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Russia sets Ukraine agenda with diplomacy, threats

Associated Press
By DAVID McHUGH and DALTON BENNETT

KIEV, Ukraine (AP) — Russian troops said to be 16,000 strong tightened their stranglehold on Ukraine's Crimean Peninsula Monday, openly defying the U.S. and the European Union and rattling world capitals and stock markets.

The West struggled to find a way to get Russia to back down, but with little beyond already threatened diplomatic and economic sanctions, global markets fell sharply over the prospect of violent upheaval in the heart of Europe.

For its part, Moscow reiterated its price for ending the crisis: restoration of a deal reached with the opposition less than two weeks ago to form a national unity government in Kiev that represents pro-Russian as well as Ukrainian interests, with new elections to be held by December.

Ukraine, meanwhile, accused Russia of piracy for blocking two of the besieged country's warships and ordering them to surrender or be seized.


Ukrainian soldiers stand guard at the gate of a military base in the port of Kerch, Ukraine, Monday, March 3, 2014. Pro-Russian troops controlled a ferry terminal on the easternmost tip of Ukraine's Crimea region close to Russia on Monday, intensifying fears that Moscow will send even more troops into the strategic Black Sea region in its tense dispute with its Slavic neighbor. (AP Photo/Darko Vojinovic)

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Foreign Minister Sergey Lavrov said at a U.N. Human Rights Council session in Geneva that Ukraine should return to an agreement signed last month by pro-Russian President Viktor Yanukovych — but not Moscow — to hold early elections and surrender some powers. Yanukovych fled the country after sealing the pact with the opposition and foreign ministers of France, Germany and Poland.

"Instead of a promised national unity government," Lavrov said of the fledgling new administration in Kiev, "a government of the victors has been created."

The latest flashpoint came when Ukrainian authorities said Russian troops had issued an ultimatum for two of the besieged country's warships to surrender or be seized.

"I call on the leadership of the Russian Federation. Stop the aggression, stop the provocations, stop the piracy! These are crimes, and you will be called to account for them," said acting Ukrainian President Oleksandr Turchynov.


Pro Russian soldiers wait outside a Ukrainian military base in the port of Kerch, Ukraine, Monday, March 3, 2014. Pro-Russian troops controlled a ferry terminal on the easternmost tip of Ukraine's Crimea region close to Russia on Monday, intensifying fears that Moscow will send even more troops into the strategic Black Sea region in its tense dispute with its Slavic neighbor. The seizure of the terminal in the Ukrainian city of Kerch about 20 kilometers (12 miles) by boat to Russia, comes as the U.S. and European governments try to figure out ways to halt and reverse the Russian incursion. (AP Photo/Darko Vojinovic)

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Still, it was not clear what the West could do to make Russia retreat. The clearest weapon at the disposal of the U.S. and the EU appeared to be economic sanctions that would freeze Russian assets and pull the plug on multibillion dollar deals with Russia. Late Monday, the EU threatened to freeze visa liberalization and economic cooperation talks and boycott the G-8 summit in Russia later this year.

Already the economic fallout for Russia was being intensely felt. Russia's stock market dropped about 10 percent Monday and its currency fell to its lowest point ever against the dollar. But the economic consequences of antagonizing Russia were also acute for Western Europe. The EU relies heavily on Russian natural gas flowing through a network of Ukrainian and other pipelines.


A ship sails by the port of Kerch, Ukraine, Monday, March 3, 2014. Pro-Russian troops controlled a ferry terminal on the easternmost tip of Ukraine's Crimea region close to Russia on Monday, intensifying fears that Moscow will send even more troops into the strategic Black Sea region in its tense dispute with its Slavic neighbor. (AP Photo/Darko Vojinovic)

Global market reaction to the Russian seizure was furious. On Wall Street, both the Dow Jones industrial average and the Nasdaq composite closed sharply down, while oil prices rose on fears that Russia, a major oil exporter, might face sanctions. In European trading, gold rose while the euro and stock markets fell.

The greatest impact, however, was felt in Moscow, where the main RTS index was down 12 percent at 1,115 and the dollar spiked to an all-time high of 37 rubles. Russia's central bank hiked its main interest rate 1.5 percentage points to 7 percent, trying to stem financial outflows.

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By Monday, it was clear that Russia had complete operational control of Crimea.

Russian soldiers controlled all Crimean border posts, as well as all military facilities in the territory. Troops also controlled a ferry terminal in the Crimean city of Kerch, just 20 kilometers (12 miles) across the water from Russia. That intensified fears in Kiev that Moscow would send even more troops into the peninsula via that route.

Border guard spokesman Sergei Astakhov said the Russians were demanding that Ukrainian soldiers and guards transfer their allegiance to Crimea's new pro-Russian local government.

"The Russians are behaving very aggressively," he said. "They came in by breaking down doors, knocking out windows, cutting off every communication."


Russian solder is seen behind Ukrainian Orthodox Archbishop Clement, foreground, outside of a Ukrainian military base in the village of Perevalne, outside of Simferopol, Ukraine, on Sunday, March 2, 2014. Hundreds of armed men in trucks and armored vehicles surrounded the Ukrainian military base Sunday in Crimea, blocking its soldiers from leaving. (AP Photo/Ivan Sekretarev)

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Hague said "the world cannot just allow this to happen." But he, like other Western diplomats, ruled out any military action. "The U.K is not discussing military options. Our concentration is on diplomatic and economic pressure."

Tension between Ukraine and Moscow rose sharply after Yanukovych was pushed out by a protest movement among people who wanted closer ties with the EU. Yanukovych fled to Russia after more than 80 people were killed near Kiev's central square. He insists he is still president.

Russian President Vladimir Putin's confidence in his Ukraine strategy is underpinned by the knowledge that the nation's 46 million people have divided loyalties. While much of western Ukraine wants closer ties with the 28-nation European Union, its eastern and southern regions look to Russia for support.


Ukrainian Prime Minister Arseniy Yatsenyuk, left, shakes hands with British Foreign Secretary William Hague in Kiev, Ukraine, Monday, March 3, 2014. Pro-Russian troops took over a ferry terminal on the easternmost tip of Crimea close to Russia on Monday, exacerbating fears that Moscow is planning to bring even more troops into this strategic Black Sea region. (AP Photo/Andrew Kravchenko, Pool)

Crimea is where Russia feels most at home in Ukraine: It is home to 2 million mostly Russian-speaking people and landlord for Russia's critical Black Sea Fleet at Sevastopol.

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Bennett reported from Kerch, Ukraine. Associated Press writers Lara Jakes in Washington, Yuras Karmanau in Kiev, Raf Casert and Juergen Baetz in Brussels, Frank Jordans in Berlin, John Heilprin in Geneva, Volodya Isachenkov and Laura Mills in Moscow and Danica Kirka in London contributed to this report.

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