Merkel, Hollande ready for further sanctions against Russia

By Andreas Rinke STRALSUND, Germany (Reuters) - Germany and France are ready to agree more extensive sanctions against Russia if a planned presidential election in Ukraine on May 25 is foiled, Chancellor Angela Merkel and President Francois Hollande said on Saturday. In a joint statement, they agreed to support tougher sanctions against Russia - affecting areas such as energy, defense, financial services and engineering - than European Union leaders outlined at a meeting in Brussels on March 6. "We would be ready to take further sanctions against Russia if the May 25 elections in Ukraine fail," Merkel said at a joint news conference with Hollande in the Baltic port of Stralsund, although sanctions would not be "an end in themselves". Germany, which relies on Russia for 40 percent of its natural gas supplies, has been seen as hesitant to ratchet up and broaden sanctions, which are opposed by most Germans. Stern magazine reported German growth could be cut by 0.9 percentage points this year if tougher sanctions are imposed. The May 25 election is to choose a successor to President Viktor Yanukovich, the pro-Russian president of Ukraine toppled by unrelenting protests. Russia then seized and annexed Ukraine's Russian-majority Crimea region, citing threats from what it called far-right extremists in the new Kiev government. Western countries responded by imposing limited sanctions against Moscow targeting some Russian political and business leaders and interests seen as involved in the Ukraine crisis. But pro-Russian separatists have since stirred turmoil in eastern Ukraine, declaring autonomous republics in what the West sees as an attempt by Moscow to cement Russian domination there, much as occurred in Crimea, and thwart a nationwide election. Merkel and Hollande called on Russian President Vladimir Putin to personally intervene to ensure that the election takes place across the whole of Ukraine. Merkel said Putin had taken encouraging steps by appealing to pro-Russian militants to suspend a planned autonomy referendum on Sunday. "But the Russian president has to send more signals of de-escalation," Merkel said. Hollande added that he and Merkel were both doing all they could to impress on Putin what is at stake now in Ukraine. "There is a European position," said Hollande, brushing off suggestions from Poland that Germany is not acting decisively enough in the Ukraine crisis. In an interview with Germany's Bild newspaper, Polish President Bronislaw Komorowski said: "I don't have much understanding for the way that some Germans are viewing Russia. It's better to put out the fire now than to wait for a larger fire to spread to other nations. We can't just stand by and watch when a nation (Ukraine) is being blackmailed with brutality and military power right in front of our front door." In their statement, Merkel and Hollande said they would draw the "appropriate consequences" if the election was scuttled. "If there is no internationally recognized presidential election, that would unavoidably lead to a further destabilization. Germany and France are in agreement that if that is the case, then corresponding consequences would be drawn as outlined by the European Council on March 6, 2014." (Reporting by Andreas Rinke in Stralsund,; writing by Erik Kirschbaum in Berlin and Leigh Thomas in Paris, editing by Mark Heinrich)