The European Union sanctioned companies for the first time over the Kremlin’s encroachment in Ukraine and pledged to accelerate preparations for broad economic penalties should Russia disrupt the Ukrainian presidential election due May 25.

EU foreign ministers meeting today in Brussels froze the assets of two companies expropriated after Russia annexed Crimea. They also added 13 people to a list of individuals facing asset freezes and travel bans for destabilizing Ukraine, according to an e-mailed statement. The identities of the two businesses and 13 extra people are due to be published later today in the EU’s Official Journal.

In expanding these so-called stage-two sanctions, the ministers also stepped up the threat of more far-reaching “stage-three” penalties against Russia and called separatist votes yesterday by pro-Russian groups in eastern Ukraine illegitimate.

“These attempts at referendums have zero credibility in the eyes of the world,” U.K. Foreign Secretary William Hague told reporters before the meeting. “It’s very important for us to demonstrate that we are ready for that third tier of sanctions, far-reaching sanctions, depending on Russia’s attitude toward the elections on May 25.”

The 28-nation EU is urging Russian President Vladimir Putin to back down in the biggest standoff since the Cold War, expanding asset freezes and travel bans and preparing harsher penalties should the Kremlin encroach further in the country. German Chancellor Angela Merkel and U.S. President Barack Obama said 10 days ago that Russia’s stance on Ukraine’s election could be a trigger for deeper penalties.

Main Supplier

Such sanctions against Russia, the main supplier of natural gas to Europe through Ukrainian pipelines, risk undermining the economies of some member nations. As a result, EU officials are scrambling to assess the impact on the bloc’s countries of any stage-three penalties.

“We all understand that this phase is very sensitive,” Lithuanian Foreign Minister Linas Linkevicius told reporters on his way into the meeting. “This is really not so easy. I’d like to reiterate that the second phase is by far not yet exhausted.”

The French government said it will deliver Mistral helicopter carriers to Russia as planned, citing the size of the contract, the penalties that would be due in the event of cancellation and France’s refusal to be the only country taking a meaningful hit on sanctions.

Sanctions Debate

France refuses to link the contract to the sanctions debate, an official from President Francois Hollande’s office told reporters traveling with the president in Baku late yesterday.

German Foreign Minister Frank-Walter Steinmeier said the EU must be ready to hit Russia with stage-three sanctions while being keen to avoid a scenario in which that step is necessary, such as the failure of the May 25 elections to take place.

“Nobody wants that,” Steinmeier told reporters. “We are working together so that, after the escalations of recent days, we finally come to a situation in which we can de-escalate the whole situation and thereby make further sanctions unnecessary.”