(Adds Chinese statement, Western diplomat)
By Louis Charbonneau and Michelle Nichols
UNITED NATIONS, April 23 (Reuters) - Russia and China have blocked a proposal by the United States and France to impose U.N. sanctions on Central African Republic's former President Francois Bozize and two other people linked to the conflict there, diplomats told Reuters on Wednesday.
The proposal to sanction Bozize, in particular, was due to his "engaging in or providing support for acts that undermine the peace, stability or security of CAR," according to an eight-page letter to the U.N. Security Council's sanctions committee on Central African Republic, which was obtained by Reuters.
The sanctioning of Bozize, who was ousted by predominantly Muslim Seleka rebels in March 2013, and two other individuals was to have taken effect on Tuesday, but first Russia and then China raised last-minute objections, diplomats said.
It was the first attempt to blacklist anyone linked to the conflict since a U.N. sanctions regime was set up in December.
"The Russians and Chinese have a placed a hold on the proposed designations," a diplomat on the 15-member Security Council told Reuters on condition of anonymity. "We don't know whether it's dead or if their concerns can be dealt with."
If agreement is not reached to lift a hold, it can leave proposed sanctions in limbo indefinitely. The Security Council sanctions committees work on the basis of unanimity.
France had originally wanted to sanction more individuals, but settled on three names for a joint U.S.-French proposal that Washington's rigorous vetting process could accept, envoys said.
Russia's U.N. mission spokesman declined to comment.
A spokesman for Beijing's mission in New York said in an email: "We would reaffirm that it is China's principled stance to be opposed to resorting to sanctions. Sanctions are not conducive to the proper settlement of problems."
A Western diplomat, however, said he was optimistic that Russia and China would ultimately be persuaded to back the designations as they have in the cases of Iran and North Korea.
Russia told the sanctions committee in a written explanation of its objections that "the listing of Bozize may lead to negative consequences, which would hardly contribute to the main goal of reaching settlement in the Central African Republic - inter-religious reconciliation."
"It remains to be answered why France and the United States, while proposing to list Francois Bozize, who was unconstitutionally removed from power, overlooked Michel Djotodia, the former transitional president and Seleka leader, who masterminded the forcible takeover of power in March 2013," said the letter, which was read to Reuters by a third diplomat.
Diplomats said China simply needed more time to consider the proposal.
ENVOYS SEE NO RETALIATION FOR UKRAINE
Inter-communal violence has gripped Central African Republic since late 2012 when a battle for power degenerated into fighting between Muslims and Christians that has since forced about 1 million people from their homes.
Almost 200,000 people have fled the impoverished landlocked country since December with a further 160,000 expected to leave this year. The United Nations has warned that the situation could spiral into genocide.
Virtually all Muslims have fled the capital of Bangui since the Seleka, who seized power in March 2013, were forced to step aside in January. The U.N. has since reported a "cleansing" of Muslims from the country's west.
The diplomats interviewed for this article said they did not think Russia was blocking the proposal in retaliation for U.S. and European support for the Kiev government in Ukraine or for the Western sanctions imposed on Russians linked to Moscow's annexation last month of the Ukrainian region of Crimea.
"We're disappointed, but hopefully we can convince them to withdraw their holds," a Security Council diplomat said.
The move by Russia and China comes as the European Union has found it increasingly difficult to justify its own blacklistings in European courts. Iran has successfully mounted legal challenges in several cases there.
The French-U.S. proposal calls for global travel bans and asset freezes on two other individuals in addition to Bozize - an "anti-balaka" Christian militia leader and one of the original Seleka leaders. It accuses all three men of encouraging or helping organize atrocities.
That proposal says Bozize has been financing and supporting militiamen attempting to destabilize the situation in CAR and bring him back to power. It says he encouraged a Dec. 5 attack on Bangui by anti-balaka forces that led to increasing violence that has claimed over 700 lives.
"Forces loyal to Bozize have become involved in reprisal attacks against CAR's Muslim population," the proposal says. "Bozize called on his militia to pursue the atrocities against the current regime and the Islamists."
The Security Council earlier this month authorized a 12,000-strong U.N. peacekeeping mission to be deployed in September, a sign of its recognition that 6,000 peacekeepers from the African peacekeeping force (MISCA) and France's 2,000-strong Sangaris force had failed to stamp their authority on the country. (Editing by G Crosse and Jan Paschal)
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