European members of the Security Council tried to avoid a veto by watering down the language on sanctions three times, but they failed.
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The vote was 9-2 with four abstentions - India, South Africa, Brazil and Lebanon.
The resolution demanded that Syria immediately end all violence and ensure human rights. It also called for "an inclusive Syrian-led political process."
Russia's UN Ambassador Vitaly Churkin told the council after the vote that his country did not support Syrian President Bashar Assad's regime or the violence but opposed the resolution because it was "based on a philosophy of confrontation," contained "an ultimatum of sanctions," and was against a peaceful settlement of a crisis.
China's Ambassador Li Bandong said his country is concerned about the ongoing violence and wants to see speedy reforms but opposed the resolution because "sanctions, or threat of sanctions, do not help the sitiuation in Syria but rather complicates the situation."
France's UN Ambassador Gerard Araud denounced the veto, saying it "goes against the sense of history that is under way in the region."
"I would like to commend all of those who fight against the bloodthirsty crackdown in Syria," he said.
The Security Council has been divided over a response to the violence, with Western nations and some supporters in Africa and Latin America pressing for tough action against Syria while Russia, China and other members opposed even mentioning the threat of sanctions.
If the resolution had been approved, it would have been the first by the Security Council against Syria since Assad's military began its crackdown against protesters in mid-March.
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