Sanctions on Russia may be delayed

Moscow backs off its intervention in Ukraine as cease-fire falters

Sanctions aimed at key economic sectors in Russia over its stance on Ukraine might be delayed after positive signals from Russian President Vladimir Putin, according to Obama administration officials.

The United States and its European allies were finalizing a package of sanctions with the goal of putting them in place as early as this week, the officials and others close to the process said on Tuesday. Penalizing large swaths of the Russian economy, including its lucrative energy industry, they would ratchet up the West's punishments against Moscow.

The US and Europe have already imposed sanctions on Russian individuals and entities, including some with close ties to Putin, but have so far stayed away from the broader penalties, in part because of concern from European countries that have close economic ties with Russia.

Common sanctions

But with the crisis in Ukraine stretching on, a senior US official said the US and Europe are moving forward on "common sanctions options" that would affect several areas of the Russian economy. A Western diplomat said those options included Russia's energy industry, as well as Moscow's access to world financial markets.

The US and Europe have been eyeing a European Council meeting in Brussels later this week as an opportunity to announce the coordinated sanctions. However, the enthusiasm for new sanctions, particularly among European leaders, appears to have waned in recent days as countries evaluate whether Putin plans to follow through on a series of promises that could ease the crisis, officials said.

The Russian leader acted on Tuesday to rescind a parliamentary resolution authorizing him to use the Russian military in Ukraine; on Wednesday, the parliament's upper house canceled the resolution. Putin also urged the new Ukrainian government to extend a weeklong cease-fire and called for talks between Ukraine and pro-Russian rebels who are widely believed to be backed by the Kremlin.

Putin's moves came one day after he talked by phone with President Barack Obama, their first known conversation in more than two weeks.

The threat of sector sanctions may be driving Putin to try to avoid penalties that could have a devastating impact on the already shaky Russian economy. However, there were no guarantees that Moscow would be able to convince the West that it is not supporting rebels in eastern Ukraine and is willing to reach a negotiated settlement agreeable to Kiev.

Fragile truce

There were signs on Tuesday of just how fragile the situation on the ground remains. Hours after Putin called for the cease-fire to be extended, a Ukrainian military helicopter was shot down near Sloviansk, killing nine servicemen.

The loss of the helicopter and two other Ukrainian government soldiers prompted Ukrainian President Petro Poroshenko to threaten to unleash a powerful new military campaign in the industrial east.

On Wednesday, an AFP team in Sloviansk heard a wave of shelling launched by Ukrainian forces who have effectively surrounded the devastated city of nearly 120,000 people.

The army's push was met with extended rounds of anti-aircraft and heavy machinegun fire that echoed through deserted city streets.

"This is the calm before the storm that begins once the cease-fire ends," said a 42-year-old rebel who is simply known to his unit as "Oleksandr the Soldier".

Poroshenko's warning of a massive assault dealt a crushing blow to hopes of peace after 11 weeks of fighting that has killed more than 435 people and brought the ex-Soviet nation to the brink of collapse.

Kiev's temporary cease-fire was picked up by separatist commanders on Monday but was due to expire on Friday morning after just one round of inconclusive and indirect talks.

Putin urged both sides to extend the truce and has called on Poroshenko to initiate meaningful negotiations with leaders of the eastern uprising.

AP - AFP