EU targets Putin's circle

Russia's economy faces a financial stranglehold and President Vladimir Putin's inner circle will be hit with asset freezes and travel bans under tough European Union sanctions to be agreed on in Brussels today.

The leaders of the United States, Britain, Germany, France and Italy held talks yesterday as the EU prepares to target "Kremlin influencers".

"The latest information from the region suggests that even since MH17 was shot down, Russia continues to transfer weapons across the border and to provide practical support to the separatists," British Prime Minister David Cameron's spokesman said.

"They agreed that the EU and US should continue to work together to exert pressure on Russia to change course and to engage in a political resolution to the crisis before more innocent lives are lost."

Work began yesterday in Brussels on a blacklist to confiscate assets and revoke visas of influential Russians, who often have close ties to European capitals and are regarded as "benefiting from Russian decision-makers".

EU ambassadors are also close to agreeing to sanctions that will go beyond measures previously taken by Washington to cut Russia off from Western financial centres. Downing St has admitted these restrictions could cause "pain" for the City of London.

The mood in Europe has hardened over the past four days, as Putin's behaviour has grown increasingly unpredictable amid escalating violence in the eastern Ukraine and he failed to return several phone calls from Angela Merkel, the German Chancellor.

Western diplomatic sources have cited Russian reports that Putin was now behaving "erratically" in meetings and noted that he had failed to offer any last-minute concessions to mollify and divide Europe, as he has done in the past.

"They seem to have lost patience with Putin," a senior US source said. "We are now expecting a serious package of sanctions this week that in some areas might even exceed our own."

Resistance in many European capitals to economic sanctions has dropped since Putin's decision to continue arming Russian separatist rebels in east Ukraine, despite the destruction of Malaysia Airlines flight MH17, killing all on board.

Navi Pillay, the UN high commissioner for human rights, said the shooting down of MH17 might amount to a war crime.