Business

Ukrainian Americans and supporters protest at the White House over the Russian invasion of Crimea

Russia may face second round of sanctions over Ukraine

Ukrainian Americans and supporters protest at the White House over the Russian invasion of CrimeaAs Vladimir Putin rebuffs initial US-EU sanctions over occupation, France says assets may be seized if Moscow does not relent.
Barack Obama and his European Union allies have unveiled a co-ordinated set of sanctions to punish Russia for occupying Crimea, imposing visa restrictions on individuals and sharpening their rhetoric in what has rapidly degenerated into the worst east-west crisis since the cold war.

Early on Friday, France’s foreign minister, Laurent Fabius, said that if the first round of sanctions did not succeed, a second could follow, targeting Russian businesses and people close to Vladimir Putin. But the president rebuffed Washington’s warnings, saying Moscow could not ignore calls for help from Russian speakers in Ukraine.

Putin and Obama spoke for an hour on Thursday afternoon. According to the White House, the US president told Putin that newly announced sanctions, introduced in co-ordination with the UK, were a response to Russia’s “violation of Ukraine’s sovereignty and territorial integrity”.

“President Obama indicated that there is a way to resolve the situation diplomatically, which addresses the interests of Russia, the people of Ukraine, and the international community,” the White House said in a statement to reporters.

“As a part of that resolution, the governments of Ukraine and Russia would hold direct talks, facilitated by the international community; international monitors could ensure that the rights of all Ukrainians are protected, including ethnic Russians; Russian forces would return to their bases; and the international community would work together to support the Ukrainian people as they prepare for elections in May.”

In their first concrete response to Russia’s move to seize Crimea from Ukraine, Brussels and Washington warned of further sanctions, such as asset seizures, if Moscow did not relent.

“I am confident that we are moving forward together, united in our determination to oppose actions that violate international law,” Obama told reporters in Washington. “That includes standing up for the principle of state sovereignty.”

After an emergency EU summit in Brussels, the German chancellor, Angela Merkel, said: “We have experienced very much disappointment in recent days and we’re ready to act.”

The urgency was heightened after the Crimean parliament abruptly and unanimously voted to secede from Ukraine and reposition the Black Sea peninsula as part of Russia. It brought forward a referendum on secession to 16 March, but said such a vote would merely rubber-stamp its own decision. The sudden move elicited cries of protest from the new authorities in Kiev, and grave warnings from the west.

“The decision to hold a referendum in Crimea is illegal and not compatible with the Ukrainian constitution,” Merkel said.

The opposition leader Yulia Tymoshenko spoke to journalists on Friday following a meeting with Merkel, warning of a guerrilla war in Crimea should it be incorporated into Russia.

“As of today, those instruments that have already been applied by the US and the EU didn’t produce any tangible effects,” she said.

“If these instruments do not produce results, there are two options left. To opt for next strongest sanctions, I proposed a set of nonviolent, economic measures.” The alternative, she said, was to give Crimea to Russia. “They have to be very convincing for Putin to send the strongest signal that it would not be tolerated.”

The west should not accommodate a referendum on the question, Tymoshenko continued.

“The immediate consequences would be guerrilla warfare. [This] … would be a real flash point in the Black Sea.

“We never will be able to stabilise the situation in Ukraine and the wider region if it will be a permanent conflict.”

The White House said its visa bans would affect an unspecified number of Russian and Ukrainian individuals immediately, with the threat of asset seizures and bans on doing business in the US hanging as a deterrent against further escalation in Ukraine. The EU agreed to suspend visa and investment talks with Russia and held out the prospect of a full-blown trade and economic conflict with Russia unless there was a diplomatic breakthrough.

“The solution to the crisis in Ukraine must be based on the territorial integrity, sovereignty, and independence of Ukraine,” said the EU summit statement. “It would be a matter of great regret if Russia continued to refuse to participate in a productive dialogue with the government of Ukraine.”

The EU said Moscow had to open negotiations with Kiev “within the next few days, and produce results within a limited timeframe”.

The EU and the US have struggled to co-ordinate a response to Russia’s boldest military venture since the 2008 war in Georgia because the stakes are very different for both parties. EU-Russia trade volumes, including vast gas imports and engineering exports, are 15 times the level of US-Russia trade. Washington has far less to lose from a trade war, and has hitherto talked tougher.

John Kerry, the US secretary of state, speaking in Rome, denied a rift with the EU. “I do not believe there is a gap. There may be a difference of opinion about timing … that’s not unusual when you have as many countries as we do,” he told reporters at a news conference.

German officials also dismissed reports of divisions. “That is something I think that would make Putin very happy,” a senior official said. “He wants to divide us. The reality is that we are on the same page.”

The White House rejected criticism that sanctions risked escalating the crisis, insisting there remained a way for Russia to defuse the situation if it chose.

“While we take these steps I want to be clear that there is also a way to resolve this crisis that respects the interests of the Russian as well as the Ukrainian people,” said Obama, repeating calls for international monitors to be allowed into Crimea and other parts of Ukraine to ensure Russian interests were not threatened.

But Obama’s rhetoric was more combative than of late and he accused Russia of not just “violating sovereignty and territorial integrity” of the Ukraine but of “stealing the assets of the Ukrainian people”.

“In 2014, we are well beyond the days when borders can be redrawn over the heads of democratic leaders,” he added.

It was clear that the sharpening of the western response was a result of exasperation with Russia’s refusal to make concessions in negotiations in Paris on Wednesday, the first direct talks between Moscow and Washington on Ukraine, but also designed to put pressure on Putin to reverse course.

Representing the camp arguing for a hard line against Russia, Donald Tusk, the Polish prime minister, said he was pleased things were moving in the right direction. “It was a heated discussion,” he said.

Dalia Grybauskaite, the Lithuanian president, demanded action to counter Russia’s “open and brutal aggression”. She said: “Russia today is trying to rewrite the borders of Europe after world war two, that is what’s going on. If we allow this to happen, next will be somebody else.”

The Europeans and the Americans are focused on forcing Russia to open a dialogue with Ukraine. The acting Ukrainian prime minister, Arseniy Yatseniuk, said Kiev was ready to talk to Moscow; it was ready for “co-operation, but not surrender”.

“Mr Putin, tear down this wall,” he said, echoing Ronald Reagan’s demand of Soviet leader Mikhail Gorbachev in the 1980s. “Tear down this wall of intimidation, of military aggression.”

In another unexpectedly bold move, the EU decided to push ahead much faster than predicted with a political pact drawing Ukraine closer to Europe, the initial spark for the crisis last November when the deposed president Viktor Yanukovych refused to sign the agreement.

Hitherto, the EU has said that Brussels would revive the pact only after elections scheduled for 25 May, once a new government was installed. Merkel and Tusk said the agreement would be split into political and trade sections. The political part could be signed “days or weeks” before the elections, Merkel pledged for the first time.

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