An international agreement to avert wider conflict in Ukraine, brokered only five days ago, is teetering with pro-Moscow separatist gunmen showing no sign of surrendering government buildings and Kiev and Moscow trading accusations over who was responsible for killings over the weekend.
Washington, which signed last week’s accord in Geneva along with Moscow, Kiev and the European Union, said it would decide “in days” on additional sanctions if Russia does not take steps to implement the agreement. U.S. Vice President Joe Biden is in Kiev where he is expected to announce a package of technical assistance.
So far, markets’ worst fears have not materialized but with thousand of Russian troops massed on the frontier with Ukraine and deadly clashes between Ukrainian forces and pro-Russian separatists, it would not take much to change that.
The European Commission handed documents to EU member states last week explaining the potential impact on their economies of imposing stricter trade and financial sanctions on Russia. There is talk of an emergency meeting of EU leaders if necessary but building a consensus on tougher measures is tricky in Europe where many countries rely on Russian energy exports.
Polish Prime Minister Donald Tusk has written in the FT, calling on the EU to create an energy union to secure its gas supply because the current dependence on Russian energy makes Europe weak.