By Laurence Norman
BRUSSELS--European Union leaders were set on Saturday to request
new options for stepping up sanctions on Russia, although some
countries remained hesitant about further straining relations with
the Kremlin over the Ukraine conflict.
With pro-Moscow rebels making fresh gains on the ground, a host
of EU leaders, including French President François Hollande, U.K.
Prime Minister David Cameron and European Commission President José
Manuel Barroso said the deteriorating situation in eastern Ukraine
necessitated an EU reaction.
Until 72 hours ago, EU leaders weren't expected to take any
fresh action against Russia this weekend following
Brussels-brokered talks in Minsk on Tuesday between Russian
President Vladimir Putin and Ukraine's President Petro
Poroshenko.
Yet the mood soured significantly as reports emerged--later
backed up by Washington--that hundreds of Russian soldiers had
entered Ukraine.
"I expect the leaders of the European Union member states...to
be ready for a new round of sanctions following the recent
escalation and further destabilization of Ukraine," Mr. Barroso
said after a meeting with Mr. Poroshenko.
Mr. Hollande said the troop incursion will "no doubt" lead to a
new round of sanctions on Moscow. Mr. Cameron said Russia must face
"consequences" if it doesn't pull troops out of Ukraine.
Russia denies sending any troops into Ukraine and says a group
of soldiers arrested by Ukrainian authorities had entered the
country by accident.
President Barack Obama has ruled out a U.S. military response
but said Thursday that Russia's escalating incursion into Ukraine
would bring more costs for Moscow. He said further actions would be
discussed at a NATO summit next week.
EU leaders were meeting in Brussels on Saturday to agree on
their picks for two top EU jobs and to discuss the crisis in
Ukraine and other foreign-policy issues.
Saturday evening, the leaders picked Italian Foreign Minister
Federica Mogherini to be the bloc's new foreign-policy chief. Soon
after, she said continued dialogue with Moscow was important but
acknowledged that, so far, it hadn't yielded results.
The bloc also picked Polish Prime Minister Donald Tusk as the
new president of the European Council, the body which represents
member states. He said the bloc would be |defeated only when it is
divided on the Ukraine crisis.
Meanwhile, Mr. Poroshenko said his government was working on a
fresh peace plan that he hopes to publish in draft form next
week.
While he gave no details, Mr. Poroshenko said he hopes the plan
can form the basis of discussions Monday on a cease-fire between
Russia and Ukraine. He said he still would like to see a political
solution to the escalating crisis.
Russia has repeatedly called on Kiev to end its offensive
against the rebels. Ukraine and its western allies say Moscow must
offer guarantees to stem flows of fighters and weapons across its
border for a sustainable cease-fire to work.
Shortly before Saturday's EU summit started, an updated draft
statement from the leaders said the bloc "stands ready to take
further steps" on sanctions, "in light of the evolution of the
situation on the ground."
The statement requested EU officials "to urgently undertake
preparatory work" on new measures.
EU diplomats said later some leaders were pushing for the EU to
set out a clear timeline for a decision.
Still, some leaders remain cautious about rushing into new
measures against Russia. Earlier this month, Russia banned many
agricultural imports from the EU in retaliation against the EU's
latest restrictions.
Austrian Chancellor Werner Faymann said the bloc should be
"speaking less" about sanctions.
"The effect of sanctions as they have been applied so far hasn't
always produced what some expected," he said.
In July, the EU for the first time agreed broad sanctions
against Russia's financial, energy and defense sectors, the
sharpest steps since Moscow annexed Crimea in March.
Still, there were plenty of exemptions to the restrictions.
Member states were allowed to complete already signed defense
contracts. The financial measures allowed most transactions to
continue and only placed significant restrictions on five
state-owned Russian banks.
The U.S. followed the EU's moves in July by adopting similar
sanctions against Russian banks as well as the energy, arms and
shipping sectors.
Mr. Barroso said the EU would consider additional financial
assistance for Ukraine, on top of the EUR1 billion ($1.31 billion)
Ukraine could receive from the bloc under already earmarked
plans.
Mr. Poroshenko again pushed for military assistance from the EU.
He also said Ukraine will ratify next month a broad political and
trade deal with the bloc that Moscow opposes.
Greg White in Moscow, Sam Schechner in Paris and Frances
Robinson in Brussels contributed to this article.
Write to Laurence Norman at laurence.norman@wsj.com