Russia cannot afford 'collapsing state' in its backyard

(ATHENS) - Europe issued fresh calls Saturday for dialogue with Russia over Ukraine, warning Moscow it faces having a failed state in its backyard just as it tightens the economic noose on Kiev.

Russia needs to understand it is not in its interest "to have a collapsing state in its neighbourhood", German Foreign Minister Frank-Walter Steinmeier said at the close of two-day talks with his 27 European Union counterparts.

But as a Ukraine-Russia gas price row intensifies, Steinmeier stressed that Europe needed to keep lines of communication open with Moscow to enlist Russian help for the new authorities in economically distressed Kiev.

"That's why we, even if there is conflict between us, have to talk with Russia."

There were warnings however of more trouble ahead in the EU-Russia tug-of-war for influence among former Soviet satellite states.

Swedish Foreign Minister Carl Bildt warned of "thunder" from Moscow if the 28-nation bloc went ahead as promised with the signing of trade and political deals with Georgia and Moldova in June.

"I doubt there will be applause in the Kremlin, there might be something else," Bildt said. "Thunder rather than applause."

EU ministers are insisting that the European Union sticks to its bid to reach out to eastern states in spite of Moscow's irritation.

Speaking to AFP, Lithuanian Foreign Minister Linas Linkevicius said: "If we do not do what we are supposed to do then that would increase tensions.

"Unfortunately this would be perceived as a weakness."

There were no decisions at the informal talks, a regular six-monthly affair. But the ministers emerged with a double-edged message.

They laid heavy stress on defusing tension, on "trying to persuade Russia of the importance to de-escalate to ensure future dialogue," said EU foreign policy chief Catherine Ashton.

Europe must "keep open the channels of political and diplomatic dialogue with Russia," said Greek Foreign Minister Evangelos Venizelos.

But the ministers also reiterated that they would be prepared to sharpen sanctions against Russia failing concrete signs of de-escalation by Moscow.

It is important to ensure "we are prepared to take measures," Ashton said, adding that "work is ongoing" and that "we are united to deal with threats against Ukraine."

On opening the talks, the ministers had said "Europe must not relax" and needed to stand firm until Russia "shows it is serious" by clearly pulling back its troops from the border.

They described the unprecedented crisis unfolding on the bloc's eastern flank as "very dangerous" but had appeared to be hoping to see Moscow take steps to defuse the tension.

"It is really important that Russia shows that it is serious about the de-escalation by moving troops back," Ashton said."We'll be watching with great care what's happening there."

British Foreign Secretary William Hague deplored that Russian troops had made "only a token withdrawal" from the border.

"We have not seen real de-escalation by Russia. Therefore Europe must not relax," Hague added.

But the ministers said it was not the time yet to step up pressure by agreeing to fresh reprisals that would entail economic sanctions against Moscow.

"At the moment we have some kind of breathing time, the tension does not increase. We have to benefit from this opportunity to stabilise the political situation," Steinmeier said.

Hague too, along with his Dutch colleague Frans Timmermans, said the time had not come for so-called "Phase Three" economic sanctions.