Obama’s Europe Trip Shifts to Mobilizing Ukraine Response

Photographer: Win McNamee/Getty Images

President Barack Obama walks from the Oval Office of the White House to deliver a statement on Ukraine prior to departing for Florida on March 20, 2014 in Washington, DC. Close

President Barack Obama walks from the Oval Office of the White House to deliver a... Read More

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Photographer: Win McNamee/Getty Images

President Barack Obama walks from the Oval Office of the White House to deliver a statement on Ukraine prior to departing for Florida on March 20, 2014 in Washington, DC.

U.S. President Barack Obama is turning a European trip originally focused on nuclear security and trade into a mission to mobilize international opposition to Russia’s annexation of Crimea.

White House National Security Adviser Susan Rice said yesterday that Russian President Vladimir Putin’s moves to claim Crimea from Ukraine have prompted the U.S. and Europe to reevaluate their post-Cold War relationship with Russia.

“What will be clear for the entire world to see is that Russia is increasingly isolated,” Rice said at a White House briefing on week-long trip, which begins March 24 in the Netherlands. The U.S. is leading the charge to impose costs on Russia “for its aggression against Ukraine.”

Russia’s incursion into Ukraine has become the central issue for Obama as he enters into a series of discussions with leaders gathering for a nuclear security summit and the annual U.S.-European Union meeting. While there, Obama also will meet with other leaders of the Group of Seven nations, Chinese President Xi Jinping and U.S. allies in Asia.

It will be the first broad gathering of world leaders since Russia moved into the Crimean region. Russia completed its annexation of Crimea yesterday with Putin signing legislation in Moscow to absorb the Black Sea peninsula and its port, Sevastopol, from Ukraine.

Other Stops

The situation also is overshadowing other stops on Obama’s itinerary: his first meeting with Pope Francis at the Vatican and a visit to Saudi Arabia to discuss Syria, Iran and Mideast peace talks.

Russia is unlikely to retreat from its annexation of Crimea so the primary goal of Obama’s meetings in Europe is to reassure allies on the periphery of Russia such as Poland and the Baltic states and send Putin “a clear deterrent message,” said Robert Litwak, director of International Security Studies at the Wilson Center in Washington.

The U.S. and EU have slapped financial sanctions on Russian officials and Putin allies to pressure Russia. Obama and European leaders have signaled that Russia may face further repercussions if it doesn’t stop what they see as destabilizing actions in Ukraine.

“We’re already quite closely coordinated with our European partners,” Rice said.

Possible Sanctions

Obama signed a new executive order on March 20 authorizing though not implementing economic sanctions affecting parts of the Russian economy. They would target financial services, energy, metals and mining, defense and engineering. Those measures carry the risk of squeezing the economies of the U.S. and EU because they would hit multinational companies that do business in Russia.

The turmoil already has had an impact in Russia. Yesterday, the country’s benchmark Micex Index (INDEXCF) of stocks fell 1 percent, the most among emerging markets, to 1,307.34 by the close, and yield on government bonds due February 2027 jumped 12 basis points, the most in a week, to 9.42 percent. The ruble has tumbled 9.3 percent against the dollar this year, the worst among 24 emerging markets tracked by Bloomberg after Argentina’s peso.

Strobe Talbott, president of the Brookings Institution in Washington who was deputy secretary of state in President Bill Clinton’s administration, said Putin’s “appetite is unsated” by seizing Crimea and it’s too soon to say whether the sanctions will be enough to stop him from going further.

Russian Behavior

“It certainly hasn’t changed Russian behavior and it’s not going to change Putin’s own predilections,” Talbot said on Bloomberg Television’s “Political Capital with Al Hunt” airing this weekend.

The massing of Russian troops near Ukraine’s borders have raised concerns that Putin may push further into the second most populous former Soviet republic.

Rice said the U.S. views with “skepticism” Russia’s assertion that movements of its military on the borders of Ukraine were simply training exercises.

Since the breakup of the Soviet Union, the U.S. and EU have supported Russia’s integration into the global economy, such as backing its entry into the World Trade Organization.

“But that was predicated on an expectation that Russia would play by the rules of the road, the economic and security rules of the road, international law,” Rice said. “What we have seen in Ukraine is obviously a very egregious departure from that.”

G-8 Debate

Rice alluded to discussions about suspending Russia from the Group of Eight, saying members will “consider the optimum disposition of the G-8/G-7 mechanism going forward in light of recent developments.”

Russia still will take part in the nuclear security conference in The Hague. The summit -- the first was held in Washington in 2010 -- is aimed at working to prevent the spread of nuclear material and the spread of weapons.

While Obama and other heads of state will be attending, Putin is staying home. Russia will be represented by Foreign Minister Sergei Lavrov. Rice said that decision was made before the confrontation over Ukraine.

“We have every interest in continuing to cooperate with Russia and other countries, even where we have differences with them on other issues, on the issue of nuclear security,” Rice said.

To contact the reporters on this story: Julianna Goldman in Washington at jgoldman6@bloomberg.net; 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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