Europe On Course to Renew Russia Sanctions Over Ukraine

By Laurence Norman in Brussels and Laura Mills in Kyiv, Ukraine

The European Union is heading toward extending economic sanctions imposed on Russia over the Ukraine crisis despite
efforts to improve ties with Moscow in the aftermath of the Paris attacks, EU officials and diplomats say.

The apparent willingness to renew the sanctions, which expire in late January, suggests that while France is
pushing to deepen cooperation with Russia in fighting the Islamic State extremist group, clear limits remain on any
rapprochement.

EU officials say there is little appetite in key capitals, including Berlin, London and Paris, to win Russian help
in Syria at the expense of Ukraine, where officials fear that a rapprochement between Moscow and the West over Syria
could come at their expense.

“Any shift in the current U.S. and European position on Ukraine would be extremely detrimental not only for Ukraine
but for Europe,” said one person close to the Ukrainian government.

Fighting has flared up again with Russia-backed separatists in eastern Ukraine following a roughly two-month lull,
while progress toward a political resolution has been slow on all sides.

Over the weekend, six Ukrainian soldiers were killed in fighting with separatists in the eastern Donbas region, but
the violence was overshadowed by the spectacular terror attacks in Paris, which France has blamed on Islamic State.

Russian President Vladimir Putin has emerged as a leading figure in talk of a combined global effort against
Islamic State in its base in Syria and elsewhere. Ukrainian officials fear Moscow may exploit that cooperation to
undermine U.S. and European support for their country.

“The Russian strategy is to create the perception that the West doesn’t care about Ukraine anymore,” said Dmytro
Kuleba, ambassador-at-large for Ukraine. It is a clear narrative they are using: ‘Let’s put Ukraine aside, let’s fight
terrorism.'”

The EU imposed economic sanctions on Russia in two stages in the summer of 2014 in response to Moscow’s annexation
of Ukraine’sCrimea region and its support for separatists in eastern Ukraine. Russia has denied Western charges that it
supplied and directed the rebels.

The sanctions, which were renewed for another six months this summer, include restrictions on defense and energy
business ties and prevent state-owned banks, energy and defense companies from raising money in European financial
markets. Washington has adopted similar measures.

EU leaders are expected to discuss the sanctions at their mid-December summit unless the issue is resolved before
then, as happened in June. Any decision must be backed by all 28 member states.

Officials say three options are being floated: extending the sanctions again by another six months, a one-year
rollover or a shorter three-to-four month extension to signal to Moscow the bloc’s recognition of some concessions over
Ukraine.

Russia this week made a surprise proposal to restructure Ukraine’s debt coming due next month, offering a potential
solution to a standoff that has threatened to complicate an international bailout of Ukraine.

Moscow lent Ukraine$3 billion under the country’s previous, pro-Moscow president in 2013. The proposal to the
International Monetary Fund was that Kyiv repay $1 billion each year from 2016 to 2018. Russian Finance Minister Anton
Siluanov said Wednesday that Moscow wants the European Union, the U.S. or a major international bank to serve as a
guarantor.

However, Ukrainian Finance Minister Natalie Jaresko said Wednesday that Kyiv still hasn’t received any official
proposal, Interfax news agency reported.

People familiar with the discussions in Brussels said there is broad agreement that economic pressure should be
kept on Russia until the peace plan brokered in Minsk, Belarus, in February is fully implemented.

Along with the renewed violence, the movement of international observers in eastern Ukraine remains restricted. Few
expect Kyiv to regain control of the border with Russia in separatist regions by the Dec. 31 deadline.

In Kyiv, the party backing the president has occasionally struggled to muster the necessary votes to pass required
legislation, such as amendments to the constitution that would devolve greater powers to local governments.

European Council President Donald Tusk, a high-ranking EU official, said this month that despite “some progress
over the past weeks, it is clear that the Minsk agreements are not yet fully implemented.

“This will need to be reflected in the upcoming review of our sanctions, ” he said.

Latvian Foreign Minister Edgars Rinkevics said in a telephone interview Wednesday there was no discussion at
Monday’s EU foreign ministers meeting in Brussels about re-examining the sanctions to encourage Moscow to cooperate on
Syria.

A senior EU official said there was no sign that the consensus behind extending the sanctions was starting to
crack. “There is a general feeling right now that the sanctions should be rolled over,” he said.

U.S. resolve has also stayed firm, officials say. On Sunday, on the sidelines of the Group of 20 meeting in Turkey,
President Barack Obama discussed sanctions in a meeting with the French, German, Italian and British leaders.

The White House said leaders “reiterated that sanctions against Russia must remain in place until full
implementation of the Minsk agreements is achieved.”

U.S. Assistant Secretary of State Victoria Nuland said in Berlin on Tuesday that sanctions against Moscow should be
rolled over and pledged ongoing support for Kyiv should it “continue to live up to its promises to its own people and
maintain the trust of the international community.”

Vice President Joe Biden will make his fifth visit to Ukraine in December, and the U.S. recently announced a $1
billion loan guarantee pending certain reforms.

But diplomats have also voiced concerns over ongoing corruption in Ukraine, particularly in law-enforcement
agencies that have failed to bring any high-profile corruption cases to court.

The increasingly fractious parliament also has threatened to undo measures that are key to its $40 billion bailout
package from the IMF.

“Syria will create more pressure on Kyiv’s narrative of punishing Russia for Crimea and Donbas, and will put more
focus on inactions at home,” said Balazs Jarabik, a visiting scholar at the Carnegie Endowment.

“The support is not going to fade away and the sanctions on Russia are not going to be withdrawn anytime soon,”
said Mr. Jarabik. “But the moment there is a bigger focus on Ukraine instead of Russia, that is the moment the West is
going to start getting disillusioned.”

Andrey Ostroukh in Moscow contributed to this article.

Write to Laurence Norman at laurence.norman@wsj.com and Laura Mills at moscowbureau@dowjones.com 


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