West Warns Russia Not to Annex Crimea After Referendum

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A man holds a Soviet flag near Lenin Square in Simferopol, Ukraine, on March 16, 2014.

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Photographer: Filippo Monteforte/AFP via Getty Images

A man holds a Soviet flag near Lenin Square in Simferopol, Ukraine, on March 16, 2014. Close

A man holds a Soviet flag near Lenin Square in Simferopol, Ukraine, on March 16, 2014.

Photographer: Andrew Lubimov/AP Photo

About 96 percent of Crimeans voted in yesterday’s disputed referendum in favor of leaving Ukraine and becoming part of Russia. Close

About 96 percent of Crimeans voted in yesterday’s disputed referendum in favor of leaving Ukraine and becoming part of Russia.

Photographer: Dimitar Dilkoff/AFP via Getty Images

Armed men, believed to be Russian servicemen, patrol outside a Ukrainian military base in Perevalnoye, Ukraine, on March 16, 2014. Close

Armed men, believed to be Russian servicemen, patrol outside a Ukrainian military base in Perevalnoye, Ukraine, on March 16, 2014.

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Wheelchair bound Anna Kirichik reads paperwork before casting her vote in a predominantly Russian area of Crimea, in Bakhchisaray, Ukraine, on March 16, 2014. Close

Wheelchair bound Anna Kirichik reads paperwork before casting her vote in a predominantly Russian area of Crimea, in... Read More

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People arrive to cast their vote at a polling station in Simferopol, Ukraine, on March 16, 2014. Close

People arrive to cast their vote at a polling station in Simferopol, Ukraine, on March 16, 2014.

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After finishing the referendum in Crimea, pro-Russian people celebrate at Lenin Square in Simferepol, Ukraine, on March 16, 2014. Close

After finishing the referendum in Crimea, pro-Russian people celebrate at Lenin Square in Simferepol, Ukraine, on March 16, 2014.

The U.S. and the European Union warned Russia not to annex Crimea after a referendum in the southern Ukrainian region, setting the stage for sanctions on Russia in the worst diplomatic standoff since the Cold War.

A total of 96.8 percent of voters in the Black Sea peninsula yesterday backed leaving Ukraine to join Russia, the head of the election commission, Mikhail Malyshev, told reporters. The results exclude one city, Sevastopol. EU foreign ministers arrived in Brussels this morning for a meeting at which they’re poised to impose asset freezes and visa bans on people and “entities” involved in Russia’s seizure of Crimea, according to an official from the 28-nation bloc.

“We’ll be looking today at what we do about this so-called referendum,”the EU foreign-policy chief, Catherine Ashton, told reporters before the talks. “This is, under international law and under the Ukrainian constitution, illegal. We need to now consider what our response should be.”

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The Ukrainian government and the U.S. also consider the vote illegal, while Russia said it “fully met international norms.” As the West threatens to ratchet up sanctions if Russia doesn’t back down from taking over Crimea, the Kremlin has deployed about 60,000 troops along the Ukrainian border, the government in Kiev said. Ukraine closed border crossings to Russia and will mobilize as many as 15,000 volunteers in the next 15 days to defend the nation, officials said yesterday.

‘Increasing Costs’

The international community “will not recognize the results of a poll administered under threats of violence and intimidation from a Russian military intervention,” the White House said in a statement. “Russia’s actions are dangerous and destabilizing. Military intervention and violation of international law will bring increasing costs for Russia.”

Turnout in the vote was 83.1 percent, according to the election commission.

A majority of Crimea’s residents are ethnic Russians and the region was part of Russia until 1954, when it was given by Soviet leader Nikita Khrushchev to Ukraine. President Vladimir Putin contends ethnic Russians in Crimea are at risk after the ouster last month of President Viktor Yanukovych, an assertion that Ukraine’s new leaders deny.

How the Crisis Began, Where It's Headed

President Barack Obama signed an executive order authorizing U.S. financial sanctions, allowing Treasury Secretary Jacob J. Lew to take steps that could include freezing assets or blocking American companies or individuals from doing business with Russians, Ukrainians or others deemed a threat to Ukraine’s security.

No Resolution

Putin spoke with Obama yesterday and said even amid differing views it’s necessary to work together to stabilize Ukraine, the Kremlin said on its website.

Obama told Putin no diplomatic resolution is possible “while Russian military forces continue their incursions into Ukrainian territory,” the White House said in a statement.

U.K. Foreign Secretary William Hague called the Crimea vote “illegal, unconstitutional and illegitimate.” The EU will need to make “a firm and united response” to Russia, he said in a statement.

“We are all reluctant to impose sanctions because Russia will probably respond and we’ll all suffer as a result,” Foreign Minister Radoslaw Sikorski of Poland, a NATO and EU country that shares a border with Russia’s Kaliningrad exclave, said on CNN. “But Russia is leaving us with no choice.”

Biden Trip

U.S. Vice President Joe Biden travels to Poland and Lithuania today for talks on Ukraine, according to the White House. The Pentagon said last week it would send 12 F-16 aircraft to Poland as a sign of U.S. commitment to defend allies in the region; the U.S. previously sent six fighter jets to Lithuania.

Russia’s ruble slipped 0.2 percent as of 7:07 a.m. in London. Moscow’s Micex Index climbed 1.2 percent.

Lilit Gevorgyan, senior economist at IHS Global Insight (INSDHYS) in London, said that “currency and equity markets have already been punishing the Russian ruble and companies and the talk of EU sanctions is only fueling capital flight.”

Reports of Russia’s increasing military presence follow accusations by Ukraine over the weekend that its neighbor’s troops entered the Kherson region on the Azov Sea from the Crimea peninsula.

‘Cold War’

“We’re on the brink of a new Cold War, where Europe’s view of Russia as a benign nation that could be integrated economically and politically has become history,” Fredrik Erixon, director of the European Centre for International Political Economy in Brussels, said by phone.

Crimea will switch to the ruble from Ukraine’s hryvnia April 1, RIA Novosti cited Crimean Deputy Prime Minister Rustam Temirgaliev as saying yesterday.

The latest reports of Russian military activity beyond Crimea’s borders in eastern Ukraine have heightened concerns that Putin plans to extend his reach in Ukraine.

“We can rule out that Putin will limit himself to Crimea,” Joerg Forbrig, a senior program officer at the Berlin bureau of the German Marshall Fund of the U.S., said in a phone interview. “There is no prospect of self-restraint on the part of Putin’s Kremlin.”

Two days ago, Russia vetoed a United Nations Security Council resolution proposed by the U.S. that declared the referendum illegal and stressed the need for political dialogue to resolve the crisis. China abstained, with the other 13 members backed the resolution.

Russian lawmakers are scheduled to consider legislation March 21 that would allow Russia to incorporate parts of countries where the central authority isn’t functioning and local residents want to secede, Sergei Markov, a Kremlin adviser and vice rector of the Plekhanov Russian University of Economics in Moscow, said in a telephone interview from Sevastopol on March 15. That would allow Russia to formally annex other parts of eastern Ukraine, he said.

To contact the reporters on this story: Stepan Kravchenko in Simferopol, Ukraine at skravchenko@bloomberg.net; Helena Bedwell in Simferopol, Ukraine at hbedwell@bloomberg.net

To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net; John Fraher at jfraher@bloomberg.net Eddie Buckle

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