Obama Meets Ukraine Leader, Presses Putin to Back Down

Barack Obama called Russia’s incursion into Crimea a violation of international law and told Ukrainian Prime Minister Arseniy Yatsenyuk that the U.S. stands with Ukraine to protect its sovereignty and territory.

If Russian President Vladimir Putin doesn’t change course, the U.S. and the international community “will be forced to apply a cost,” Obama said after meeting with Yatsenyuk at the White House. “There’s another path available.”

Obama suggested that if Russia backs down there could be “different arrangements over time” for Crimea in line with Ukraine’s constitution. “But that is not something that can be done with the barrel of a gun pointed at you.”

Yatsenyuk told Obama that Ukraine can be a part of “the western world” as well as a “good friend and partner” of Russia. While vowing Ukraine “will never surrender,” he said the government in Kiev was open to talks with Russia.

“Mr. Putin, tear down this wall. The wall of war, intimidation and military aggression,” Yatsenyuk told reporters afterward, warning that Russia may move beyond Crimea to invade central Ukraine. “Let’s stop. Let’s calm down.”

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Obama’s meeting with the Ukrainian leader was a show of support for the government in Kiev in its standoff with Russia, whose troops seized the Crimean peninsula after an uprising in Kiev toppled the Moscow-backed president, Viktor Yanukovych.

‘Grave Implications’

With the approach of a March 16 referendum in Crimea on reuniting with Russia, Obama and U.S. allies in Europe are ratcheting up the threat of sanctions if Putin doesn’t take steps to defuse the situation.

The confrontation has become the biggest between Russia and the West since the end of the Cold War. The U.S. and other members of the Group of Seven countries warned in a statement today that Russian annexation of Crimea “could have grave implications.”

The main pressure point on Russia is economic. Along with the threat of financial sanctions by the U.S. and Europe, investors have registered their concern.

Russia’s Micex Index (INDEXCF) lost 2.6 percent to 1,274.21 by the close in Moscow, the lowest since May 2012. The ruble weakened for a fourth day against the central bank’s dollar-euro basket. Government bonds due February 2027 slid for a fourth day, with the yield at the highest since the securities were issued in February 2012.

Merkel’s Overtures

German Chancellor Angela Merkel, meeting in Warsaw today with Polish Prime Minister Donald Tusk, reiterated her March 17 deadline for Russia to accept her government’s overtures for a diplomatic “contact group” to resolve the crisis.

EU foreign ministers are prepared to draft a series of punitive measures including asset freezes and visa curbs at the beginning of next week, she said. The U.S. has already imposed a visa banned on some individuals, which it hasn’t identified, and Obama has authorized the imposition of financial sanctions.

U.S. Secretary of State John Kerry, who met with Yatsenyuk earlier today, said at a congressional hearing that he’d travel to London tomorrow for a meeting with his Russian counterpart, Sergei Lavrov, to seek a way forward. He said the U.S. and its allies are ready to exert maximum pressure on Russia.

Sanctions could “get ugly fast if the wrong choices are made,” Kerry said. “And it can get ugly in multiple directions.”

‘Ugly Fast’

Putin so far has refused to back down. His government contends ethnic Russians in Crimea are at risk after the ouster of Yanukovych, an assertion Ukraine’s new leaders deny. Putin supports Crimea’s recently appointed administration, which has organized the March 16 referendum.

The Black Sea region’s premier, Sergei Aksenov, said today that Crimea can be integrated into Russian within two months if voters approve.

Ukraine’s First Deputy Premier Vitaliy Yarema told the government in Kiev, that Russian forces, which already have blockaded or taken over bases in Crimea, are amassing along Ukraine’s eastern frontier.

Russian forces control the roads leading to the peninsula, have taken charge of a ferry crossing at Kerch and blocked harbors, according to Ukrainian border guards. Kiev’s Boryspil airport said on its website that Simferopol, the southern region’s capital, has canceled flights linking the two cities until the day after the referendum.

On Edge

Steven Pifer, a former U.S. ambassador to Ukraine, said the crisis has put the entire region on edge.

“Every neighbor around Russia, their concern is, if the Russians take a chunk of Ukraine’s territory, will they come and look at us next?” said Pifer, who directs the Arms Control and Non-Proliferation Initiative at the Brookings Institution, a policy center in Washington. “You have a lot of countries around Russia much more worried today than two weeks ago.”

For the acting government in Kiev, Pifer said, Yatsenyuk’s visit to the White House is “seen as a big plus” in showing the U.S. government’s support.

After his meetings with Obama and Kerry, Yatsenyuk went to the Capitol tonight and met with members of the Senate Foreign Relations Committee. He called the U.S. pledge of $1 billion in loan guarantees “the first real and concrete step how to stabilize the situation in my country, and we praise it.”

Speaking to reporters after meeting in a closed-door session with committee members, Yatsenyuk said he wasn’t concerned about the time that may be required for Congress to approve the requested economic assistance.

“It always takes time to make good things,” he said.

Aid Package

Senator Robert Menendez, a New Jersey Democrat and committee chairman, said the aid package could be passed as soon as Congress returns from a week-long recess.

“I don’t know that it would take weeks,” Menendez said. Senate Majority Leader Harry Reid, a Nevada Democrat, “intends to make this the first order of business when we return from recess,” he said.

“The bottom line is the Ukraine is going to have this assistance,” Menendez said.

To contact the reporter on this story: Margaret Talev in Washington at mtalev@bloomberg.net

To contact the editors responsible for this story: Steven Komarow at skomarow1@bloomberg.net Joe Sobczyk, Michael Shepard

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