Welcome to countdown. Back to our top story. Eu leaders have given the European Commission a week to draft a new round of sanctions against russia as the conflict deteriorates. Worried the situation could get worse. I think we are close to the point of no return. The point of no return is fullscale war. Lets get more of this. Ryan chilcote has been reporting on russia for 20 years. Thats a long time. It is. Are getting really busy. We heard the ukrainian president. We also heard from the russian president yesterday in what i think was a very meaningful sayingew he gave affectively there should be talks for state had four Eastern Ukraine. You pointed out earlier a spokesman said this is not the russian president saying Eastern Ukraine should be independent. It will certainly unnerve kiev, and it certainly has a lot of people concerned putins aim is to create a land bridge from russia proper to crimea to another state. It is putting pressure on kiev. Exactly, to have this wedge between russia and nato should ukraine think of joining nato, which is one thing ukraine is suggesting it should do right now. That is interesting. He also dismissed the idea of a ceasefire yesterday. Medicine that we have heard from the Russian Foreign minister this morning cap that is something we have heard from the Russian Foreign minister this morning. Saying he hoped the talks focused on the ceasefire, but at the same time he said it would be unrealistic for the rebels to put down their weapons. How do we read the latest againston in violence the comments you got from the European Union over the weekend that that if things get worse than the sanctions environment would get worse . The European Union threat came on the back of russia saying they have well over 1000 troops in ukraine. Nato said that at the end of last week before the eu leaders gathered. Saying if the situation worsens we had prorussian rebels firing on ukrainian coast guard vessels. Is definitely an escalation. That definitely moves us closer to sanctions. They are working out where the sanctions could fall. That is right. Where we are right now is the sanctions the most meaty sanctions are against companies in energy and finance really, and restrict their access to capital markets, and the idea is we could see more of that. What the eu leaders have done is said to the European Commission dropped the new sanctions we understand they are working with the United States on trying to make the European Union sanctions as tough as our closer to the toughness of the american sanctions, but there is a way to go there. A busy week. Absolutely. We have president obama going to estonia. He will be the second president to go there. President bush went there in 2006. Dont even think about touching the baltic you are allowed to say it. Ou should be going to ukraine absolutely. I dont think he should necessarily be going to ukraine. I dont have a personal view on this. On the russian side of things if the conflict is in ukraine and he is going to a different country thomas it would be more powerful if he was to go to ukraine to a different country, it would be more powerful if he was going to ukraine and saying, dont touch ukraine. You are getting a lot of calls within the congress and in general the United States for president obama to show more resolve. To have a proactive start. Yes, and a bunch of senators were in ukraine yesterday. Yesterday andiev said the u. S. Should start giving arms to the Ukrainian Government to fight the rebels. Merkelsomething angela doesnt want to see happen. And that is something we discussed saturday. She said, if we give them weapons, the way to solve this conflict is through military means. Thats the message we dont want them to send. She doesnt think this should happen. As you know, it is something i am sure they are going to discuss. In addition to, we understand obama is pushing for European Countries to spend more on defense. This is a big theme. They want countries and the European Union, nato countries, pend 12 of their gdp to share the burden. Within the european states the only ones are ukraine are the u. K. And france. It may drop to two percent in the nottoodistant huger ominous but the fact that cameron is calling nottoodistant future, despite the fact that cameron is calling for them to do this. The ruble was negligibly down. I think the ruble is an interesting story. I am not sure where we are. The ruble had a terrible week. Dirty 7. 11. It strengthened just a tad. 37. 11. Last week. E closed it was its worst week. It was down three percent. It was at a record low. It was down more than 10 this year. Thats a big issue. Thats a big issue for inflation. In addition to the food import bans. That is something the russian government has to be worried about. , theit comes to the market russian stock market, last week the russian stock market lost dust over three percent. Most of the losses have been , those by the sanctions having more trouble getting access to markets. It hasnt been the blood bath it would be given the rhetoric. Thanks very much for the latest on ukraine. China has released its latest health check on the manufacturing sector. David is standing by in hong kong with more. It seems the weakness in isufacturing number prompting some people to consider whether the government might do more to prop up the economy. Exactly. Thats why when the numbers came out a few hours back use of the markets quickly turned. It was basically flat hong kong and shanghai. It did see a big pot because of expectations in the numbers a big pop because of the expectation the numbers should show that. Official pmi data. 51 point one. On the surface it looks ok. It was a big drop from the previous month. If you look at the glass, it is half full. The Largest Listed Companies are moving forward at a steady pace. Hsbc,nal reading from which is a smaller survey, is 50. 1. Ove 5050 the recovery and china is actually slowing. And merrillica lynch is saying we will see beijing announced stimulus measures. In what form we still do not know. You are in hong kong. Over talk about tensions the democratic process, because we understand the protesters are vowed to start an era of civil disobedience. Tell us more. Thats right. The stage is set, because what we had over the weekend was we have this proposal from beijing. Electionsor the 2017 must be approved by a nominating panel, which opposition lawmakers have come out and said will likely be stacked with probeijing loyalists. So democracy legislators want suffrage,erage, that the general public nominate the candidate for the elections, something based on the proposal from beijing wont happen. Side of the argument, which was brought up by the aobeijing side, is that public nomination of candidates does not comply with hong kong. It is the mini constitution we follow in hong kong. It is important to keep in mind the political system, which is one country into systems between hong kong and the rest of the chinese mainland. What is ahead . The occupy Central Movement has said it will be staging a mass occupation. They didnt say when. It is not a very big place, bybably 10 to 15 minutes walk. That would cause a lot of destruction. This is where you had a stock exchange. This is where you had major banks. It is something to watch closely. Lawmakers have said they would block this proposal from beijing. Beijing has said if the law doesnt go through we may actually just scrap the 2017 elections. It is a developing story and very big to follow. Thank you very much. Thisill to come, moscows calculation. Our next guest says Vladimir Putin has played a poor hand in Eastern Ukraine and now needs to make the best of a bad job. The former British Ambassador to russia joins us after the break. Welcome back to countdown. Lifetime in london is 14 minutes past seven. More sanctions are coming. That is the word after nato employed troops to Eastern Ukraine. Within a week the European Commission will have drawn up new measures to impose on russia. U. K. Prime minister David Cameron says the kremlins only choice is to listen to europes demand. It is a difficult situation, and we have to show real resilience in demonstrating to thisa if she carries on in way the relationship between europe and russia, britain and russia, america and russia, will be radically different in the future. We are joined by the former reddish ambassador, sir andrew former British Ambassador, sir andrew wood. I know you think putin had failed. He is tryingn what to achieve. What do you think his objectives are . But they keep changing. His original objective was to make sure there was no democratic government in ukraine and that would lead directly to moscow. That failed. He miscalculated in interfering with Eastern Ukraine in that he suppose there would be a Popular Uprising in favor of his ideas and policies. That failed. He was on the verge of military donetsk. N each time he has doubled or quit. How difficult is it to combat somebody working in uch an ad hoc manner . Its very difficult. The important thing is for us to have a consistent view. Our consistent view is it is not primarily a quarrel between the west and russia, which is the secondly, the it. Territorial integrity of ukraine is something essential to try to that is something primarily up to the ukrainians. I think those are two basic principles. You were this countrys ambassador to russia. How good is the intelligence . I know you are not privy to it now, but it seems putin keeps surprising everybody and really has the initiative. Does the United States know what putin is going to do tomorrow . I cannot answer. I think he doesnt know what he is going to do tomorrow either. This is the real danger of the present situation. It is very ad hoc. I dont think he would have wished to introduce his troops quite so blatantly, although he has been supplying men and weapons for some time, and he has been forced into that because it was not working, and he thought he might lose those cities. That was an opportunity to declare victory and to get out. He proposed instead to open another front. Was it a lower level of popularity at home . Would that cause putin to think twice, and if so, what would drive that . Would that be higher living costs, reduced standard of living for russians . Was that the focus . The factiving costs, he has lied to his people, and the arrival of body bags. Those are serious risk. Over the longterm this is an Economic Disaster for russia. One must assume in the longterm his ratings will drop. The ratings are slightly illusory to the degree they are ofnded on his presentation litany or chaos. Chaos is what you have in ukraine. You wouldnt want that, would you . That is a perfectly good strategy, but not a longterm strategy. The ratings are 84 , even if you believe them. Economic chaos or problems with ,he economy and peoples lives we are not really there yet. Those are distant raw specs, the idea the economy will get really bad and his distant prospects, the idea the economy will get really bad in his popularity will plummet. But they think it will happen. It doesnt matter what i think or what any of us think. It is what he feels. There are quite a lot of indications of nervousness on his part. He knows in russian history people have turned quite suddenly and from the point of view of the powers to be dangerously. Problems are i was going to say psychological because they are within him, but they are in peoples apprehension of what is going on. He has expressed himself on that. What do you think of prospect military assistance . Angela merkel over the weekend was pushing against that as an option. There is definitely a Division Within europe on whether europe should give assistance to kiev. To moscow. Where are we headed on that regard . A it has become more of question. Military assistance has a wide range of meanings. Protectedtter equipment in a way as military assistance. Helping with supply is a form of military assistance. Supplying more competitive weapons for the Ukrainian Army is a further step up. I dont think we are talking about ourselves producing troops to go there. One quick question on bp i know you advise and have advised Russian Companies that operate in russia. Bp in the past. They have got a 20 stake in russias largest oil company. Closer to russia has not been a material issue. Ir hasnt been so far the closeness to russia has not been a material issue. At what point is that change because sanctions keep getting ratcheted up . At what point does bp really start to suffer and British Business as a result of the sanctions getting ratcheted up . How bad of a situation is bpn . Is bp in . This is not a comfortable situation for anyone. To some degree the future is takeedictable, but bps s is determined to be longterm. They must suppose russia will in due course settle down and resume a path towards economic abandoned in was 2012 by putin. Which you think will be their strategy. I think it has a degree of optimism, but if you invest in oil you have got to have some optimism. Thank you for joining us. Sir andrew wood, associate fellow. Atcoming up we are looking reshuffled management. All the details later. Welcome back. Thehe chief executive of largest exotic Eyewear Company is in a printer a bitter row with the owner. Andrew roberts joins us from paris. What is going on . What do we expect to happen . Good morning, mark. What is going on is there is a Board Meeting this morning. They are gathering top people to make a decision and to make a final call this evening. As to what is going to happen speculation has been mounting since july. Supposedly there was a fallout between the man who has led and the owner and founder of the company. They supposedly had a falling out over strategy. It could have to do with the. Oogle tie up in any case it looks like he is leaving the company and the most likely solution is the cfo will replace him, possibly with some support on the operational and commercial side. To leave you now but hopefully we will get you back. Buckets ofthrowing water comes into vogue on the internet, water week. We will discuss that next. Welcome back. Lets go straight to the Foreign Exchange market to check on eurodollar. At thelar is highest level in almost a year. Going tot ukraine is have has been weighing on the euro. Sort of boostme to the dollar. We have talked about contrasting we are discussing in relation to the fed and the ecb, when talking about its strategy for Monetary Policy and the other one not talking about that. All of that comes into focus on thursday when we have that meeting at the European Central bank. These are the top headlines. Chinas manufacturing expanded at a slower pace last month. It suggests the economy is losing momentum. Chinas official purchasing manufacturers index came in at 50. 1 in august. At 50. 2. In both dropped in july but remain above 50, which indicates expansion. Staying in china, protesters have taken to the street, vowing to start an era of civil disobedience. That is after china ruled that populares of the election must be screened. The ruling gives the beijing government an effective veto over anyone not viewed as friendly to the communist party. Oppositionists say they will block the passage of the electoral bill. Tosian rebels have attacked ukrainian coast guard rest vessels for the first time. Just hours after that you government agreed to impose new sanctions on russia. If it worsens the sanctions may target energy and finance industry. Welcome back to countdown. The time in london is 7 32. World water week kicks off in stockholm. The conference aims to bring Energy Efficiency into focus. Joining us is the head of thematic investment. Thank you for coming in. Lets talk about water. The facts weof need to know around water and the global megatrend, and we will delve into investment ideas behind it. I think at the macro level there is not enough of it. If you look at all the water on the earth, only two and a half percent of that water is fresh water. Its in all the wrong places. You have 10 countries that control 60 of that water. You have close to 50 countries currently in a state of water stress or scarcity. Of it. Sing too much water use is booming around the world. Goes tosage agriculture. Seven percent is considered inefficient. And municipal as we start to adopt a lot of the bad habits we had in the west with regard to water use. Where are we when it comes to management, Wider Technology use, greater government mechanisms those three headings . We have a long way to go. To put it in perspective, only two and a half percent of water around the world is recycled and actively reused. It is just a drop in the bucket. We have to get up to the sorts of levels we have seen countries like israel, which are at 75 to 80 . We also have to have a significant move in terms of rising. Water is not price at a level be ncourages usage to users to be efficient in water use. The water has to hit home in the same way as energy. Where water meets the energy or, we see interesting trends. A least of which the development increasing use of fracking technology. Not least of which is the development of the increasing use of fracking technology. 90 of energy is what are dependent. The fastestgrowing source in the u. S. Is energy. For every bill the increasing use of fracking technology. 90 of energy is what are dependent. The fastestgrowing source in the u. S. Is energy. For every bill of shale gas produced you have one barrel of water. 50 to 60 of areas where they are officially classified as water stress. How do we take advantage of this . You have got a great staff that show