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EU close to deal on 10th sanctions package against Russia

European Union flags flutter outside the EU Commission headquarters in Brussels

By Jan Strupczewski and Andrew Gray

BRUSSELS (Reuters) - The European Union is close to a 10th sanctions package against Russia for its invasion of Ukraine and EU governments hope to reach a deal on Wednesday if they can overcome differences about a ban on Russian rubber and diamond imports, EU diplomats said.

Among those the bloc is seeking to target are Russians it says are involved in the illegal deportation of some 6,000 Ukrainian children.

The package, worth 11 billion euros ($11.70 billion), is also likely to include, for the first time, a ban on all exports to seven Iranian entities believed to be making items used by Russia in the war.

"We were discussing today the 10th sanctions package against Russia," Polish ambassador to the EU Andrzej Sados said after talks by ambassadors of the EU's 27 governments in Brussels.

"We will restart the discussion tomorrow afternoon in the hope that we can find a common denominator," he said.

The EU wants to have the package, including against those accused of the deportation of children, ready in time for the anniversary of the invasion on Feb. 24.

"At least 34 Russian institutions are involved in systemic stealing of Ukrainian children, including the Russian children's ombudsman," Sados said.

The U.N. refugee agency said last month Russia was giving the children Russian passports and putting them up for adoption.

A U.S.-backed report this month said Russia had held at least 6,000 Ukrainian children in sites in Russian-held Crimea and Russia whose primary purpose appeared to be political re-education. Russia's embassy in Washington said Russia accepted children who were forced to flee Ukraine.

In response to the UNHCR, Russia's foreign ministry accused its chief of being silent when children died as a result of what she said was Ukrainian shelling in the Donbas region after pro-Moscow separatists declared independence in 2014.

DIAMOND TRADE

Sados said there was some progress on setting an embargo on imports of Russian diamonds, either polished or rough, because Belgium was easing its opposition to it even though it would hurt Europe's biggest diamond trading centre in Antwerp.

But he and other diplomats said diamonds were unlikely to be part of this package because such a measure still needed to be coordinated with G7 countries, whose leaders were likely to mention the issue in a statement on Friday.

Neither would the package include sanctioning Russia's nuclear energy sector and putting Rosatom on the sanctions list, diplomats said, because several European countries, including France, buy uranium from Russia for their reactors.

But the EU was close to a compromise on banning Russian synthetic rubber, diplomats said, even though Germany and Italy opposed a complete embargo which Poland and the Baltic countries are calling for. The solution could be a quota and the talks were focusing on how much could be allowed, diplomats said.

The EU will also ban sales to Russia of all dual-use and electronic components used in Russian armed systems such as drones and missiles and helicopters -- basically anything that can be found in Russian weapons on Ukrainian battlefields.

The EU is also likely to cut more Russian banks, including the private Alfa-Bank, the online bank Tinkoff and the commercial lender Rosbank [ROSB.MM] from the global messaging system SWIFT.

The EU is likely to ban Russia Today's Arabic service from its territory and prohibit sales to Russia of electronic circuits and components, thermal cameras, radios and heavy vehicles, as well as steel and aluminium used in construction and machinery serving industrial and construction purposes.

($1 = 0.9398 euros)

(Reporting by Jan Strupczewski; Editing by Alison Williams)