Bloc to extend Russia sanctions

Ukraine loan programme under threat: IMF

BRUSSELS, Dec 19, (Agencies): EU member states agreed Friday to roll over for another six months damaging economic sanctions against Russia for its involvement in the Ukraine crisis, EU sources said.

“COREPER agreed to the extension of sanctions against Russia,” one of the sources told AFP, referring to a formal meeting of the 28 country ambassadors to the European Union.

The source, who asked not to be named, said the procedure will close Monday and the formal announcement will be made Tuesday, with the sanctions extended to end-July.

The decision was originally meant to be a formality.

But it ended up delayed by two weeks after several countries, led by Italy, raised questions about the wisdom of punishing Russia while also seeking its help on key international issues, including the Syrian conflict.

Italy has traditionally close ties with Russia and wanted EU leaders at a Thursday-Friday summit in Brussels to discuss the issue, but despite Prime Minister Matteo Renzi’s efforts it was not on the agenda.

Earlier Friday, the European Commission announced another decision likely to cause offence in Moscow, offering short-stay visa-free travel to the EU for Ukraine, Georgia and Kosovo, all embroiled in disputes with Moscow.

Issue

Russia’s own efforts to get visa-free travel, if only for its businessmen, fell foul of the Ukraine crisis, with Brussels suspending talks on the issue in March last year.

The European Union first imposed economic sanctions against Russia after the July 2014 downing of a Malaysia Airlines jet, blamed on proRussian rebels in eastern Ukraine.

Coming up for renewal in early December, EU diplomatic sources told AFP at the time that while there were differences over what line to take, the simplest option was to extend the measures as they were.

Moscow has repeatedly dismissed the sanctions which target its bank, oil and defence sectors as both ineffective and counter-productive to the better mutual understanding the EU says it wants.

The diplomatic sources said that the aim of a straight rollover was to avoid having the issue discussed at the summit for fear differences would surface in public.

Renzi said after the summit Friday that Italy always and still believed that Russian help was needed to solve pressing internatioal issues, such as the Syrian conflict and the terrorist threat of Islamic State.

“I found it surprising that we should want to confirm the sanctions without first having had a little discussion,” he said.

Many eastern European member states are notably more critical of Moscow, fearing Russia’s intervention in Ukraine shows it wants to reassert its Soviet era influence in the region.

In March, EU leaders agreed to link the economic sanctions to Russia’s full implementation of a Ukraine ceasefire brokered by France and Germany in Minsk.

US and EU officials say there can be no let up until Moscow honours its Minsk commitments, especially helping Kiev regain control of its eastern border.

A recent improvement on the ground in eastern Ukraine has seen some more conciliatory language.

Besides the economic sanctions, the EU has imposed a separate travel ban and asset freezes on Russian and Ukrainian individuals blamed for the conflict in eastern Ukraine. These measures run to March.

It has also targeted those involved in Moscow’s annexation of Crimea with similar measures which expire in June.

KIEV:

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The International Monetary Fund (IMF) said on Friday it was concerned by signs parliament might reject a proposed tax code and budget for 2016, warning that this could further disrupt its $17.5 billion bailout programme.

Disagreement in parliament over critical tax reforms and the draft budget has held up the disbursement of a third $1.7 billion tranche from the IMF at a time when divisions in the ruling coalition have raised concerns the government could fall.

The government has sought to compromise on its tax proposals with parliament, but the IMF said lawmakers’ discussions on Thursday amounted to an effective rejection of the reforms required under the IMF programme.

“Approval of a budget consistent with the program objective of reducing the general government deficit to 3.7 percent of GDP is a key condition for the completion of the (IMF aid) program,” the IMF’s first deputy director, said in a statement.

“Approval of a budget that deviates from program objectives for 2016 and the medium-term will interrupt the program and inevitably disrupt the associated international financing.”

The warning follows a visit by US Vice President last week, who in a speech to parliament urged lawmakers to put aside political differences and enact reforms without which he said Ukraine would fail to rebuild itself on transparent, democratic lines.

Nevertheless, subsequent brawls in parliament and spats in Ukraine’s ruling elite showed the deep divisions threaten to derail the reform drive.

On Friday fighting between members of the pro-European coalition in the parliamentary chamber interrupted Yatseniuk’s report on his government’s performance, while on Monday Interior Minister threw a glass of water at Odessa Governor

during a reform council meeting in front of President

With opposition parties calling for a no-confidence motion to be tabled against the government, Poroshenko released a rare joint statement with Yatseniuk and the Speaker, saying the dismissal of the Prime Minister should not be on the agenda at a time when reforms need to be passed.

The failure to pass the tax reforms and budget has held up $2.7 billion in international financing for this year, in addition to the IMF loan tranche.