Merkel Backs Extension of Russia Sanctions as U.S. Weighs Thaw

(Bloomberg) -- German Chancellor Angela Merkel and French President Francois Hollande backed extending economic sanctions against Russia, citing a lack of progress on ending the armed conflict in eastern Ukraine.

As President-elect Donald Trump proposes Exxon Mobil Corp. Chief Executive Officer Rex Tillerson for U.S. secretary of state, the push by the European Union’s two biggest economies to keep EU penalties on Russia for another six months signals a divergence. Tillerson has questioned whether sanctions work.

“It will be necessary to extend sanctions on Russia once again,” Merkel told reporters on Tuesday, standing alongside Hollande as they met for talks in Berlin. Progress on last year’s Minsk peace plan for eastern Ukraine has been slow and “we would have wished that we were further along in implementing this process,” she said.

Leaders of the 28 EU governments meeting on Thursday in Brussels are expected to approve extending the sanctions, which expire on Jan. 31 unless they’re renewed. The measures, which target Russia’s finance, energy and defense industries among others, were imposed in 2014 in response to Russia’s backing for rebels in Ukraine.

“The Minsk agreement must be implemented,” Hollande said. “I support the extension of sanctions until there is progress, as does the chancellor.”

Syria Factor

Merkel and Hollande also expressed horror about the Syrian government’s Russian-backed advance on Aleppo, with the French president blaming Russia for the humanitarian crisis in the besieged city. Though U.S. and EU sanctions on Russia related to Ukraine are separate, the Obama administration and five other powers said last week they’re “ready to consider additional restrictive measures” against the Syrian regime’s backers.

Merkel, Hollande, Putin and Ukrainian President Petro Poroshenko reached the Ukraine accord in Minsk, Belarus, in February 2015. It lays out a cease-fire plan between Russian-supported rebels in Ukraine’s eastern Donbas region and political measures to establish autonomy for the breakaway region.

While European leaders are expected to clear the renewal of sanctions this week, next time may be different as opponents who argue the EU is hurting its own economies gain ground.

France’s Republican candidate Francois Fillon, who polls suggest may succeed Hollande as president in May, has signaled he wants to ease tension and revive French-Russian relations. Another French presidential candidate, Emmanuel Macron, has called for a review of the sanctions. Italy and Hungary have gone along with the measures against Russia even while criticizing them.