement came after a meeting of ambassadors from EU member
states to discuss ratcheting up pressure on Moscow because of what
the West says is its support for pro-Russia rebels in eastern
Ukraine.
Herman Van Rompuy, president of the European Council, sent a
letter to EU leaders saying the ambassadors had found "emerging
consensus" on a plan to restrict Russian access to European capital
markets, and an embargo on trade in weapons as well as exports of
militarily sensitive goods and energy-sector technology to Russia.
A copy of the letter was seen by The Wall Street Journal.
The trade embargo won't affect existing contracts, the letter
says. That is important for France, which doesn't want to cancel
the planned delivery of a Mistral warship to Russia scheduled for
the fall. Some Eastern European nations also worried they could
lose access to parts needed to maintain Soviet-era military
equipment.
An export ban on goods with dual civilian-military use will
apply only to Russian military customers at first, the letter adds.
Restrictions on energy technology will apply only to oil-industry
equipment, since the EU depends in particular on Russian natural
gas, the letter says.
"My assessment is that this package strikes the right balance,"
Mr. Van Rompuy wrote. "It should have a strong impact on Russia's
economy while keeping a moderate effect on EU economies."
The expected move to hit the Russian economy with tougher
measures follows the shooting down of a Malaysia Airlines jet over
eastern Ukraine, allegedly by Russia-backed separatists, with more
than 200 EU citizens among the dead.
Late Friday, the European Commission, the EU's executive, said
it had formally adopted proposed legislation for detailing the
sanctions, which will now go to member states for review.
"The final decision now lies with the EU's member states but I
believe that this is an effective, well-targeted and balanced
package providing the flexibility to adjust our reaction to changes
on the ground," said commission President José Manuel Barroso.
Mr. Van Rompuy asked the leaders to direct ambassadors to
approve the sanctions when they meet on Tuesday, avoiding the need
for another high-level summit. The European Council represents
member state governments in Brussels.
The EU on Thursday agreed to add 18 entities to its sanctions
list, including the separatist groups People's Republic of Luhansk
and Donetsk People's Republic and some Crimea-based companies that
benefited from the Russian annexation of the region, diplomats
said.
Also targeted were 15 individuals, including the chief of the
Federal Security Service, the KGB's successor agency, EU diplomats
said.
EU officials said their names were to be published late Friday
in the bloc's official journal, after which the visa ban and asset
freeze takes immediate effect. However, the publication was delayed
because of technical reasons, officials said.
The EU also agreed Thursday to clear the way for sanctions on
people they determine to be actively supporting Russian decision
makers on actions in Ukraine, including the annexation of Crimea in
March. That could include Russian oligarchs close to the Kremlin
and more of Russian President Vladimir Putin's senior advisers and
aides.
People familiar with the discussions said the ambassadors wanted
to focus Friday's discussions on the broader economic sanctions
before opening a fresh debate over who else to target among Mr.
Putin's inner circle. However Mr. Van Rompuy said in his letter the
additional targeted sanctions would be ready for adoption by
Monday.
One of the issues that governments will need to address is how
to scale up or down the sanctions as the situation in Ukraine
changes. The draft legal decisions won't set out any detailed
conditions, officials said, leaving such delicate political
decisions as they arise to member states.
The proposals for economic sanctions, described in a document
distributed to member states and seen by the Journal on Thursday,
include investment restrictions and a prohibition on listing
Russian financial instruments on European markets or
exchanges--measures that could hit Sberbank, Russia's largest bank
and one of the biggest in Europe.
Russian financial institutions that are more than 50%-owned by
the Russian government would also be subject to the restrictions,
the document says. Those financial institutions raised EUR7.5
billion ($10 billion) in bonds from EU capital markets in 2013, 47%
of all the bonds they issued, the document says. EU citizens would
be forbidden from buying their equity or debt with a maturity
longer than 90 days.
Write to Laurence Norman at laurence.norman@wsj.com and Matthew
Dalton at Matthew.Dalton@wsj.com