Source: www.telegraph.co.uk

As an uneasy truce holds between the Ukrainian authorities and separatist rebels in the east who want closer ties to Russia and an end to Ukrainian overtures to the EU, the EU has brought into force further sanctions against Russia. Despite consistent Russian denials, the West believes that Russia is backing the rebels with arms and even boots on the ground. The sanctions are designed to encourage the Russians to disengage and foster dialogue between the two protagonists.

Despite the ceasefire, the EU has decided to press ahead with the latest raft of sanctions against Russia. Measures include curbs on trade between EU businesses and Russian oil and defence concerns and a block on loans to five major Russian state banks. The rationale is to maintain pressure on Russia although there was considerable debate as to whether it was right to press ahead with the latest measures whilst the Russian brokered truce held.

Russian banks are to be denied access to loans with maturity longer than one month and other EU financial services. The oil sector will be denied access to EU deep-water technology and will affect the three major Russian state oil concerns: Rosneft, Transneft and Gazprom Neft, in addition, they will have access to financial markets in Europe restricted. Rosneft was known to be urgently seeking $42 billion and has turned to the Russian government for help.

Russia has indicated that it may make retaliatory sanctions which may involve denial of its airspace to commercial jets. Sergei Lavrov accused the EU of "taking a path towards undermining the peace process". He noted that Russia "will react in a calm and appropriate way, first and foremost, proceeding from the need to defend our interests".

The Rouble fell to a fresh low of 37.57 to the Dollar. The USA has also indicated that it will apply its own sanctions against Russia in parallel with the EU move. NATO claims that as many as 1000 Russian troops are in Eastern Ukraine, but this is denied by Russia.