European Union leaders put off further sanctions on Russia after President Vladimir Putin showed a willingness to work with Ukraine’s new leader.
An EU summit in Brussels focused on aiding Ukraine’s economy and helping President-elect Petro Poroshenko stabilize the country, which has been rocked by pro-Russian insurgencies in the south and east. Russia has said it will respect the vote and has pulled some of its troops from Ukraine’s border.
“The possibility of de-escalation is here, finally,” French President Francois Hollande told reporters early today after the summit ended. ``But we still need this strict reminder.''
An EU blacklist has hit 83 Russian and Ukrainian officials and two companies, to punish profiteers of Ukraine’s old regime and the Kremlin for annexing Ukraine’s southern Crimea region and stirring up trouble in the east of the country.
In their final statement, leaders noted the EU was working on “possible targeted measures” and agreed “to continue preparations for possible further steps on that basis should events so require.”
Russia has yet to cross over the line that would trigger “stage three” sanctions -- EU code for broader economic penalties that could restrict investment or trade with Russia.
“No one will opt to impose new sanctions right away but we should unanimously say that Europe is ready for further sanctions if Russia doesn’t give up its policy to support separatists,” said Polish Prime Minister Donald Tusk, whose country shares a border with Ukraine.
Ukraine’s bonds headed toward the biggest monthly rally in four years amid expectations that the billionaire Poroshenko will put the economy on a firmer footing and ease tensions with Russia.
Gross domestic product may shrink 7 percent this year, the European Bank for Reconstruction and Development says. Ukraine’s banks need at least 50 billion hryvnia ($4.2 billion) in fresh capital, central bank Governor Stepan Kubiv said May 16.
The EU released 100 million euros ($136 million) of budgetary aid for Ukraine on May 20, the first installment in a seven-year package of loans and grants that could amount to as much as 11 billion euros.
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