The European Union will warn Russia on Monday that Moscow's future ties with the bloc could depend on its adhering fully to a peace deal to end the Georgia conflict, according to a draft summit statement. (UPDATED)


The EU has been divided over whether or not to implement sanctions on Russia, as France, Germany and Italy insist the bloc should not take steps to isolate Moscow, while Britain says it must face some consequences. Russia is Europe's largest energy supplier.

The five-page text, obtained by Reuters as EU leaders began emergency talks in Brussels, strongly condemned Russia's move to recognize the independence of the rebel regions of South Ossetia and Abkhazia and urged other countries to avoid such a step.

It contained no references to sanctions but described ties between the 27-nation bloc and its largest energy supplier as being at a "crossroads" ahead of a long-scheduled Nov. 14 meeting between European and Russian leaders in Nice, France.

"The European Council is gravely concerned by the open conflict which has broken out in Georgia, by the resulting violence and by the disproportionate reaction of Russia," the draft said.

"In the light of the situation and in particular the implementation by Russia of all its commitments under the six-point (peace) plan, (the review) may lead to decisions on the continuation of discussions on the future of relations between the Union and Russia in various areas."

"The Union will remain vigilant," it said, adding that the review "may lead to decisions on the continuation of discussions on the future of relations between the Union and Russia in various areas."

European and Russian leaders are due to meet in November and, in the run-up to that summit, the EU would take note of whether Moscow was honoring its commitments under a peace plan for the conflict with Georgia, the draft document also said.

EU DIVIDED
EU leaders met in an extraordinary session on Monday to try to unite behind a strong response to Russia's actions in Georgia.

France, the current holder of the EU presidency, Germany and Italy have said any punitive action against the bloc's largest energy supplier would be premature. But others including Britain and ex-Soviet states say Moscow must face some consequences.

Britain called on the European Union to suspend partnership negotiations with Russia due to its military action in Georgia, the prime minister's spokesman said.

"We are clear that in advance of the conclusions of the fundamental review of the EU’s relations with Russia, we should suspend negotiations on a successor to the partnership and cooperation agreement between the EU and Russia," Prime Minister Gordon Brown's spokesman told reporters.

The European Union should not suspend its dialogue with Russia in response to Moscow's intervention in Georgia, German Chancellor Angela Merkel said on Monday.

French Prime Minister Francois Fillon said President Nicolas Sarkozy would embark on a new mediation effort between Georgia and Russia, and stressed the need for dialogue with Moscow.

"Today the word 'sanctions' is not on the agenda, today the word is 'dialogue'," he added, conceding that EU states would go into the 2-1/2-hour meeting with "very different positions".

Italian Prime Minister Silvio Berlusconi said Russia was a power to be reckoned with and that he did not expect any steps from the Brussels meeting that would "aggravate" the situation.

"It still has a nuclear potential able to destroy 10 times the population of the world. It's a country growing at a rate of 7-8 percent a year. It's a country which has oil and gas," he told Canale 5 TV.

The tussle within the EU is complicated by the bloc's dependence on Moscow for much of its oil and gas, and the struggle to develop other sources such as the Nabucco pipeline due to bring Azeri gas to Europe via Georgia and Turkey.

It is also made difficult by the West's desire to retain Russia's cooperation on difficult diplomatic issues like Iran's nuclear program.

DEFEND INTERESTS
Russia sent its troops into Georgian territory after Georgia's military tried to retake South Ossetia, like Abkhazia, is a Moscow-backed region which rejects Tbilisi's rule.

Moscow has withdrawn most of its forces in line with a ceasefire deal but has kept soldiers and equipment in "security zones", which include undisputed Georgian territory around South Ossetia and Abkhazia.

Western governments have demanded Moscow pull its troops back to pre-conflict positions, as it agreed to do under a French-brokered peace plan. The Kremlin says the troops are peacekeepers needed to protect the separatist regions from new Georgian aggression.

Russian President Dmitry Medvedev said his country did not want confrontation or isolation but it will defend its interests when they are threatened.

Some of the options being considered by the EU include sanctions and isolating Russia diplomatically.

Baltic states want a second round of talks over a planned EU-Russia partnership pact, scheduled for Sept. 15-16, to be postponed and Britain has raised the possibility of excluding Russia from Group of Eight meetings and review its NATO ties.

"All things have to be re-evaluated," EU foreign policy Chief Javier Solana said.

Georgian Prime Minister Lado Gurgenidze called in a Reuters interview for "smart" EU sanctions against officials and firms doing business with South Ossetia and Abkhazia.

NATO-CENTRISM
Russian Foreign Minister Sergei Lavrov on Monday called on the European Union to reject "NATO-centrism". "Today’s European Union summit should reveal a lot. We expect a choice to be made that is based on the core interests of Europe," Lavrov said ahead of the EU summit.

He called for an end to a security system in Europe based around the NATO military alliance and instead for European leaders to examine a Russian proposal for a continent-wide security system that would include Russia.

He warned against any attempts to break the close relationship between Russia and Germany and said Georgia should be subject to an arms embargo