By Laurence Norman
BRUSSELS--European Union leaders agreed late Saturday to draw up
options within a week for possible new sanctions against Russia,
with action to follow quickly unless Moscow takes clear steps to
scale back its intervention in Ukraine.
European Council President Herman Van Rompuy said the bloc
wouldn't set out specific criteria for triggering fresh sanctions
but said there was "determination" to ensure Russia paid an
appropriate price for heightening tensions.
"I can assure you that everyone is fully aware that we have to
act quickly given the escalation on the ground," he said at the end
of a summit of European leaders.
In a statement, EU leaders said the bloc "stands ready to take
significant further steps in light of the situation on the ground."
They also requested the Commission to present an option to slap
sanctions on "every person and institution" dealing with rebel
groups in the Donbas region of eastern Ukraine.
A fresh move to tighten sanctions against Russia will fuel
tensions between Brussels and Moscow and could lead to retaliation
from Russia, which denies it has sent troops into Ukraine. Earlier
this month, Russia banned imports on a wide range of food and
agriculture products from the EU in response to Western
sanctions.
Some in the EU, whose economy is still in a fragile recovery
after a long financial and debt crisis, have also warned that
tougher sanctions could make it harder for the bloc to find a
political solution to the crisis.
There was no immediate reaction to Saturday's EU decision from
Russian officials in Brussels.
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 his Ukrainian counterpart, Petro
Poroshenko.
The mood soured significantly as reports emerged that hundreds
of Russian soldiers had entered Ukraine.
With pro-Moscow rebels making fresh gains on the ground, a host
of EU leaders said Saturday the deteriorating situation in eastern
Ukraine necessitated an EU reaction.
German Chancellor Angela Merkel said sanctions were inevitable
if the situation doesn't improve significantly. "Should the
situation stay as we see it today, or should there be further
escalation, sanction in the areas the commission has looked at up
until this point, such as on the energy and financial sector, will
be heightened."
U.K. Prime Minister David Cameron said it is "totally
unacceptable" that there are Russian soldiers in Ukraine "and we
have now set out a timetable for further sanctions...and that's
important."
French President François Hollande said there would have to be
another meeting either of senior EU officials to sign off any new
measures. Both he and Ms. Merkel talked down the prospect of the
bloc meeting Ukraine's request to send military equipment to
Kiev.
"One can't think it would be fruitful, useful," Mr. Hollande
said. "What we're asking for today is a cease-fire--not to sustain
the conflict, but to end it."
Mr. Poroshenko, who also attended Saturday's gathering in
Brussels, announced his government was working on a peace plan but
warned that the Ukraine crisis could soon reach "the point of no
return."
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.
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.
The EU has significant energy, financial and commercial links
with Russia and some member states have been cautious about
heightening tensions with Moscow.
Austrian Chancellor Werner Faymann was one of several leaders
Saturday to question whether sanctions would have any impact on Mr.
Putin. In the past Mr. Putin has appeared to exploit those
divisions, taking steps to temporarily ease tensions to avoid
tougher sanctions.
On Saturday, as fresh news came from Kiev of rebel gains on the
ground, Mr. Poroshenko said he hopes the peace plan that's being
drafted 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, which says a group of soldiers arrested by Ukrainian
authorities had entered the country by accident, 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.
Greg White in Moscow, Sam Schechner in Paris and Frances
Robinson in Brussels contributed to this article. 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