EU diplomats met to forge a deal on Tuesday on the bloc's first broad economic sanctions on Russia, to try to force President Vladimir Putin to defuse the crisis in Ukraine.
After months of hesitation from the European Union, the downing of a civilian flight over Ukraine earlier this month, killing all 298 people on board, has strengthened the bloc's resolve to act and bear the brunt of any possible economic measures against Russia.
Late on Monday, the United States said Western leaders agreed on imposing wider sanctions on Russia's financial, defence and energy sectors after a conference call between U.S. President Barack Obama and leaders of Britain, France, Germany and Italy.
Previously, Washington and Brussels have imposed sanctions on specific individuals over Moscow's actions towards Ukraine, but the EU in particular had shied away from measures designed to hurt vital sectors of the Russian economy.
The EU does more than 10 times as much trade with Russia as the United States, relying in particular on Russian natural gas to fuel its industry and power its cities.
Some of the bloc's 28 member states are nervous about the risk to their own economies, and EU leaders are seeking to strike a balance between inflicting pain on Russia and preventing fragile EU nations from sliding back into recession.
Some diplomats cautioned that Tuesday's talks might stop short of a final deal, while others said negotiations would probably last for many hours.
Maja Kocijancic, a spokeswoman for EU foreign policy chief Catherine Ashton, told reporters on Tuesday the diplomats were debating detailed legal proposals and that inevitably took time.
In a letter to EU leaders last week, European Council President Herman Van Rompuy said the proposed sanctions package "should have a strong impact on Russia's economy while keeping a moderate effect on EU economies".
There was "an emerging consensus", he said, on some key principles, including only targeting future contracts, which would leave France free to go ahead with the delivery of the first of two helicopter carrier ships is it building for Russia.
Another principle was that EU measures targeting energy technology could hit Russia's oil sector but not its natural gas. Russia is the world's biggest exporter of gas and second biggest exporter of oil; Europe depends on it far more for gas, which arrives mainly by pipeline and is harder to source from elsewhere than oil that arrives mostly by ship.
So far, diplomats said the talks on Tuesday had managed to sign off on a new list of Putin's associates and companies that will face sanctions under previous measures, the criteria for which were toughened the day before the plane crash.
The new list is expected to be made public on Wednesday, adding to the 87 people and 20 organisations already hit with asset freezes for playing a role in threatening Ukraine.
Among the new measures that are being discussed are steps that could limit access of Russian banks to European capital markets, which could affect European holders of Russian debt and financial services firms that do business there.
(Additional reporting by Tom Koerkemeier and Martin Santa; Editing by Peter Graff)
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