EU summit to discuss crisis-hit Russia, economic plan

EU leaders on Thursday will discuss tense relations with Russia and punishing sanctions imposed over Moscow`s actions in Ukraine at a summit led for the first time by Poland`s Kremlin-wary former premier Donald Tusk.

Leaders will also back a huge 315-billion-euro ($380-billion) investment plan unveiled last month by new European Commission President Jean-Claude Juncker -- although hard cash is expected to be lacking to help kickstart Europe`s economy.

"The Russian economic situation will be in everyone`s minds," a European diplomat said, after a month that has seen Russia spend heavily to stop the collapse of the ruble triggered by falling oil prices and sanctions imposed by Brussels and Washington.

Tusk -- who on December 1 took up his duties as president of the European Council grouping the 28 EU member states -- has set aside talks on a "strategy" for Moscow, several European sources said.

No new sanctions will be decided at the summit in Brussels as the EU "is not in a hardening mindset," one diplomat said, while another added: "We don`t want to provoke Putin too much."

"We must pursue the political work," a French source said.

On Tuesday, French President Francois Hollande and German Chancellor Angela Merkel held a conference call with presidents Vladimir Putin of Russia and Petro Poroshenko of Ukraine, agreeing that peace talks to end months of bloody rebellion in the east of the ex-Soviet republic should resume "as soon as possible".

The EU leaders, who want to tread a line between firmness and dialogue with Moscow, must reflect on how to follow up on the heavy sanctions agreed over the summer after the shooting down of Malaysia Airlines flight MH17.

"Everybody agrees that the sanctions have an impact but that they are not an end in themselves," a European source said, stressing that Russia has not changed its policy one bit on Ukraine.

Western powers have repeatedly accused Russia of stoking the Ukraine crisis, which has killed at least 4,700 people and displaced close to one million, by supplying weapons and troops to the rebels -- Moscow denies this.

Tusk said: "The crisis in Ukraine remains a serious concern.... It is therefore important that we come out of this meeting with a clear political message."The EU, which has already spent $1.6 billion on rescuing effectively bankrupt Ukraine, will reiterate that it is ready to do more, but only in return for reforms.

Also on the table will be Juncker`s investment plan to revive the bloc`s stalling economy, a plan that seems to have pitted Brussels against European governments.

On the eve of the summit, the head of the EU`s executive branch urged EU leaders to open their wallets and add to the seed money that will be put in place over the next few months to launch the investment plan.

"Several states have shown potential interest," Juncker said in a debate at the European Parliament.

"I now wait for concrete proposals and not just `talk-talk`. I need `money-money,` hard cash now," he said.

But the 28 member states are far from stepping up.

They first want to know how the plan will work, what the projects will be and what the return will be for their country at a time when their budgets are already strained.

"I don`t think that, tomorrow or after tomorrow, the states will take a decision on participating in it," a German government source said.

"It will not be a donors conference," a French source said, while leaving the door open to national contributions at a later stage.

Tusk, a veteran of summits which he attended for seven years as Poland`s prime minister, wants to break with the style of previous gatherings.

The conclusions will be shorter than before, as will be debates, which he does not want to see drag on beyond midnight.

If all the subjects are wrapped up, the meeting could end Thursday evening, a first for European summits which often stretched late into a second night at the height of the eurozone debt crisis.