New EU sanctions against Moscow due to be announced on Monday will likely limit access to financial markets by Russian oil companies Rosneft and Transneft plus the petroleum unit of gas giant Gazprom, diplomatic sources said. Since the three companies are more than 50-percent state-owned, they "meet the criteria" laid down in a tough new package of economic sanctions against Russia agreed by officials Friday, one source said.
The new sanctions build on those agreed end-July when European Union leaders, stung into action by the shooting down over Ukraine of a Malaysia Airlines plane, decided to target whole economic sectors on top of travel bans and asset freezes against individuals.
Crucially, the July sanctions meant Russian entities would no longer be able to raise fresh funds on EU financial markets with a maturity of more than 90 days. It is widely expected this could now be cut to as little as 30 days in the new measures, tightening the screws on state-owned Russian banks at a time when the economy is already struggling.
That could force the Russian government "to put its hand in its pocket," to make up the funding shortfall, the source said. With the new package agreed by officials on Friday, the 28 EU member states are now discussing the measures, with their formal approval expected later Monday.
A deadline for European capitals to confirm their approval was extended by three hours to 1600 GMT because "we didn't receive all 28 faxes" by the earlier cut off-point, an EU diplomat said, adding however that was "not unusual". The negotiations over the sanctions have already taken more than a week, with eastern European members the Czech Republic and Slovakia having lobbied Brussels to soften the new measures.
The new sanctions would come into effect once published in the EU's Official Journal, which a European Commission spokeswoman said would happen on Tuesday "at the latest." US President Barack Obama and British Prime Minister David Cameron both said on Friday the sanctions should go ahead in spite of a cease-fire signed between the pro-Russian rebels and Kiev the same day.
However, the sanctions could be lifted if Russia reversed course in Ukraine, cutting support for the rebels and supporting a peaceful solution to a conflict which has cost more than 2,600 lives. The new measures target more people linked to the rebel leadership in the Donbass region of eastern Ukraine, the government of Crimea which was annexed by Russia in March, and Russian "decision-makers and oligarchs," EU heads Herman Van Rompuy and Jose Manuel Barroso said on Friday.
They cover the same four areas as the previous set in July - capital markets, defence, dual-use goods with both military and civilian capabilities, and oil technology, Van Rompuy and Barroso added. Russian Prime Minister Dmitry Medvedev warned that Moscow could retaliate against any new western sanctions and may block commercial flights through its airspace.