World

Europe Adopts Initial Sanctions on Russia Over Ukraine Crisis

BRUSSELS — The European Union agreed on Tuesday to impose a modest first round of economic sanctions against Russia in response to the Kremlin’s recognition of two separatist enclaves in Ukraine and the movement of Russian troops there.

The sanctions, after coordination with the United States and Britain, were designed to bite, but were well short of a potential full package of sanctions that the 27-member bloc is holding in reserve, to try to convince President Vladimir V. Putin of Russia to abandon larger military and territorial aims in Ukraine.

Mr. Putin’s move put the European Union into a quandary — how harsh should initial punitive sanctions be without a clear military confrontation between Russia and Ukraine?

Josep Borrell Fontelles, the bloc’s foreign policy chief, said that sanctions had been agreed upon unanimously at a meeting among its foreign ministers in Paris.

“This package of sanctions that has been approved by unanimity will hurt Russia and it will hurt a lot,” Mr. Borrell said at a news conference.

He had earlier been careful with his words. “Russian troops have entered into Donbas,” he said, referring to the separatist enclaves. “We consider the Donbas part of Ukraine. I wouldn’t say it is a fully fledged invasion, but Russian troops are on Ukrainian soil.”

The European Union has said the bigger sanctions list will follow an “invasion” or “incursion” into Ukraine, but has stopped short of defining that trigger.

It was the kind of careful parsing of facts on the ground that indicated negotiations about sanctions would be a delicate process if the United States and its allies were to keep a unified front — precisely what Mr. Putin seems determined to test.

Prime Minister Boris Johnson of Britain spoke similarly on Tuesday about his country’s plans to impose “just the first of a barrage of sanctions, because we believe there will be more Russian irrational behavior to come.”

And, in an important signal to Moscow, Chancellor Olaf Scholz of Germany said that he would stop certification of the Nord Stream 2 natural gas pipeline, which connects Russia and Germany, bypassing Ukraine, for the indefinite future.

The $11 billion pipeline, which belongs to the Russian state-owned company Gazprom and the Kremlin, is completed. But Mr. Scholz said that he would withdraw an existing government judgment that the pipeline posed no security risks. “No certification of the pipeline can now take place,” Mr. Scholz said. “And without this certification, Nord Stream 2 cannot go into operation.’’

For the moment, the pipeline has been placed in hibernation, where it will presumably stay so long as Russian troops remain in Ukraine. The pipeline is more a question of costs already sunk than of immediate impact, and not using it will, if anything, keep European energy prices high, because the European Union currently relies on Russia for 40 percent of its natural gas.

So far, by keeping Russian troops from crossing the so-called “contact line” between separatist forces and Ukrainian soldiers, Mr. Putin appears to be trying “to navigate below the threshold of tough sanctions,” said Ulrich Speck of the German Marshall Fund, a research organization in Berlin. Mr. Putin’s tactics seem to be “advance, pause, negotiate,” Mr. Speck said.

But Russian troops around Ukraine remain in position for a massive invasion of Ukraine with little notice, said the NATO general-secretary, Jens Stoltenberg, after representatives of the alliance met on Tuesday with Ukrainian officials. “Every indication is that Russia is continuing to plan for a full-scale attack of Ukraine,” he said, adding: “It’s never too late not to attack.’’

If Mr. Putin sends troops beyond the contact line, “then I think it is the full monty of European sanctions,” said Nathalie Tocci, director of the International Affairs Institute in Italy. “But if he just sticks to the occupied areas, then there will probably be a long and potentially divisive discussion.”

The European Union cannot afford not to reach an agreement, Ms. Tocci added. So, if Mr. Putin does not advance further now, it is likely that even Poland and the Baltics, despite their strong views about punishing the Kremlin hard and quickly, will accept a partial set of sanctions, as will Hungary, which is more pro-Russia but has always accepted sanctions against Moscow even while complaining about them.

“The paradox of the situation is that the worse it is for Ukraine, the easier it is for us to stick together,” Ms. Tocci said.

“The E.U.’s sanctions package was carefully assembled to avoid divisions,” said Emre Peker, the Europe director of Eurasia Group, a risk consultancy. “Quick movement on the first set of targeted measures will help bolster unity, while paving the way for more substantial measures with follow-up sanctions.”

What the bloc has approved so far is a partial set of sanctions, mostly linked to the Russian recognition of the separatist enclaves. The penalties do not cover major items like Russian energy companies, which would be more contentious now among member states with varying dependency on Russian natural gas and oil.

The sanctions target 27 individuals and entities, including political, military, business and financial organizations, as well as “propagandists” linked to the recognition decision.

Some of the people and organizations targeted are geographically inside the two enclaves, Donetsk and Luhansk, diplomats said. But the sanctions also target members of the Russian Duma who proposed and voted for the resolution to recognize the enclaves. The diplomats added that the penalties would include European Union-wide asset freezes and travel bans.

The sanctions also prevent Russian state and regional governments, including state banks, from accessing European Union financial and capital markets, freeze the assets of three banks linked to the separatist enclaves and extend trade bans that have been placed on Crimea, the Ukrainian peninsula Russia annexed in 2014.

The sanctions would take effect within 48 hours, E.U. officials said.

Guntram B. Wolff, director of Bruegel, a Brussels-based economic research institution, said, “The main difficulty will be preserving the unity of the E.U. over time.”

“If Russia attacks a country in the center of Europe we have to be prepared to be bold in our response, and that means economic and financial sanctions that are far-reaching and biting,” he said. “It can’t just be a short-term thing for a few months but must be sustained to really increase the cost to Russia. But that means the cost on our side will increase.”

And the cost to Europeans of the penalties on Russia will not be equally distributed, he added. “So the politics of sustaining sanctions will get more difficult over time because of domestic politics and different economic interests,” he said. “In the shock of invasion, we’re ready to be tough. But the real question is will it last more than three or six months. If it lasts two to three years, then it really cripples the Russian economy, and this will be a real problem for Putin — if it holds.”

In general, the European Union can sustain losses more easily than Russia, as the bloc has an economy 10 times as big. Only some 5 percent of the bloc’s exports go to Russia, but about half of Russia’s exports go to the European Union, “so that gives us economic leverage,” Mr. Wolff said.

But there are “a lot of domestic taboos,” he added, especially around energy. “So the real problem for policymakers is to sustain sanctions in the face of domestic pressures and special interests that will oppose these sanctions because of the economic and financial loss.”

Sanctions can seem ineffective in the short run, but if sustained, can do real damage, argued Edgars Rinkevics, Latvia’s foreign minister.

“In a short perspective, sanctions cannot stop Russia from invading Ukraine or doing what they did,” he told the BBC. “But in the longer term, especially those sanctions related to technology and transfers to the financial sector, they will slow down development of Russia and that would actually repeat a kind of Soviet Union experience. Given time, in history, the Soviet Union simply collapsed.”

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