BRUSSELS, March 21 - The European Union will be prepared to enact Phase 3 of its three-stage plan of sanctions against Russia that was agreed two weeks ago if it sees any further escalation of Russia's unfriendly activities in regard to Ukraine, German Chancellor Angela Merkel said at a press conference after the first working session of the European Council.

The plan's Phase 3 envisions serious economic sanctions, which, European political figures and experts fear, may deliver a palpable blow to the EU economy as well. The European Executive Council has been asked to work out such options that will make sure that the proposed sanctions are damaging to the EU to a lesser extent than they are to Russia.

Merkel said that it had been made totally clear that the EU would be ready to switch to Phase 3, should a further escalation occur.