EU agrees on tougher economic sanctions against Russia

The 28-member European Union has reached a preliminary agreement Friday, on tough sanctions against Russia following its unabated support of Ukrainian rebels.

 The EU and the US were forced to consider stronger economic sanctions against Russia with the downing of the Malaysian MH17 flight with 298 passengers aboard in the conflicted border region.

The diplomats representing the countries have agreed to exclude state owned Russian financial institutions from EU capital markets, imposed an embargo on any sales of arms  and also a restriction on supply of energy and technology.

The details and the legalities of the agreement have yet to be chalked out said Maja Kocijancic, spokeswoman for EU foreign policy chief Catherine Ashton.

"The direction of travel here is very clear but we are still travelling," she told reporters, according to Reuters.

The EU will also issue a list of 15 individuals and 18 firms under asset freezes for supporting Crimea's annexation to Russia and their role in the crisis in eastern Ukraine.

Dutch Prime Minister Mark Rutte had a key role in pushing for the sanctions. Netherlands lost 194 citizens in the Malaysian airlines crash, and he wanted Russia to halt the supply of weapons to the rebels.

"We want as a country that has acquired a certain moral obligation as a result of this tragedy to promote Europe taking a common line on this," he told a parliamentary committee in The Hague, reports Reuters.

"All indications are that Russia is continuing to arm the separatists," Rutte said. "There's an easy way out for Russia: to distance themselves from the separatists, and stop arming them."

But there are many hurdles to cross before full imposition of the sanctions. The EU courts have not been open to sanctions against Iraq and Syria earlier. The various EU members also have their own equations with Russia and trying to balance the sanctions.

Bulgaria, Hungary and Germany are dependent on their supply of gas on Russia and are not in favor of pushing too hard on the energy sanctions.

Some other European countries like Cyprus, Austria, Luxembourg and the U.K. have strong banking ties with Russia with lucrative funds from Russia stationed in their banks. France on the other hand has a $1.62 billion contract to supply two warships to Russia and is clear about going ahead with it

"There's a triple-lock in Europe: Germany doesn't want to do energy, France doesn't want to do defense, and the U.K. doesn't want to do finance," said Mujtaba Rahman, Europe director for the Eurasia Group consultancy, reports the Wall Street Journal.