EU delays new Russia sanctions as Germany warns on Ukraine talks

[MUNICH] The European Union postponed new sanctions against Russia in a gesture of support for planned peace talks on Ukraine, while the government in Kiev said more Russian troops entered the conflict zone.

Foreign ministers meeting in Brussels on Monday agreed to delay the expansion of a blacklist to an additional 19 people and nine organizations by a week until Feb 16. The decision will "give space" for diplomacy ahead of a planned summit between the leaders of Ukraine, Russia, Germany and France in Minsk, Belarus, on Wednesday, the EU said in a Twitter posting.

The "principle" of widening the blacklist "is upheld but their application will be made in light of the situation on the ground," French Foreign Minister Laurent Fabius told reporters at the talks in Brussels.

The diplomatic encouragement of the effort to end the yearlong crisis comes as the US and some European allies consider supplying arms to Ukrainian forces, while German Chancellor Angela Merkel warned of a deepening conflict that can't be won militarily. A breakdown of negotiations would also strain trans-Atlantic unity in dealing with Russia, as Europe's consensus on economic sanctions shows signs of fraying ahead of an EU summit on Thursday.

There's "still heavy lifting to do" and "no guarantee" of success, German Foreign Minister Frank-Walter Steinmeier told reporters before the Brussels meeting. "We hope that the open points can be clarified to the point that a Minsk meeting is genuinely promising and can take first steps toward a cease- fire." Some 1,500 Russian army troops with combat equipment including Grad multiple-launch rocket systems and artillery crossed the border into eastern Ukraine on Feb. 7-8, Ukrainian military spokesman Andriy Lysenko told reporters in Kiev on Monday. Russian regular troops went in the direction of Luhansk and the embattled town of Debaltseve, he said.

The confrontation in Ukraine was "not caused by the Russian Federation" and an "immediate" cease-fire is needed, Russian President Vladimir Putin said in an interview with Egyptian daily Al-Ahram published ahead of his visit to Cairo Monday. The crisis "emerged in response to the attempts of the US and its Western allies who considered themselves 'winners' of the Cold War to impose their will everywhere," he said.

"We have seen how Nato's infrastructure was moving closer and closer toward Russia's borders and how Russian interests were being ignored," Mr Putin told the paper.

Ms Merkel is due to discuss the crisis with US President Barack Obama in Washington on Monday amid growing domestic pressure on the White House to authorize delivery of lethal weapons to Ukraine, a move the German leader opposes. US Secretary of State John Kerry said he's confident Mr Obama will make his decision "soon" after the meeting.

A "negative outcome" in Minsk "would probably open the door for US lethal weapons supplies to Ukraine," Tatiana Orlova, an economist at Royal Bank of Scotland Group Plc in London, said in an e-mailed note Monday.

Sanctions could be discussed at the summit of EU leaders on Thursday, the day after the planned Minsk talks.

Mr Putin has said all sides must first agree on their positions before the talks in Minsk can take place.

Officials from Ukraine, Russia, Germany and France are to hold discussions in Berlin on Monday on a cease-fire, withdrawal of heavy weaponry, Russian-Ukrainian border security, demarcation lines, issues of autonomy and monitoring by the Organization for Security and Cooperation in Europe, German Foreign Ministry spokesman Martin Schaefer told reporters. Chances are open for a breakthrough though "we don't know if this is going to work," he said.

Ukraine, the US, the EU and the North Atlantic Treaty Organization say Russia is supporting the separatists with hardware, cash and troops, accusations the Kremlin denies. Russia says Ukraine is waging war on its own citizens and discriminates against Russian speakers, a majority in Donetsk and Luhansk.

Merkel and French President Francois Hollande stepped up peace efforts over the past week after fighting between Ukrainian government forces and pro-Russian separatists escalated. Looming over the negotiations is the prospect of deeper sanctions on Russia, an economic collapse in Ukraine and the risk that the conflict descends into a proxy war.

Almost 5,400 people have died in the fighting since April, according to the United Nations. Nine government troops were killed and 26 wounded during 100 attacks by rebel forces in the past 24 hours, Ukrainian military spokesman Vladyslav Seleznyov told reporters in Kiev on Monday.

The Ukrainian economy meanwhile is being brought to its knees, making the prospect of reviving the country even tougher should a peace agreement ever emerge. The country devalued its currency by 31 percent on Feb. 5 as it tries to win more support from the International Monetary Fund.

BLOOMBERG