Crimea Takeover Builds to Expose Ukraine Escalation Risk

Photographer: Alexey Nikolsky/Ria Novosti/AFP via Getty Images

Russian President Vladimir Putin puts his signature upon a board as he visits the mountain Paralympic village outside Sochi on March 6, 2014. Close

Russian President Vladimir Putin puts his signature upon a board as he visits the... Read More

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Photographer: Alexey Nikolsky/Ria Novosti/AFP via Getty Images

Russian President Vladimir Putin puts his signature upon a board as he visits the mountain Paralympic village outside Sochi on March 6, 2014.

Russian President Vladimir Putin is showing no signs of heeding Western calls to ease the standoff in Crimea, where pro-Kremlin forces stepped up their takeover of the Ukrainian region preparing for a separatist referendum.

Gunmen fired warning shots as international observers tried to enter Crimea for a third day and a Ukrainian border patrol plane came under fire that didn’t cause injuries. TV5 reported that a military agency in the regional capital Simferopol was captured, and 70 unidentified trucks entered the city.

Ukraine is struggling to keep hold of Crimea, home to Russia’s Black Sea Fleet, after pro-Russian forces took control of it following the ouster of the country’s president late last month, Viktor Yanukovych, who was backed by Moscow. Western officials say they’re concerned that the situation in the peninsula, where the U.S. estimates there now are 20,000 Russian troops confronting a smaller Ukrainian military force, threatens to explode at any moment.

“Russia and Ukraine, right now, are one nervous 20-year-old soldier’s mistake away from something very, very bad happening that could spin out of control,” said Steven Pifer, a former U.S. ambassador to Ukraine. There are about 12,000 Ukrainian troops in Crimea, he said.

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‘Intensive Contacts’

Russian Foreign Minister Sergei Lavrov and U.S. Secretary of State John Kerry discussed the situation by phone yesterday, agreeing that “intensive contacts” were necessary to resolve the crisis, according to a statement by the Foreign Ministry in Moscow. Kerry said March 6 in Rome that he had presented Russian Lavrov with ideas to take to Putin.

Kerry “underscored U.S. readiness to work with partners and allies to facilitate direct dialogue between Ukraine and Russia,” the State Department said in a statement. Kerry also “made clear that continued military escalation and provocation in Crimea or elsewhere in Ukraine, along with steps to annex Crimea to Russia would close any available space for diplomacy, and he urged utmost restraint,” the statement said.

As Putin opened the 2014 Paralympic Games in Sochi on March 7, lawmakers in Moscow pledged to accept the results of a March 16 referendum on Crimea joining Russia.

The peninsula, where Russian speakers comprise a majority, will join Russia once parliament in Moscow passes the necessary legislation and there’s nothing the West can do to stop the process, according to Sergei Tsekov, the deputy speaker of Crimea’s parliament.

“There’s no comeback, and the U.S. or Europe can’t impede us,” Tsekov said by phone yesterday from Moscow, where he met Russian officials to discuss the region’s future. “Crimea won’t be part of Ukraine anymore. There are no more options.”

Obama, Hollande

U.S. President Barack Obama had phone conversations yesterday with several other international leaders, including separate calls with French counterpart Francois Hollande and British Prime Minister David Cameron, and a conference call with the presidents of Latvia, Lithuania and Estonia, according to the White House.

Obama and Hollande agreed that there’s no legal basis for the referendum and that Russia should withdraw its forces, according to an e-mailed statement from the French president’s office. Obama and Hollande are seeking direct dialog between Ukraine and Russia as well as the restoration of Ukraine’s sovereignty and territorial integrity, according to the statement.

All of the leaders Obama talked with “rejected the proposed referendum in Crimea as a violation of Ukraine’s constitution,” and all “agreed on the need for Russia to pull its military forces back to their bases,” according to a White House statement.

Ambassador’s Meeting

Russian Deputy Foreign Minister Grigory Karasin on March 7 met Volodymyr Yelchenko, Ukraine’s ambassador to Moscow. The two discussed the countries’ relations in a “frank atmosphere,” the Russian Foreign Ministry said in a statement on its website.

Germany wants to “mobilize an as-broad-as-possible international coalition” to counter Russian threats over Ukraine, Frankfurter Allgemeine Sonntagszeitung reported, citing unidentified people from the Foreign Ministry.

A Ukrainian division at Shcholkino was stormed by Russian soldiers, who beat servicemen, confiscated their mobile phones and forced them and their families to leave, Ukraine’s border guard service said in a statement. Eleven border guard units are currently being blocked, according to a separate statement.

The service later said 100 Russian soldiers and 50 other men took control of the ferry across the Kerch Strait to Russia, stopping border guards from inspecting 31 trucks arriving in Crimea. Armed men attacked and entered a Ukrainian base in Sevastopol, the Defense Ministry in Kiev said March 7. The men withdrew after talks, according to TV5.

Pifer said Russian forces have tried to provoke Ukraine’s military, and that it was “very commendable” the Ukrainians haven’t challenged the Russians who’ve surrounded their bases.

“There needs to be some kind of de-escalation,” said Pifer, a senior fellow at the Brookings Institution, a Washington public policy research group.

The observers stymied yesterday by gunmen from entering Crimea to monitor events were from the Organization for Security and Cooperation in Europe, Tatyana Baeva, a spokeswoman for the 57-state group that includes Russia and the U.S. said by phone from Vienna. Nobody was injured as warning shots were fired, she said. Russia isn’t taking part in the mission.

The plan to determine Crimea’s status through a vote, which Ukraine’s new leaders and Western powers consider illegal and unconstitutional, heightens tensions in the worst dispute between Russia and the West since the end of the Cold War.

Ukraine will do its best to resolve conflict in Crimea peacefully, Foreign Minister Andriy Deshchytsya said yesterday.

Obama’s Advice

Obama, who is spending this weekend in Key Largo, Florida, has urged Ukraine to control its military and avoid giving Russia a pretext to escalate with military force, said two U.S. officials who requested anonymity to discuss intelligence reports and diplomatic contacts.

Obama and his European counterparts have called on Putin to de-escalate. The Russian leader says he’s defending Ukraine’s ethnic Russians, who make up 59 percent of Crimea’s population.

The U.S. and European allies will move together to impose sanctions if there isn’t a quick resolution Obama said at the White House on March 6. He telephoned German Chancellor Angela Merkel March 7 to discuss Ukraine, the White House said, and yesterday also talked about it by phone with Italian Prime Minister Matteo Renzi.

Lavrov, in his conversation with Kerry, warned against “hasty and ill-considered moves that can damage Russian-American relations, especially sanctions, which would inevitably boomerang on the United States,” the Russian Foreign Ministry said in its statement.

Treaty Visits

The Russian Defense Ministry is considering suspending visits of international inspectors as part of strategic arms reductions treaty obligations, Interfax reported yesterday, citing an unidentified high-ranking military diplomat.

Any sanctions the EU imposes would be done progressively as the 28-nation bloc seeks a diplomatic solution with Russia, EU Trade Commissioner Karel De Gucht said during a visit to the U.S. “The longer it takes, the broader the sanctions will be,” he said in a phone interview, without providing details.

Russia also turned up the economic pressure on the Kiev government by signaling that natural gas supplies may be cut because Ukraine’s unpaid gas bills have reached $1.9 billion. OAO Gazprom (OGZD) halted supplies to Ukraine five years ago amid a pricing and debt dispute, curbing flows to Europe.

Eni SpA Chief Executive Officer Paolo Scaroni said he doesn’t think the Ukraine crisis will affect gas supplies this year, thanks partly to mild weather in Europe, according to an interview with Italian daily La Stampa.

Aid Efforts

To steady Ukraine’s finances, the EU plans to provide an 11 billion-euro ($15.3 billion) aid package and is prepared to drop tariffs on about 85 percent of the bloc’s imports of Ukrainian goods, according to De Gucht.

The Republican-led U.S. House of Representatives passed a bill on March 6 to allow $1 billion in loan guarantees for Ukraine sought by Obama’s administration. Senate Foreign Relations Committee Chairman Bob Menendez, a New Jersey Democrat, is working with committee Republicans on a package of aid for Ukraine and sanctions against Russia. The panel is scheduled to vote on the legislation, which hasn’t yet been made public, on March 11.

Ukraine wants as much as $15 billion from the International Monetary Fund.

To contact the reporters on this story: Volodymyr Verbyany in Kiev at vverbyany1@bloomberg.net; Daryna Krasnolutska in Kiev at dkrasnolutsk@bloomberg.net; Stepan Kravchenko in Simferopol at skravchenko@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net Andrea Dudik

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