Merkel, Juncker Say EU’s Russia Sanctions to Stay–Update

By Laurence Norman, Harriet Torry and Nick Shchetko

German Chancellor Angela Merkel and the new European Commission president said Wednesday there is no prospect of
scaling back sanctions on Russia, maintaining a tough stance after Moscow said it “respected” the results of a vote in
the separatist regions of eastern Ukraine.

Ms. Merkel said in Berlin that the European Union should consider expanding its sanctions list to include those
elected on Sunday. The EU, Kyiv and the U.S. have refused to recognize the elections, and said that Russia’s refusal to
condemn them are a breach of a September cease-fire signed in the Belarusian capital of Minsk.

“We should also have another look at the list of specific individuals who now have responsibility in eastern
Ukraine due to these illegitimate elections,” Ms. Merkel told reporters. “Otherwise I think we should maintain the
sanctions we have.”

In his first detailed comments on Russia since taking over as Commission president, Jean-Claude Juncker said he
sees no need to adjust the bloc’s sanctions against Moscow. He also said he planned a visit to Kyiv to meet with
President Petro Poroshenko for his first bilateral meeting in his new role, though he didn’t give a date.

The continued standoff has suggested any compromise to end the de facto division of Ukraine is remote. Ukraine’s
prime minister said Wednesday that Kyiv won’t pay pensions and other benefits for residents of the regions controlled by
the pro-Russia rebels, though he added it wouldn’t follow through on an earlier threat to cut off gas supplies.

Speaking to a cabinet meeting, Arseniy Yatsenyuk said that “as long as those territories are controlled by all
kinds of impostors, the central budget won’t send funds there.” Instead, the funds would accrue and be released when
Kyiv regains control.

But he said that cutting off gas supplies with winter coming would be inhumane. “Those are our citizens there and
the government won’t let them freeze because that would cause a humanitarian catastrophe.” He said gas bills haven’t
been paid in the regions for months but would continue to accrue.

He put the total value annually of government benefits to the regions at 34.2 billion hryvnia ($2.6 billion).
Ukraine’s government, its economy plunging, is struggling to stabilize its finances.

A rebel spokeswoman said she couldn’t immediately comment on Mr. Yatsenyuk’s announcement.

Despite the cease-fire, fighting has continued almost daily along the 480-kilometer (300-mile) line of contact
between Kyiv and rebel forces and casualties–including among civilians–have mounted.

Two teens were killed and three injured in a shelling of a school playground in Donetsk. The shells were fired from
the “side of the conflict zone,” the city council said Wednesday.

Two Ukrainian servicemen were also killed and nine wounded in the last 24 hours, military spokesman Col. Andriy
Lysenko said. More than 100 Ukrainian servicemen have been killed and more than 600 wounded since the truce was signed,
the Foreign Ministry said.

Kyiv said Tuesday it would repeal a law that had offered special status to the rebel regions under the Minsk deal,
but fell short of separatists’ demands for autonomy. The government also said it would strengthen checkpoints along the
line of contact. Talks mediated by the Organization for Security and Cooperation in Europe continued Wednesday on
formalizing the line.

The organization’s Secretary General Lamberto Zannier said the OSCE was stepping up its presence and monitoring
activities, though they are limited by budget constraints and security concerns.

“Nothing is easy–we don’t have the degree of access we’d like to have in the east,” Mr. Zannier said, noting
recent “very sophisticated” attempts to jam navigation signals of the monitoring mission’s drones.

Ukraine’sDefense Ministry also reported a concentration of Russian fighters and equipment in the separatist
territories, the Interfax news agency reported. Russia has repeatedly denied sending troops or equipment to the region.

EU member states reviewed the bloc’s Russia sanctions package at the end of October but decided not to adjust the
measures. An EU official said the issue of adding names to the sanctions list was discussed at a meeting in Brussels on
Tuesday evening.

An EU analysis says the bloc’s sanctions will have only a modest impact on Europe’s economy this year and next, but
hit Russia’s growth rate harder. The ruble has lost about 25% of its value against the dollar this year, battered by
Western sanctions, a stagnating economy and the falling price of oil.

Viktoria Dendrinou and Matthew Dalton contributed to this article.

Write to Laurence Norman at laurence.norman@wsj.com and Harriet Torry at harriet.torry@wsj.com 


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