Report: EU readies to add people, firms to Ukraine sanctions list

MOSCOW, Jul 29 (PRIME) -- The European Union is preparing to add at least five individuals and two entities to its Ukraine sanctions list, for the first time targeting oligarchs who the bloc says are supporting or benefiting from the turmoil in Ukraine, E.U. diplomats said, the Wall Street Journal reported late Monday.

The move comes as the E.U. is putting the finishing touches on sectorwide economic sanctions that would target Russia's financial system, place a trade embargo on arms, and restrict exports to Russia of militarily sensitive goods and equipment used in unconventional oil production, diplomats said. The financial sanctions would sharply limit the ability of Russia's largest banks, including Sberbank and VTB Group, to raise financing in the E.U., the diplomats said.

The measures are part of the E.U.'s plans to raise pressure on Russian President Vladimir Putin for Moscow's alleged support of pro-Russian militants in eastern Ukraine. The hope is to deal a blow to the Russian economy and isolate Russia's elite, thus pressuring Putin to stop arms and fighters from flowing across the border into Ukraine's eastern provinces.

But the oligarchs the E.U. is moving to sanction aren't some of the "big fish" that are reportedly close to Putin, diplomats said. Their names will be announced Wednesday, the E.U. said.

The E.U. may target oligarchs thought to be in Putin's inner circle if the West believes Putin continues to destabilize Ukraine despite the sanctions measures that will be announced this week, diplomats said.

The U.S. has already sanctioned some oligarchs, imposing travel bans and asset freezes on men such as Gennady Timchenko, a billionaire Russian oil trader, and the brothers Arkady and Boris Rotenberg, who control some of Russia's biggest construction companies. All three men were reportedly Judo sparring partners of Putin during the 1990s in St. Petersburg.

The U.S. has more freedom to impose sanctions than the E.U., since European courts show less deference than U.S. courts to authorities' justifications for placing people on sanctions lists. Many of the E.U.'s member nations have also been wary of taking a tough line with Putin for fear of retaliation from Russia.

But without the E.U. matching the U.S. sanctions against allegedly well-connected oligarchs, these men are still free to, for example, visit their apartments in London, take their families shopping in Milan or Paris and move their money around the E.U.'s financial system.

European leaders this month expanded the bloc's sanctions to include people who support officials deemed responsible for the turmoil in Ukraine. It remains unclear whether the E.U. will want to use that authority to target oligarchs who sit at the pinnacle of Russian society.

The E.U.'s plans for economic sanctions are also expected to be announced Tuesday or Wednesday, yet governments remain wary of their impact. Among their concerns: Eastern European nations could lose access to military parts needed to maintain their Soviet-era military equipment. That concern may lead to an exemption for countries that need these parts, said one diplomat.

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