Merkel cool on ease of Russia sanctions

German Chancellor Angela Merkel said on Thursday that the key to ending sanctions against Russia over the Ukraine conflict was the full implementation of September's Minsk agreement, between the government in Kyiv and pro-Moscow separatists.

Speaking in Berlin at a press conference with Ukrainian Prime Minister Arseniy Yatsenyuk, Merkel said "the implementation of sanctions had certain causes, and these sanctions can only be lifted when the causes are eliminated again."

"I think we need to see the entire Minsk agreement implemented before we can say that sanctions will be lifted," she added.

Under the September deal, both sides agreed to a ceasefire and the withdrawal of "illegal armed groups, military hardware, and all fighters and mercenaries" from Ukraine. The agreement, however, failed to stop the conflict.

Both sides met again at the end of December in an attempt to secure the shaky ceasefire, but the talks broke down and managed only to secure a mutual prisoner swap.

Ukraine and the West have accused Moscow of furthering the conflict in eastern Ukraine by supplying the separatists with troops and weapons - charges the Kremlin has denied.

Russia's economy has taken a hit from the sanctions - as well as from falling oil prices - with its ruble currency plummeting in recent months, and figures for November showed that the country's economy contracted by 0.5 percent compared to the same month in 2013. That was Russia's first economic contraction since October 2009.

The UN estimates that more than 4,700 people have been killed since the fighting in the eastern Ukrainian regions of Donetsk and Luhansk broke out in April, following Russia's annexation of Ukraine's Crimean Peninsula.

Merkel said she did not expect separate sanctions tied to Crimea would be lifted, as this would require Russia to reverse its annexation of the territory.

Kazakhstan talks

Merkel said on Thursday that work was in progress to set up a possible meeting in Kazakhstan, but it remains unclear whether it will go ahead. Ukrainian President Petro Poroshenko said last month he would meet with the French, German and Russian leaders in Astana on January 15 over the ongoing Ukraine conflict.

"The talks in coming days will show whether we're ready for such a meeting," Merkel said.

The meeting with Yatsenyuk came a day after the hacking of the website of Germany's lower house of parliament, the Bundestag, and Merkel's official chancellery page.

The pro-Russia group CyberBerkut claimed to have carried out the attack in connection with Yatsenyuk's visit to Berlin.

Ukraine aid announced

Also on Thursday, EU Commission President Jean-Claude Juncker unveiled plans to lend an additional 1.8 billion euros ($2.1 billion) to rescue the almost bankrupt Kyiv government. It adds to the 1.4 billion euros handed over last year in medium-term loans.

The bloc's 28 members and the European Parliament must still approve the additional loans.

jr/msh (Reuters, AFP, AP)