Merkel: Putin risks ‘catastrophe’

Kerry warns of U.S., EU crisis steps

Ukrainian interim Prime Minister Arseniy Yatsenyuk speaks as he holds a copy of the United Nations charter during an U.N. Security Council meeting on the Ukraine crisis, Thursday, March 13, 2014, at the United Nations Headquarters. Yatsenyuk, during a meeting with President Barack Obama on Wednesday, declared in English that his government was "absolutely ready and open for talks with the Russian Federation" and urged Moscow to "start the dialogue" without guns and tanks. (AP Photo/John Minchillo)

Ukrainian interim Prime Minister Arseniy Yatsenyuk speaks as he holds a copy of the United Nations charter during an U.N. Security Council meeting on the Ukraine crisis, Thursday, March 13, 2014, at the United Nations Headquarters. Yatsenyuk, during a meeting with President Barack Obama on Wednesday, declared in English that his government was "absolutely ready and open for talks with the Russian Federation" and urged Moscow to "start the dialogue" without guns and tanks. (AP Photo/John Minchillo)

Friday, March 14, 2014

The U.S. and Germany stepped up pressure on Russia to back down from plans to annex Crimea from Ukraine after the region holds a referendum Sunday, warning they’ll exact an economic toll if Russia goes ahead.



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“If there is no sign of any capacity to be able to move forward and resolve this issue, there will be a very serious series of steps on Monday in Europe and here with respect to the options that are available to us,” U.S. Secretary of State John Kerry told a Senate panel in Washington.

Kerry, who said “nobody doubts” Crimea will vote to leave Ukraine on Sun-day, spoke to Russian Foreign Minister Sergey Lavrov by phone Thursday and will meet him in London today.

German Chancellor Angela Merkel said the Kremlin is risking a disaster. “If Russia continues on the course of the last weeks, it won’t just be a catastrophe for Ukraine,” Merkel told lawmakers in Berlin. “It would also cause massive economic and political harm to Russia.”

With Ukraine accusing Russian forces of seizing Crimea in the run-up to the referendum, Western powers are trying to muster economic and diplomatic sanctions to force Russian President Vladimir Putin to defuse the situation.

Putin’s government contends ethnic Russians in Crimea are at risk after the ouster of pro-Russia President Viktor Yanukovych, an assertion Ukraine’s new leaders deny. The Kremlin supports Crimea’s recently appointed administration, which organized Sunday’s referendum.

In his remarks to a Senate Appropriations subcommittee, Kerry questioned whether Putin is serious about a solution and said the U.S. is considering “contingencies” if Russia moves into eastern Ukraine.

“We’re watching every day the movement of troops,” Kerry said.

The head of Ukraine’s Security and Defense Council, Andriy Parubiy, said Wednesday that Russia had deployed 80,000 troops, 270 tanks and 140 military aircraft along the Ukrainian-Russian border. There also were 380 Russian artillery systems and 18 rocket-launcher systems in the border area, according to the statement.

A day after a deputy minister denied any military buildup on the border, the Russian Defense Ministry released a series of statements beginning early Thursday that appeared to contradict that.

The military acknowledged significant operations involving armored and airborne troops in the Belgorod, Kursk and Rostov regions abutting eastern Ukraine, where many ethnic Russians have protested against the new interim government in Ukraine’s capital, Kiev, and appealed to Moscow for protection.

The Defense Ministry said the maneuvers involved parachuting in 1,500 troops for large artillery exercises involving 8,500 soldiers and artillery and rocket systems in the south.

During the Ukrainian crisis, the U.S. has sent additional fighter jets to Poland and Lithuania. Russia responded Thursday by deploying six fighter jets to Belarus, its ally.

Shots were fired by a Russian armored vehicle Thursday near a Ukrainian border-patrol plane close to Crimea’s northern border, the Ukrainian Border Service said in a statement on its website, adding that it wasn’t clear if the aircraft was targeted. Another such plane took evasive action five days earlier to avoid machine-gun fire, the service said.

Acting Ukrainian President Oleksandr Turchynov said in a statement on his official website that he believed the Russian forces massed near the border were “ready to intervene in Ukraine at any time,” and that he hoped diplomatic efforts by Ukraine and sympathetic nations would “stop the aggression.”

Putin did not sound conciliatory about Ukraine when he convened a meeting of his Security Council, an advisory body of top defense and security officials, including Lavrov.

“It’s foremost Ukraine’s internal crisis,” Putin said Thursday. “But, regrettably, we have been drawn into these events.”

“We can’t ignore the developments around Ukraine, Crimea and everything related to that uneasy problem, which, I want to underline, has emerged through no fault of ours,” he said.

Crimea, an autonomous region that hosts Russia’s Black Sea Fleet base, became the hotbed of tensions in Ukraine after Yanukovych fled last month after protracted anti-government protests and outbursts of violence.

RUSSIAN: WAR UNDESIRED

In New York on Thursday, Ukrainian acting Prime Minister Arseniy Yatsenyuk condemned Russia’s “military aggression,” telling the United Nations Security Council that the country’s actions are “absolutely, entirely unacceptable in the 21st century.”

Russia’s U.N. ambassador, Vitaly Churkin, gave him a direct answer: “Russia does not want war and neither do the Russians, and I’m convinced the Ukrainians don’t want that either.”

Churkin urged a return to the European-mediated plan in which Ukraine’s protest leaders and Yanukovych agreed on Feb. 21 to form a new government and hold an early election.

The Security Council was holding its sixth meeting on Ukraine in less than two weeks. It has been unable to take any action because Russia, as a permanent member, has veto power.

Shortly before the meeting, the United States circulated a draft resolution that would reaffirm the Security Council’s commitment “to the sovereignty, independence, unity and territorial integrity of Ukraine within its internationally recognized borders.”

The draft urges all parties “to pursue immediately the peaceful resolution of this dispute through direct political dialogue,” to protect the rights of minorities in Ukraine.

It notes that Ukraine has not authorized Sunday’s referendum in Crimea and “declares that this referendum can have no validity, and cannot form the basis for any alteration of the status of Crimea.”

Samantha Power, the U.S. ambassador to the United Nations, told the council that more than 20,000 Russian troops are in Crimea ahead of Sunday’s referendum.

She said the United States and other nations “call for the suspension of this referendum, which cannot be regarded as legitimate, especially against the background of foreign military intervention.”

British Ambassador Mark Lyall Grant said a “free and fair referendum cannot possibly be held where voters are casting their ballots under the barrel of a gun.”

In addition to the presence of Russian troops in Crimea, pro-Russia demonstrators in eastern Ukraine have in recent weeks seized government buildings and engaged in clashes with supporters of the Ukrainian government. Violence broke out late Thursday in the city of Donetsk, where people rallying in support of the central authorities were attacked by pro-Russia crowds.

At least one person died and 17 others were wounded, according to the local health department.

Ukraine’s parliament voted Thursday to create a 60,000-strong National Guard to help protect the country as its understaffed and underfunded military was in disarray.

In Crimea, jittery residents lined up at banks to withdraw cash amid uncertainty over the future of the peninsula.

Oleh Serha, a spokesman for Ukraine’s largest bank, Privat, said all banks in Crimea were struggling to deliver more cash. He said, “There is panic in Crimea because nobody understands what will happen later.”

Serha said his bank is continuing to service its clients but that it has imposed a limit of $150 on daily withdrawals across the country.

About 60 people lined up to withdraw money from an automated teller machine at a Privat bank near a pedestrian mall in Simferopol, Crimea’s capital.

“People are in panic. They have been fooled before. People are confused,” said Vyacheslav Leonenko, one of those in the line.

DIRE ECONOMIC STRAITS

Meanwhile, the International Monetary Fund said a team that’s in Kiev assessing the needs of Ukraine’s economy will probably complete its work as early as today.

The U.S. and its allies are seeking to bolster the country, which needs as much as $15 billion in loans to repay billions in foreign debt after investors withdrew funds and central-bank reserves plummeted.

The European Union has outlined a $15 billion package of loans and grants tied to Ukraine agreeing on measures with the IMF. A U.S. offer of $1 billion in loan guarantees has been tied up in Congress in a dispute over increasing the U.S. quota for the IMF.

The West also aims to put economic pressure on Russia. The U.S. already has imposed a visa ban on some individuals, whom it hasn’t identified, and President Barack Obama has authorized the imposition of financial sanctions.

Merkel said the EU and other Western nations would soon freeze bank accounts of Russians and implement travel restrictions, if Moscow refuses to enter “negotiations that achieve results.”

“Let me be absolutely clear so that there is no misunderstanding, the territorial integrity of Ukraine is not up for discussion,” she said.

If Moscow does not begin to “de-escalate” the situation, Merkel said, the 28 EU nations, the U.S. and other allies are prepared to take even stronger measures that would hit Russia economically.

Russian government officials and businessmen are bracing for sanctions resembling those applied to Iran, according to people with knowledge of the preparations. Putin met senior officials Wednesday in Sochi, his spokesman, Dmitry Peskov, said by phone.Putin urged the government to ensure Russia’s “ability to react immediately to internal and external risks.”

Iran-style sanctions, which would include freezing foreign reserves and banking assets and halting lending to companies, are an unlikely worst case, according to the people, who asked not to be identified as talks are confidential.

Also Thursday, the Organization for Economic Cooperation and Development, a club of wealthy nations Russia is trying to join, “postponed” the country’s accession process, according to a statement on its website Thursday. The group’s members also agreed they “should respond positively to Ukraine’s request to further strengthen existing OECD-Ukraine cooperation.” Information for this article was contributed by Indira A.R. Lakshmanan, Jake Rudnitsky, Helena Bedwell, Rainer Buergin, Brian Parkin, Patrick Donahue, Sandrine Rastello, Scott Rose, Anna Andrianova, Ksenia Galouchko, Vladimir Kuznetsov, Jonathan Tirone, Alexander Weber, Aliaksandr Kudrytski, Thomas Penny, Kateryna Choursina, Daryna Krasnolutska and Sangwon Yoon of Bloomberg News; by Mike Eckel, Vladimir Isachenkov, Maria Danilova, David Rising, Edith M. Lederer and Peter James Spielmann of The Associated Press; and by Steven Lee Myers, Alison Smale, Steven Erlanger and Andrew E. Kramer of The New York Times.

Front Section, Pages 1 on 03/14/2014