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​Leaked: EU to cut loans and investment for Russia, punish Crimea

Published time: July 16, 2014 14:10
Reuters/Thierry Roge

Reuters/Thierry Roge

EU leaders may impose a new round of sanctions against Russia at Wednesday’s summit, including blocking trade and investment in Russia and Crimea, according to media sources that have obtained a copy of a draft statement.

EU leaders may impose a new round of sanctions against Russia at Wednesday’s summit, including blocking trade and investment in Russia and Crimea, according to media sources that have obtained a copy of a draft statement.

Unsatisfied with Russia’s role in calming down anti-Kiev separatists in eastern Ukraine, the EU is poised to dole out more sanctions on Russia, according to a number of media outlets who have seen a draft version of the summit communique.

New sanctions may include expanding the blacklist of Russian companies and individuals to match the US, trade barriers, more asset freezes, and economic relations with Crimea.

The EU may expand asset freezes and target companies "that are supporting materially or financially actions undermining or threatening Ukraine's sovereignty, territorial integrity and independence," the statement says, Bloomberg reports.

The EU may refuse any Russian participation with the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD), cutting off all new project funding.

Suspending lending from these institutions would hurt Russia, the biggest loan recipient from the London-based EBRD. Last year Moscow received $2.5 billion (1.8 billion euro) in investments from the EBRD and $1.4 billion (1 billion euro) from the EIB.

Russia used the money to finance a variety of projects: from pipeline valves, property purchases, and a loan to a hypermarket chain. There are two Russian projects currently awaiting funding from the EBRD, one a 300 million euro plan to promote energy efficiency, and the other a $180 million loan to lease agricultural and forestry equipment.

The EBRD invests about 9 billion euro annually across Europe, central Asia and North Africa, and is more than 50 percent owned by the G-7 nations and Canada. The US has a 10 percent stake in the institution, and Russia has 4.05 percent. The bank has a total of 64 shareholders.

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Calls on Russia halt interventions in Ukraine “have not been fully met,” the draft says, according to Bloomberg.

Europe has much stronger economic and energy ties with Moscow than the US. Powerhouse economies like Germany, France, and Italy have all been wary of burning economic bridges with Russia, fearing business and growth will suffer.

Angela Merkel, the German chancellor, has said Europe won’t ease off on sanctions.

The summit on Wednesday is primarily tasked with filling key EU jobs, and notably to name a new foreign policy chief to replace Catherine Ashton.

Speaking at the BRICS summit in Brazil, President Putin suggested the five-nation bloc come up with a way to protect against sanctions and US-driven foreign policy.