Obama Warns Putin on Ukraine After Deadly Clashes in East

U.S. President Barack Obama warned Russian President Vladimir Putin of further consequence over Ukraine after clashes between pro-Russian separatists and government forces in the east of the country turned deadly.

The two leaders discussed the Ukrainian crisis in a telephone call today, according to statements from their offices. Obama “expressed grave concern about Russian government support for the actions of armed, pro-Russian separatists” and urged Putin to use his influence to get them to withdraw from the government buildings they seized, according to a statement from the White House.

Putin told Obama he should “use the American side’s capabilities to prevent the use of force and bloodshed as much as possible,” according to a statement on the website for Russian president’s office.

Full coverage of the Crisis in Ukraine:

Tensions between Russia and the U.S. and its allies were heightened over the weekend by fighting between Ukrainian security forces and separatists who occupied police and government facilities across eastern Ukraine. The U.S. blames Putin’s government for stirring trouble, while Russia denies involvement in the unrest and accuses authorities in Kiev of ignoring pleas from Russian and Russian-speaking citizens.

Obama said the conflict still can be resolved diplomatically, though any talks “cannot succeed in an environment of Russian military intimidation on Ukraine’s borders, armed provocation within Ukraine, and escalatory rhetoric by Kremlin officials,” according to the White House.

Geneva Talks

The two leaders pointed to talks among the U.S., Russia, the European Union and Ukraine scheduled for April 17 in Geneva. The White House said the call was initiated by Putin.

Obama told Putin Russia risked further penalties if the situation isn’t defused, according to the White House. Earlier today, Obama spoke with French President Francois Hollande to discuss the prospect of additional sanctions against Russia.

EU ministers meeting in Luxembourg today decided to put more names on a list of people to be sanctioned, adding to the 51 Russian and Ukrainian political figures blacklisted following Russia’s annexation of Crimea from Ukraine last month.

The sanctions already imposed and the threat of additional measures already have had an impact on Russia. The ruble declined to a three-week low today, and the benchmark Micex stock index retreated 1.3 percent and is down more than 10 percent this year. The Market Vectors Russia ETF (RSX), the biggest U.S. exchange-traded fund tracking Russia’s market, slumped 3.2 percent to $22.74.

Ukraine Economy

The conflict also is hitting Ukraine’s economy. The central bank in Kiev raised the rate to 9.5 percent from 6.5 percent tonight, according to a statement on its website, to halt the plunge of the hryvnia, the world’s worst-performing currency this year. Ukraine is facing its third recession since 2008 and dwindling reserves.

A broader set of economic sanctions against Russia would have an impact on European economies. Germany, Europe’s largest economy had $89 billion in trade with Russia in 2012. By comparison, commerce between Russia and the U.S. amounted to about $38 billion in 2013.

Europe also depends on energy from the east, with gas from Russia accounting for 30 percent and oil for about 35 percent of EU imports in 2011, according to EU data.

While emphasizing U.S. coordination with the EU, the Obama administration hasn’t ruled out unilateral sanctions that would more directly target sectors of the Russian economy.

‘Different Sanctions’

Executive orders signed by Obama “allow for all kinds of different sanctions,” White House press secretary Jay Carney told reporters in Washington, while declining to say whether the latest upheaval in eastern Ukraine would trigger additional penalties. “We’re assessing what they’ve done,” Carney said.

The U.S. has said it’s weighing further measures that may be aimed at individuals as well as against sectors of the Russian economy including energy, financial services, metals and mining, engineering and defense.

At least one Ukrainian serviceman died over the weekend, and armed separatists are occupying police and government buildings in cities across the east. NATO estimates that Russia has massed 40,000 troops in combat readiness on Ukraine’s border. Putin is getting many requests from eastern Ukraine “to intervene in one way or another,” his spokesman, Dmitry Peskov, told reporters today.

Pro-Russian protesters occupied police and local-government buildings in Horlivka, Kramatorsk, Donetsk and Mariupol, the Ukrainian Interior Ministry said on its website.

CIA Chief

Acting Ukrainian President Oleksandr Turchynov sought to ease tensions by raising the possibility of holding a national referendum on the structure of the state together with presidential elections set for May 25, Interfax reported today. He said he’s sure people will opt for a united, independent Ukraine, according to the news service.

Turchynov also told United Nations Secretary-General Ban Ki-moon today that Ukraine would welcome UN peacekeepers to help restore order in the eastern part of the country, according to a statement on the parliamentary website.

Carney, the White House spokesman, confirmed today that CIA Director John Brennan was in Kiev over the weekend. The Obama administration had previously refused to confirm Russian statements that the head of the Central Intelligence Agency had met with officials of Ukraine’s interim government.

Carney characterized it as part of a trip Brennan took to Europe for regular consultations with security officials.

Underlining the tension, two unarmed Russian SU-24 Fencer aircraft flew as many as 12 passes over 90 minutes near the USS Donald Cook in the Black Sea on April 12, Colonel Steve Warren, a Pentagon spokesman, told reporters today.

The destroyer was never in any danger, according to Warren, who called the flights acts “of unprofessionalism” by the Russians. The ship, equipped with the advanced Aegis air-defense system, wasn’t engaging in exercises at the time, he said.

To contact the reporters on this story: Volodymyr Verbyany in Kiev at vverbyany1@bloomberg.net; James G. Neuger in Luxembourg at jneuger@bloomberg.net; Joe Sobczyk in Washington at jsobczyk@bloomberg.net

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

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