Global Networks: Herman Van Rompuy

#GNN - The European Union reached #outline #agreement on Friday to impose the first economic sanctions on Russia over its behavior in Ukraine but scaled back their scope to exclude technology for the crucial gas sector.

The EU also imposed travel bans and asset freezes on the chiefs of Russia's FSB security service and foreign intelligence service and a number of other top Russian officials, saying they had helped shape Russian government policy that threatened Ukraine's sovereignty and national integrity.

FSB director Alexander Bortnikov and Mikhail Fradkov, a former prime minister who now heads the foreign intelligence service, were among 15 Russians or Ukrainians and 18 companies and other organizations named in the EU's latest sanctions list.

Also sanctioned were the secretary of Russia's Security Council, Nikolai Patrushev, Chechen leader Ramzan Kadyrov, who the EU said had made statements supporting Russia's annexation of Ukraine's Crimea region and the insurgency in eastern Ukraine, and several Ukrainian separatist leaders.

After months of hesitation, the EU is set to go beyond asset freezes by imposing sanctions on sectors of the Russian economy.

The 28-nation EU toughened its stance towards Moscow following last week's downing of a Malaysian airliner, killing 298 people, in an area of eastern Ukraine held by Russian-backed separatists.

EU ambassadors reached a preliminary agreement on Friday.

European Council President Herman Van Rompuy wrote to EU leaders asking them to authorize their ambassadors to complete an agreement by Tuesday. That would avoid the need for leaders to hold a special summit to approve the sanctions.

Van Rompuy said the proposed sanctions package "strikes the right balance" in terms of costs and benefits to the EU and in its flexibility to ramp up sanctions or reverse them over time.

"It should have a strong impact on Russia's economy while keeping a moderate effect on EU economies," he wrote in the letter, seen by Reuters.

But Van Rompuy said the sanctions on access to capital markets, arms and hi-tech goods were likely to apply only to future contracts, leaving France free to go ahead with the controversial delivery of Mistral helicopter carriers being built for Russia.

The narrowing of the proposed measures highlighted the difficulty of agreeing to tough sanctions among countries which have widely different economic interests and rely to varying degrees on Russian gas.

European Commission President Jose Manuel Barroso said late on Friday that following the ambassador's discussions the Commission had adopted a draft legal text for the Russia sanctions package.

"The final decision now lies with the EU's member states, but I believe that this is an effective, well-targeted and balanced package providing the flexibility to adjust our reaction to changes on the ground. I hope that member states will agree on this package of restrictive measures next week," he said in a statement.

The measures are not an end in themselves, "but a means to achieve a negotiated and political solution to the crisis ... I call on Russia to take decisive steps to stop the violence and genuinely engage in peace plan discussions," he said.

EU ambassadors will try to reach a final deal at a meeting on Tuesday.

Key measures include closing EU capital markets to state-owned Russian banks, an embargo on arms sales to Moscow and restrictions on the supply of dual-use and energy technologies. They would not affect current supplies of oil, gas and other commodities from Russia.

Van Rompuy said there was an "emerging consensus" among EU governments that "the measures in the field of sensitive technologies will only affect the oil sector in view of the need to preserve EU energy security."

The Commission had proposed restricting equipment for deep-sea drilling, shale oil and Arctic energy exploration.

PIPELINE PROJECTS
If the sanctions had applied to gas technology, they could have affected Gazprom's huge South Stream pipeline project to Europe and Novatek's Arctic Yamal liquefied natural gas (LNG) facility.

That in turn would have hit large EU energy suppliers and manufacturers with an interest in the project, including in Germany, Austria and Italy. The prospect of EU sanctions sent shares in French energy services firm Technip plunging 8 percent on Thursday.

Gazprom's main partners in South Stream are Italy's Eni, France's EDF, Austria's OMV and Germany's Wintershall [WINT.UL], a subsidiary of German chemical giant BASF.

Van Rompuy said EU governments also agreed that the sanctions should not be applied retroactively, particularly in the area of arms trade and restrictions on access to capital markets.

France was determined to uphold existing contracts with Russia to preserve a 1.2 billion euro ($1.6 billion) 2011 deal to supply two Mistral helicopter carriers.

EU governments also agreed that a ban on exports of dual-use technology - that can be used in both military and civilian products - would be limited at this stage to military users, Van Rompuy said.

The EU's latest list brought the number of people under EU sanctions to 87 and the number of companies and other organizations to 20.

FURTHER SANCTIONS LIST
A further sanctions list could be agreed as early as Monday under new criteria targeting companies and people who support Russian decision-makers responsible for annexing Crimea or destabilizing eastern Ukraine, Van Rompuy said. New restrictions on trade and investment in Crimea could also be agreed on Monday, he said.

Dutch Prime Minister Mark Rutte, whose country is seen as having a key role in shaping the EU response because it lost 194 citizens in the plane crash, said he would back sanctions unless Moscow halts weapons supplies to the rebels.

"We want as a country that has acquired a certain moral obligation as a result of this tragedy to promote Europe taking a common line on this," he told parliament in The Hague.

(GNN)(AIP)(Reuters)(Additional reporting by Thomas Escritt in Amsterdam, Alexandra Hudson in Berlin, Justyna Pawlak, Martin Santa, Paul Taylor and Julia Fioretti; Editing by Paul Taylor, Mohammad Zargham and Ron Popeski)

(GNN) - Jean-Claude Juncker won broad endorsement from the European Parliament on Tuesday to be the next head of the executive European Commission after setting out a "grand coalition" investment programme to help revive Europe's economy.

Belying his reputation as a grey back-room fixer, Juncker spoke with passion and fire of his ambition to "reindustrialise" Europe and put the European Union's 25 million unemployed, many of them young, back into work.

He promised a 300 billion euro ($409 billion) public-private investment programme over the next three years, combining existing and perhaps augmented resources from the EU budget and the European Investment Bank with private sector funds, to build energy, transport and broadband networks and industry clusters.

"We need a reindustrialisation of Europe," the 59-year-old former Luxembourg prime minister said. He won support from the Socialists and Liberals as well as his own centre-right bloc, the largest in the EU legislature.

The position Juncker assumes is the most powerful in the EU. The Commission proposes and enforces laws for 500 million Europeans, from Ireland in the West to Lithuania in the east.

Juncker acknowledged many Europeans had lost confidence in the EU and said only economic results and full employment, not endless debate over EU institutions, would restore their trust.

Eurosceptic parties topped May European Parliament elections in France and Britain and won more than a quarter of the seats in the Strasbourg-based assembly.

The EU assembly approved Juncker by a clear majority of 422 votes with 250 against, 47 abstentions and 10 spoiled ballots.

The score, bigger than his centre-right predecessor Jose Manuel Barroso of Portugal achieved, fell short of the combined 479 votes of the centre-right, centre-left and liberal groups.

He will take office on Nov. 1 barring any delay in the formation of the full 28-member Commission, whose members will undergo confirmation hearings in September before an overall vote of confidence in October.

In a speech delivered in French, German and English, Juncker sought to reassure Germany and other north European fiscal hawks that the 28-nation bloc's strict rules on budget deficits and debt reduction would be maintained.

However, his emphasis on public investment, reaffirmation of a target of raising industry to 20 percent of EU economic output from 19.1 percent in 2013 and call for a minimum wage in each EU country, were designed to reach out to the left.

To British sceptics demanding a return of powers from Brussels to national capitals, he declared that Europe could not be built against nation states and should focus on the big common challenges and not intervene in "small problems".

He was heckled by Eurosceptics but applauded by most lawmakers when he said the euro had protected Europeans in the world economy, and quoted former French President Francois Mitterrand as saying that nationalism only led to war.

Juncker cited the men who created Europe's single currency - Mitterrand, former Commission chief Jacques Delors and former German Chancellor Helmut Kohl - as his heroes and mentors.

"WE'LL FIGHT YOU"

EU leaders will hold a summit on Wednesday to nominate a successor to European foreign policy chief Catherine Ashton, who will also serve as first vice-president of the Commission.

Diplomats said Italian Foreign Minister Federica Mogherini was front-runner for the post, but Poland and Baltic states have misgivings because she is seen as soft on Russia over Ukraine.

The leaders may postpone the choice of a successor to European Council President Herman Van Rompuy, who chairs their summits, until after the summer break, the diplomats said.

Danish Prime Minister Helle Thorning-Schmidt is widely seen as the leading candidate but France may object since her country is not in the euro zone, and the role also involves chairing summits of the currency area.

The increased Eurosceptic contingent made its presence felt in the debate on Juncker's appointment but eschewed the protest gestures that marked this month's inaugural session.

Nigel Farage, leader of the UK Independence Party, said that while Juncker was personally a pleasant man with a good sense of humour, "what is clear is you are going to carry on with the process of the centralisation of powers.

"We are being asked to vote for the ultimate Brussels insider, somebody who has always operated with dark, backroom deals and stitch-ups," he told the chamber.

France's Marine Le Pen, speaking from the back benches after her anti-immigration National Front failed to find enough allies to form a parliamentary group, said Juncker stood for a self-perpetuating elite carving up top jobs among themselves.

"You weren't elected by the people," she declared. "We'll fight you and your institutions. Patriots are now in the majority."

In reply, Juncker joked that parliament was holding a secret ballot so that Farage's voters did not find out the British sceptic had voted for him. He thanked Le Pen for not voting for him, saying he did not want the support of anyone who stood for "exclusion and rejection".

Juncker said euro zone countries should get financial incentives if they make ambitious structural economic reforms, funded by the creation of a separate budget for the 18 countries in the currency area.

He also promised greater transparency in talks between the United States and the European Union to establish a trade and investment pact, which face strong public opposition in some EU countries.

"If we don't publish the related documents ... this treaty will fail. It will fail in the eyes of public opinion," he said, vowing to defend European health, labour and environmental standards in the negotiations.

Juncker said he would work for the creation of a guaranteeed minimum social wage in each member state of the EU. He has advocated setting a minimum wage as a proportion of each country's median income, which varies widely between Luxembourg at the top and Romania and Bulgaria at the bottom.

He also vowed to protect public services in Europe from what he called "the whims of the age" - an apparent reference to privatisation and restrictions on state aid.

(Reuters)(GNN - AIP)(Reporting by Robin Emmott, Julia Fioretti, Adrian Croft, John O'Donnell and Martin Santa; Writing by Paul Taylor Editing by Jeremy Gaunt)