A Vienna branch of Sberbank, Russia's largest state-owned bank, which would be covered

Although a large chunk of Brussels officialdom has already cleared out for the summer break, the 28 ambassadors to the EU will be busy this week finalising highly-anticipated sanctions against Russia.

On Monday, they will for the first time be adding “cronies” of Russian president Vladimir Putin to the EU’s sanctions blacklist, and then on Tuesday is the main event: deciding whether to move forward with “phase three” sanctions – measures against entire sectors of the Russian economy rather than just targeting individuals or “entities”.

Over the weekend, national governments reviewed legislation prepared by the European Commission that will be debated during Tuesday’s session. As we reported in today’s dead-tree edition of the FT, we’ve been able to secure a copy of the draft sent to national capitals and have posted relevant excerpts below. Read more

Russian president Vladimir Putin, left, with Van Rompuy at a January summit in Brussels

After weeks of equivocation that made it appear the EU might never move to “phase three” sanctions against Russia – which would target entire sectors of the Russian economy rather than just individuals and “entities” – on Friday things began to move very quickly.

First, EU ambassadors (known as Coreper in euro-speak) tasked the European Commission with drawing up the legislation needed to approve the new sanctions, which would go after the Russian financial, energy and defence sectors. Details of what the sanctions are expected to look like are here.

Then, late on Friday, Herman Van Rompuy, the European Council president, sent a letter to all EU prime ministers urging them to quickly endorse the sanctions package, and to give their EU ambassadors the authority to sign off on them Tuesday. Some countries have been calling for an emergency summit of leaders to approve them, but Van Rompuy clearly wants to move faster. The text of the Van Rompuy letter, obtained by the Brussels Blog, is here:

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Vladimir Putin, the Russian president, chairs a security council meeting at the Kremlin this week

Although the sanctions options paper prepared by the European Commission for today’s meeting of EU ambassadors offers up five different sectors of the Russian economy for possible restrictions, a full two pages of the ten-page document obtained by Brussels Blog focuses on the financial industry.

As we reported here this morning, the main financial proposal would bar all “EU persons” from investing in debt or equity sales made by state-owned Russian banks, which constitute most of the largest financial institutions in the country.

As is our practice, we thought we’d provide a bit more detail on the proposal here on the Blog. The health warning that needs to be attached to this plan, however, is that the likelihood of it being actually adopted remains slim. Thus far, only a small hard-core group of EU countries have supported moving to “phase three” sanctions, which hit entire Russian economic sectors rather than just targeted individuals. Sanctions need unanimity from all 28 EU countries to be enacted.

The meat of the capital markets proposal is pretty straight forward: if a Russian bank that is more than 50 percent owned by the government issues stock or bonds, no European can participate. As part of its impact assessment, the document estimates that between 2004 and 2012, $16.4bn was raised by Russian state-owned financial institutions through IPOs in EU markets. And in 2013 alone, about 47 per cent of all bonds issued by those banks — €7.5bn out of €15.8bn – were issued in the EU.

Here’s an excerpt of the proposal:

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Sweden's Carl Bildt, centre, and Lithuania's Linas Linkevicius, left, urged an arms embargo

Trying to keep track of what the EU has agreed – or, in some cases, has agreed to consider – on sanctions against Russia is nearly impossible for those not following the machinations up close because the terminology and targets keep changing.

Tuesday’s meeting of EU foreign ministers was just the latest case in point. Some measures were “accelerated”, others were expanded, and still others were put off until a Thursday meeting of EU ambassadors. No new sanctions were agreed, but the nuances could prove important down the road.

According to EU diplomats, some of this lack of clarity is intentional obfuscation. The initial outline of how the EU would gradually ratchet up sanctions has proven politically unworkable, so those negotiating have consciously attempted to blur lines and shift focus to make it easier to get unanimous agreement on the next steps. Read more

A pro-Russian militant stands guard at a checkpoint outside Donetsk earlier this week.

UPDATE: We’ve now posted the draft communiqué on Ukraine. You can read it here.

Today’s special EU summit was originally called to hash out nominees for the remaining jobs atop the big Brussels institutions – the European Council president, the EU foreign policy chief and the chair of the eurogroup of eurozone finance ministers. But recent events in Ukraine have pushed Russia policy back onto the agenda.

According to a draft of the summit communiqué obtained by Brussels Blog – which was pulled together at a marathon session of EU ambassadors on Tuesday – EU leaders could go beyond so-called “phase two” sanctions, which involve targeting individuals for travel bans and asset freezes. But it won’t be all the way to “phase three”, which constitutes sanctions on entire sectors of the Russian economy.

The new intermediate phase, which diplomats say is an intentional blurring of phase two and three, would focus on four elements. First, the EU would cut all new project funding for Russia from the European Investment Bank and caucus together to prevent similar investments from other international organisations where EU countries are members – particularly the European Bank of Reconstruction and Development. Other international financial institutions are not mentioned by name, but diplomats said the World Bank was raised during deliberations. The draft language now looks like this:

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Thorning-Schmidt, left, and Merkel at last week's EU summit. Is the Danish PM's star falling?

With Jean-Claude Juncker’s confirmation as European Commission president by the European Parliament in two week’s time something of a foregone conclusion, attention in Brussels corridors has turned to the other two top jobs that are due to be decided at a special summit July 16: European Council president and High Representative for foreign affairs.

According to officials and diplomats, there was much discussion of candidates’ names on the sidelines of last week’s EU summit, and while two weeks is a long time in politics, a few trends are emerging:

1. Momentum to get a centre-left candidate into the European Council presidency is stalling. Going into last week’s summit, it was widely assumed that because the centre-right European People’s party (EPP) got one of their own atop the Commission, the Council job would go to the centre-left Party of European Socialists (PES). But that conventional wisdom has changed. Read more

Van Rompuy meeting with Britain's David Cameron at Downing Street on Monday

The less-watched parallel process to selecting the new head of the European Commission has been Herman Van Rompuy’s effort, backed by several member states, to come up with a work programme for the new commission president that will lock him in for the next five years when it comes to policy programmes and priorities.

Even though advocates of such an idea appear to be pushing the same policies that are mentioned in nearly every EU summit communiqué, several countries – including strange bedfellows like the Netherlands and Italy – have argued such an agenda is in some ways more important than the leader who takes over the commission in November. They insist it will enable Europe’s prime ministers to put their stamp on the next commission and its priorities after the European Parliament was seen to have dragged the current one around.

As a first step towards agreeing such a programme, Van Rompuy, the outgoing European Council president, on Monday circulated a four-page “strategic agenda” for the new commission, which he hopes to get agreed at this week’s high-stakes EU summit. We wrote about it here, but as usual for readers of Brussels Blog, we’re providing a bit more detail for those more interested, including a copy of the document, which we’ve posted hereRead more

Campaign manager Selmayr, left, with Juncker on election night in Brussels last month.

In a town that is reading every tea leaf available to divine whether Jean-Claude Juncker, the ex-Luxembourg prime minister and front-runner for next European Commission president, will actually get the job, it seemed a rather big leaf of tea.

Martin Selmayr, the workaholic German lawyer who served as Juncker’s savvy campaign manager during last month’s European Parliament elections, took many EU officials by surprise when it was announced Wednesday he had been appointed to a top job in the London-based European Bank for Reconstruction and Development (see announcement here, under the “Five new senior management appointments” heading).

Many in Brussels had tipped Selmayr as Juncker’s chief of staff if he won the presidency. Prior to working for Juncker, Selmayr had been chief of staff to Luxembourg’s current commissioner, Viviane Reding, and he is close to the man who holds the powerful chief of staff job under José Manuel Barroso, fellow brainy German lawyer Johannes Laitenberger.

Is Selmayr’s departure a sign Juncker’s prospects for winning the presidency are dimming and he’s bailing out of a sinking ship? On Twitter, Selmayr denied it, tweeting: “You really think Juncker needs me to win? Believe in democracy!” Read more

Juncker, left, with Schulz ahead of a debate in Hamburg, Germany earlier this week

With voting now underway in Britain and the Netherlands, the first two EU members to go to the polls in the three-day continent-wide election to pick the new European Parliament, Brussels’ favourite parlour game – guessing who will emerge as the next president of the European Commission – has shifted into high gear.

As with almost everything in the EU, from the eurozone crisis to Russian sanctions, all eyes are on Angela Merkel, the German chancellor, and whether she will throw her backing to one of the two “spitzenkandidaten” – the lead candidates for the largest political groupings – or decide to back someone else for the job.

“Nobody knows,” says a top political operative from a German-allied country. “Everybody has their opinions and views, but nobody really knows.”

To play our part in the echo chamber, Brussels Blog has compiled its own completely unscientific odds on where the main candidates stand. And as they say in US sports betting, these odds are for entertainment purposes only. The Brussels Blog does not advocate gambling (though you can do so at the UK’s gaming company Ladbrokes).

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José Manuel Barroso

Anyone expecting Jose Manuel Barroso, the European Commission president, to give any hint as to where EU summitteers might go on Russian sanctions when they gather later today, will be disappointed.

At a press conference following a pre-summit meeting with business and labour union leader to discuss Europe’s jobless recovery, Barroso would only say that “the most important thing to do” is to help create a “credible, stable, prosperous, democratic Ukraine.” Read more