EU Agrees Russia Sanctions To Stay Until Ukraine Peace Terms Met

(Reuters) - European Union leaders agreed on Thursday that economic sanctions imposed on Russia will stay in place until a Ukraine peace deal is fully implemented, effectively extending them to the end of the year if need be.

The compromise reached at an EU summit in Brussels maintains EU unity on sanctions against Moscow over its role in the Ukraine conflict.

Strains have been growing within the 28-country bloc over sanctions which some member governments have only supported reluctantly.

EU governments were divided on whether to act now to renew economic sanctions on Russia which expire in July or to wait several months before taking a decision to see if the Ukraine ceasefire holds.

EU leaders backed a compromise hammered out by European Council President Donald Tusk together with German Chancellor Angela Merkel and French President Francois Hollande, two of the architects of the Ukraine peace plan reached in Minsk last month.

Leaders "agreed that the duration of economic sanctions will be clearly linked to the complete implementation of the Minsk agreements, bearing in mind that this is only foreseen by the end of 2015," Tusk told a news conference.

EU leaders were also "ready to take further decisions if necessary," he said, in a clear threat of additional sanctions.

A formal, legal decision on whether to extend sanctions on Russia's financial, defense and energy sectors that expire in July will only be taken at the next EU summit in June.

But the link to the Ukraine peace agreement effectively extends economic sanctions until the end of the year because the Minsk accord sets a year-end deadline for Kiev to recover full control over its border.

The agreement only referred to economic sanctions, however, leaving open the possibility that some of the visa bans and asset freezes the EU has imposed on scores of Russian and Ukrainian citizens and organizations could be lifted before year-end if the situation in eastern Ukraine improved, EU diplomats said.

"If things deteriorate on the ground, we will strengthen sanctions. If, on the other hand, the situation remains stable and improves, then we might envisage a re-examination of the scale of the sanctions package and possibly ease it," a French diplomatic source said.

Some EU ministers have said an offensive by pro-Russian separatists against the port of Mariupol would trigger stepped-up sanctions.

Merkel made clear when speaking to Germany's lower house of parliament earlier on Thursday that economic sanctions on Russia would not be eased until the terms of Minsk had been fully met.

"We cannot and will not lift the sanctions that expire in July or September until the demands of the Minsk agreement have been fulfilled. That would be wrong," she said.

The Minsk agreement, which set out a series of steps to defuse the Ukraine crisis including a ceasefire and withdrawal of heavy weapons, came under renewed strain on Wednesday, with Ukraine and Russia clashing publicly over the next steps and further Ukrainian military casualties from rebel attacks.

Merkel also spoke by phone to U.S. President Barack Obama on Wednesday and they agreed there would be no easing of sanctions until Russia had fulfilled all of its commitments under Minsk, the White House said.

Ukrainian Prime Minister Arseny Yatseniuk said EU leaders should discuss renewing existing sanctions or scaling up sanctions if Russia failed to implement the Minsk deal, but he rejected any talk of easing the measures.

"If Putin splits the unity ... among the leaders of the EU member countries, this will be the biggest success story of President Putin and this will be a disaster for the free world," he told reporters in Brussels after a pre-summit meeting with Tusk on Thursday.

Yatseniuk also said the EU had not yet responded to Ukraine's request for U.N. peacekeepers or an EU police mission to monitor the ceasefire.

"We expect that our European friends will support this idea," he said.