UKRAINE CRISIS | EU vows more Russia sanctions if conflict worsens

European Union leaders agreed to impose tougher sanctions on Russia, possibly targeting energy and finance, if the conflict in Ukraine worsens.
Leaders early yesterday gave the European Commission a week to deliver proposals for the penalties. The EU left open the precise trigger for further sanctions, contrasting with a four-point ultimatum issued to Russian President Vladimir Putin on June 27 that preceded the latest curbs.
“The situation has very much escalated over the last two days and if this continues we will decide on further sanctions within the week,” German Chancellor Angela Merkel told reporters after the summit in Brussels.
The meeting took place as Ukraine’s armed forces are retreating in some areas after NATO said Russia deployed troops and advanced equipment in Ukraine. “We have many places where the situation is difficult now,” Oleksandr Danylyuk, an adviser to Ukraine’s defense minister, told reporters in Kiev Saturday. Russia denies that it’s involved in the fighting in eastern Ukraine.
“We are close to the point of no return,” Ukrainian President Petro Poroshenko told reporters at the EU summit. “Thousands of foreign troops and hundreds of foreign tanks are now on the territory of Ukraine.”
Earlier, EU leaders selected Polish Prime Minister Donald Tusk as the bloc’s next president and Italian Foreign Minister Federica Mogherini as chief diplomat after a bitter contest that showed the 28-nation EU’s divisions on how to deal with the Kremlin. Tusk has pushed for tougher sanctions on Russia while Mogherini has favored diplomacy. Leaders also met with Poroshenko.
The EU and the U.S. have already slapped visa bans and asset freezes on Russian individuals and companies, and since July have imposed steadily tougher sanctions targeting the country’s energy, finance and defense industries.
Merkel said the EU is looking at more measures to target Russia’s energy and finance industry.
Leaders disagreed about possible military assistance to Ukraine, with Lithuanian President Dalia Grybauskaite telling reporters before the meeting: “We need militarily to support and send military materials to Ukraine.”
Merkel said she opposes sending arms to Ukraine because it would be a signal the conflict has a military solution. “But I don’t think that,” she said.
Fighting continued Saturday across easternmost Ukraine with “intense” battles in the Donetsk districts of Petrovsky and Kuibyshevsky, the city council said on its website.
Ukrainian soldiers are withdrawing from a rebel encirclement near Ilovaysk, the Interior Ministry in Kiev and Ukrainian military spokesman Andriy Lysenko said.
Government forces destroyed five separatist military vehicles and six Grad multiple rocket launchers. A Ukrainian Su-25 ground attack plane was shot down by a Russian missile, the Defense Ministry said in a Facebook posting.
The death toll in the conflict is almost 2,600, the United Nations said. A total of 765 Ukrainian troops have been killed in the fighting, the government said. Seventy-five rebels have been killed in the past 24 hours, Lysenko said. Bloomberg

Ewa Krukowska, Ian Wishart, Jonathan Stearns and Andrew Frye