The EU agreed on Thursday to publish and apply its new sanctions against Russia on Friday. However in a statement the EU said it was ready to cancel some or all of the measures next month if it appears the peace plan is working.
Beyond further limiting Russian access to international finance it is believed new sanctions will hit Russia’s oil and gas industry much harder than first thought; they will effectively starve Russia of the technology it needs to open up the vast resources of the Arctic.
Russia already has a wide-ranging embargo on food imports from the EU, banning fruit, vegetables, meat, dairy produce and other important foods.
That year-long ban also applies to food from the US, Canada, Australia and Norway, which have imposed sanctions similar to the EU's.
The rouble fell to a new low of 37.57 to the dollar on Thursday, after news about the EU sanctions broke. It also fell against the euro.
The Russian Foreign Ministry said, retaliation is being prepared.
“This is an absolutely unfriendly policy which among other things contradicts the EU’s interests as well. Russia’s political leadership has already made it clear to politicians of various levels that we will take adequate measures and our response will be proportional to the damage these sanctions cause to the economies of our state,” said spokeman Alexander Lukashevich.
These may include caps on the import of used cars and other consumer goods.
President Putin is in Tajikistan for a two-day summit with China, and after hearing the EU announcement he noted it while commenting that Russia would continue to work and build relationships with its “other partners”.
He also praised Moscow’s joint projects with Beijing, almost all of which he claimed were moving forwards.
US President Barack Obama said his country would join the EU in imposing tougher sanctions on Russia, targeting the defence, finance and energy sectors. He said he would provide details on Friday.
The EU and US accuse the Kremlin of directly helping pro-Russian separatists in Ukraine's Donetsk and Luhansk regions by sending regular soldiers across the border, along with sophisticated weapons including tanks. Moscow denies the allegations.
Nato says Russia is still keeping about 20,000 troops near the Ukrainian border, besides those it says are inside Ukraine.
The separatists have recently made big gains in eastern Ukraine. The fighting has killed at least 3,000 people since April.
The new EU sanctions will also add 24 more Russian officials and rebel leaders to a blacklist, subjecting them to visa bans and asset freezes.
"They comprise persons involved in actions against Ukraine's territorial integrity, including the new leadership in Donbass, the government of Crimea as well as Russian decision-makers and oligarchs," said a statement from the EU Council, the grouping of 28 member states' governments.
"This brings the total of persons subject to sanctions to 119 while 23 [Russian] entities remain under asset freeze in the EU," it said.
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