Crimea Takeover Builds to Expose Ukraine Escalation Risk

Pro-Russian forces advanced in Ukraine’s Crimean peninsula, ignoring Western calls to abandon a military takeover before the region’s separatist referendum.

Ukrainian Prime Minister Arseniy Yatsenyuk said today he’d travel to Washington as Russian President Vladimir Putin defended the actions of Crimea’s local government, which may use the March 16 vote to leave Ukraine and join the country’s Soviet-era master. Russian troops also detained Ukrainian border guards at a base a day after gunmen fired warning shots at international observers and barred them from Crimea.

Russia is wresting control of Crimea, home to its Black Sea Fleet, from Ukraine following last month’s ouster of the former Soviet republic’s Moscow-backed leader Viktor Yanukovych. The U.S. estimates Russia now has 20,000 troops confronting a smaller Ukrainian force there. Ukraine has stepped up its eastern border defenses in the worst standoff between it and the West since the Cold War.

“There clearly are Russian troops in Crimea,” U.K. Foreign Secretary William Hague said today on BBC TV. “The long-term effect will be to unite Ukraine more against Russian domination of their affairs and to recast European policies in a way that will reduce Russian leverage over Europe.”

Russian Minefields

Putin spoke to German Chancellor Angela Merkel and British Prime Minister David Cameron by phone today. He said Russia wanted a diplomatic solution and he’d discuss a proposal to establish a contact group with EU leaders and the U.S. to resolve the situation with his foreign minister, Sergei Lavrov, tomorrow, a spokesman from Cameron’s office said today.

At the same time, during the call with Merkel, Putin “underlined that the actions of the legitimate Crimean government are based on international law and are aimed at assuring the lawful interests of the population on the peninsula,” the Kremlin said in an e-mailed statement.

At Putin’s request, lawmakers in Moscow have pledged to accept the results of the referendum on Crimea joining Russia. Putin says he’s defending Ukraine’s ethnic Russians, who make up 59 percent of Crimea’s population. Ukraine’s government in Kiev says they aren’t under threat.

Pro-Russian units planted minefields in the Kherson region, north of Crimea on Ukraine’s mainland, and began to install border markers between the two regions, news website Khersonskie Vesti reported today. Ukraine’s border control service said Russian forces now control 13 border bases as well as the ferry across the Kerch Strait to Russia, preventing guards from inspecting trucks arriving in Crimea.

Standoff Continues

Authorities on the peninsula ordered an anti-aircraft regiment in the city of Yevpatoriya to lay down its arms by 5 p.m. today or its base would be taken over, news service Interfax reported.

Ukrainian border troops will leave Crimea only if “forced,” the head of the service, Pavlo Shysholin, told reporters in Kiev today. The country’s military moved groups of armored vehicles from its western Zhytomyr and Lviv regions toward the east and southeast, Russian television Rossiya 24 reported, citing local citizens. Ukraine isn’t planning to move army troops to Crimea, acting Defense Minister Ihor Tenyukh said at a government meeting in Kiev.

Gunmen fired warning shots at observers yesterday from the Organization for Security and Cooperation in Europe, blocking them from entering Crimea, Tatyana Baeva, a spokeswoman said by phone by Vienna. A 57-nation group that includes Russia and the U.S., the OSCE focuses on conflict prevention and preserving human rights, among other issues. Russia isn’t taking part in the Ukraine mission.

Annexing Crimea

U.S. Secretary of State John Kerry spoke with Lavrov, yesterday. Kerry “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,” according to a statement from the U.S. State Department.

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 on March 7 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.”

Referendum Looms

U.S. President Barack Obama spoke by phone this week with leaders of EU states including France, the U.K., Germany, Italy and the Baltic former Soviet republics Latvia, Lithuania and Estonia, according to the White House.

All of them “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. The U.S. and European allies will impose sanctions if there isn’t a quick resolution, Obama said at the White House on March 6.

Obama has urged Ukraine, a country of 45-million people, 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.

Russian Pressure

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.

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 halted supplies to Ukraine five years ago amid a pricing and debt dispute, curbing flows to Europe.

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

Before it's here, it's on the Bloomberg Terminal.