Flexing one of its few muscles with the Kremlin, the 20-member Commission announced it would not forward for formal signature an interim trade agreement with Moscow finally agreed just after Christmas.
"We are not proposing formal signing of this very important interim agreement," the European Union's external affairs commissioner, Hans van den Broek, told a parliamentary committee hours before the formal announcement of the Commission move.
"We have sounded an unmistakable note of concern," he added.
The accord seeks equal tax treatment for EU imports and exports for a transitional period. To go into force, it must be signed by Russia and the EU presidency, currently held by France, on behalf of member states.
In Vienna, Hungarian Foreign Minister Laszlo Kovacs, the OSCE's chairman-in-office said in a statement that the conflict "poses a serious threat not only to the security of the Russian Federation but of the whole region and continent as well."
Van den Broek reiterated this view.
"Instability in Russia directly bears on our vital interests," he said.
He said a trio of foreign ministers of the past, future and present holders of the EU's rotating presidency could visit Moscow soon for talks on the crisis in the breakaway region.
The EU has been urging the OSCE to take the lead in brokering a peaceful outcome, and according to U.S. Secretary of State Warren Christopher, Russia would be prepared to accept a role for the body in resolving the crisis. In a radio interview, Christopher said that Russian Foreign Minister Andrei Kozyrev had indicated Moscow's openness to such an idea during a telephone conversation on Chechnya on Wednesday evening. Europe and the United States have raised the possibility of the OSCE sending monitors to the area.
Also Thursday, German Chancellor Helmut Kohl broke his silence on the conflict, calling on President Boris Yeltsin to stop the bloodshed and welcoming the Russian president's order to stop bombing the breakaway region.
Kohl, who claims a close friendship with the Russian president, has been sharply criticized in Germany for not trying to use his influence on Yeltsin.
France, which has taken a consistently critical line on Chechnya, also lambasted Moscow Thursday.
"Russian leaders must understand that attacking civilians with planes and tanks when the balance of forces is a hundred to one is not part of the European democratic model," European Affairs Minister Alain Lamassoure told French radio.
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