Renata Goldirova 26662
Sept 1 2008

EUOBSERVER / BRUSSELS - EU leaders are holding an emergency summit on
EU-Russia relations on Monday (1 September) - the first such meeting
since the 9/11 attacks in the US. But the union is split on how to
handle Moscow, with the Kremlin threatening to retaliate against
Europe if it adopts punitive sanctions.

Georgia has high hopes for the EU emergency summit (Photo: Print Comment article The French EU presidency called
the summit after Russia launched a military incursion into Georgia
in response to its attack on the rebel-held town of Tskhinvali in
South Ossetia. Russia subsequently recognised Georgia's two breakaway
regions - South Ossetia and Abkhazia - as independent states.

Europe has already condemned Moscow's actions, but the majority of
EU states is not in the mood to go beyond words, with France, Italy,
Spain, Finland, Austria, Bulgaria, Slovenia, Greece and Cyprus all
speaking out against punitive measures before the summit began.

The French EU presidency will on Monday table a "balanced and firm
text" that falls short of sanctions, AFP reports. "It will not propose
sanctions, but very precise undertakings," French foreign minister
Bernard Kouchner said over the weekend.

UK Prime Minister Gordon Brown, in a statement in The Observer on
Sunday, called on EU colleagues to "review - root and branch - our
relationship with Russia," however. He suggested excluding Russia
from the Group of Eight leading industrialised nations.

British diplomats also told the Sunday Telegraph newspaper that London
will push for mini-sanctions, such as an EU visa ban on South Ossetia
and Abkhazia officials as well as Russian citizens active in politics
in the two Georgian regions.

Poland, Sweden, the Czech republic, the Baltic States - Estonia,
Lithuania and Latvia - are also keen to take a tough line, diplomats

But Poland's position is ambiguous, with Prime Minister Donald Tusk
telling Newsweek magazine there should be no more EU-Russia summits
until Russia pulls soldiers from Georgia, then adding he does not
want Warsaw to become isolated in a radical stance.

Meanwhile, Germany is locked in an internal dispute. The Conservative
party in Germany's coalition government backs the British G8 suggestion
"as long as Russia is not prepared to find a solution under the
framework of the United Nations," the IHT reports.

But the Social Democrats have warned against cornering Russia. "Moscow
deserves criticism for its behaviour, but that doesn't change the fact
that security and stability in Europe can only be achieved with and
not against Russia," German foreign minister Frank-Walter Steinmeier
said, according to Reuters. "Europe would only be hurting itself if
we were to get full of emotion and slam all the doors shut."

The last time the EU imposed sanctions on Russia was following its
invasion of Chechnya in 1994, with Europe freezing the ratification
of a Partnership and Co-operation Agreement, which entered into force
in 1997.

Russian warning

In the run up to the EU summit, the Kremlin - which controls some
25 percent of EU oil and gas imports - issued a number of hostile
messages to the West.

President Dmitry Medvedev said on Russian TV on Sunday: "We do not
favour sanctions on the whole and only resort to them in extreme
circumstances. [But] if required, we could pass the relevant

Mr Medvedev added that his country was set to restore its influence
in what he labelled "regions of privileged interest" and to defend
"the life and dignity" of Russian citizens "no matter where they are
located," raising fears of further Russian interventions in Moldova
or Ukraine.

"The EU is not in a position to throw Russia out of anywhere," Russia's
ambassador to the EU, Vladimir Chizhov, told Reuters, describing any
attempt to isolate Russia as "short-sighted and unrealistic."

Moscow stands alone on recognising the breakaway Georgia territories so
far. Venezuela, Belarus and Central Asian states have given rhetorical
support but stopped short of recognition. Two other separatist enclaves
- Transniestria in Moldova and Nagorno-Karabakh in Azerbaijan - are
the only other entities tohave recognised South Ossetia and Abkhazia.

Russia has also taken a financial hit from the crisis, with French bank
BNP Paribas estimating investors recently pulled â~B¬17 billion out of
the country. The Russian stock market has plunged since fighting began.

High hopes

Expectations for the EU summit are high in Georgia, where up to 30,000
people are expected to take part in an anti-Russia demonstration in
Tbilisi on Monday. Demonstrations in Brussels and across Europe are
also planned for the afternoon.

The Georgian prime minister, foreign minister and integration minister
are to meet with EU officials in Brussels on Monday but will not take
part in the summit itself.

Georgia estimates the conflict caused around â~B¬1.4 billion in
damage to its infrastructure, with Georgia's entire annual state
budget running to just â~B¬2 billion. The UN says the five-day war
affected 160,000 people.

The European Commission has already put aside â~B¬6 million in
humanitarian aid, with member states promising some â~B¬8.4 million

The EU's summit package for Georgia is expected to feature proposals
for a major donors conference and an EU monitoring team to take part
in an international peacekeeping force in the conflict zones.

The EU is also set to strengthen political and economic relations
with Georgia, a French diplomat said, including moves toward a
free-trade deal and easier visa regulations for Georgian people
traveling to Europe.