UPDATE 1-Toyota drops diesel from new model, signals likely phase-out
* Carmakers rewriting strategic plans post "dieselgate" (Adds context)
* Russia tightens grip on Crimea
* G7 leaders hold emergency talks in the Netherlands
* Sanctions against Russia, G8 summit in Sochi on agenda
By Justyna Pawlak and Aleksandar Vasovic
THE HAGUE/FEODOSIA, Ukraine, March 24 - U.S. President Barack Obama began crisis talks with his European allies on Monday after Ukraine announced the evacuation of its troops from Crimea, effectively yielding the region to Russian forces which stormed one of Kiev's last bases there.
Obama, who has imposed tougher sanctions on Moscow than European leaders over its seizure of the Black Sea peninsula, will seek support for his firm line at a meeting with other leaders of the G7 - a group of industrialised nations that excludes Russia, which joined in 1998 to form the G8.
Since the emergency one-hour G7 meeting was announced last week, Putin has signed laws completing Russia's annexation of the region.
In what has become the biggest East-West confrontation since the Cold War, the United States and the European Union have imposed visa bans and asset freezes on some of Putin's closest political and business allies. But they have held back so far from measures designed to hit Russia's wider economy.
"Europe and America are united in our support of the Ukrainian government and the Ukrainian people," Obama said after a meeting with Dutch Prime Minister Mark Rutte. "We're united in imposing a cost on Russia for its actions so far. Prime Minister Rutte rightly pointed out yesterday the growing sanctions would bring significant consequences to the Russian economy."
Moscow formally annexed Crimea on Mar. 21, five days after newly-installed pro-Moscow regional leaders held a referendum that yielded an overwhelming vote to join Russia. Kiev and the West have denounced the annexation as illegal.
Western officials are now focussed less on persuading Putin to relinquish Crimea - a goal that seems beyond reach - than on deterring him from seizing other parts of Ukraine.
"Our interest is not in seeing the situation escalate and devolve into hot conflict," White House national security adviser Susan Rice told reporters. "Our interest is in a diplomatic resolution, de-escalation, and obviously economic support for Ukraine, and to the extent that it continues to be necessary, further costs imposed on Russia for its actions."
In The Hague, leaders of the G7 - the United States, Japan, Canada, Germany, France, Britain and Italy - will discuss how to exert further pressure - and at what potential cost.
"It will be an opportunity for us to explain to each other what we are doing and where we are going, to coordinate our actions," a senior EU official said.
Persuading Europeans to sign on to tougher sanctions could be a challenge for Obama. The European Union does 10 times as much trade with Russia as the United States, and is the biggest customer for Russia oil and gas. The EU's 28 members include countries with widely varying relationships to Moscow.
"Europeans are committed to do something," said Jeffrey Mankoff, an analyst at the Center for Strategic International Studies. "I think it'll be difficult to convince them to go anywhere near where the United States would like to go."
So far, the seizure of Crimea has been largely bloodless, apart from one Ukrainian soldier and one pro-Moscow militia member killed in a shootout on Tuesday last week. Ukraine's troops left behind in Crimea have been besieged inside bases while offering little resistance.
Russian troops forced their way into a Ukrainian marine base in the port of Feodosia early on Monday, overrunning one of the last remaining symbols of resistance.
In Kiev, acting president Oleksander Turchinov told parliament the remaining Ukrainian troops and their families would be pulled out of the region in the face of "threats to the lives and health of our service personnel".
That effectively ends any Ukrainian resistance, less than a month since Putin announced that Moscow claimed the right to intervene militarily on its neighbour's territory.
Although Russian forces have not entered other parts of Ukraine, NATO says they have built up at the border. The Western military alliance also fears Putin may have designs on a part of another former Soviet republic, Moldova.
Despite the disruption to East-West relations, Washington wants other diplomatic business with Moscow to continue.
U.S. Secretary of State John Kerry is to hold talks later on Monday with Russian counterpart Sergei Lavrov, after meeting the head of the Organisation for the Prohibition of Chemical Weapons. The OPCW is overseeing the destruction of Syria's toxic stockpile in action sponsored jointly by Washington and Moscow.
"All I can say is I hope the same motivations that drove Russia to be a partner in this effort will still exist," Kerry said of the Syria disarmament programme.
Western governments are struggling to find a balance between putting pressure on Putin, protecting their own economies and avoiding triggering a vicious cycle of sanctions and reprisals.
Rutte, who is making his residence available to Obama and the other G7 leaders for the talks on the sidelines of a nuclear security summit, said the West might want to move slowly.
"Russia has an economy that is highly focused on oil and gas," Rutte told Reuters. "If it came to putting in place sanctions, that would hurt Russia considerably. So in my view we should do everything to prevent that."
U.S. officials say any further sanctions will need to be carefully calibrated to avoid bans on entire sectors, like oil or metals, that could reverberate through the global economy. Europe gets around one-third of its oil and gas from Russia.
British Foreign Secretary William Hague said in an article on Saturday, however, that Britain and its allies should consider imposing lasting limitations on arms sales to Russia, following the "outrageous" annexation of Crimea.
Diplomats said it was unlikely any detailed decisions about sanctions would be taken at the G7 meeting, due to start at 6.30 p.m. (1730 GMT), although the group is likely to send a message of support for Kiev, particularly for its economy.
The G7 leaders could also decide the future of the G8 - essentially the same group with Russia added as a member in 1998. Leaders have already suspended preparations for a G8 summit hosted by Putin in Olympic host city Sochi in June.
A French diplomatic source said the leaders will "discuss how this group can or cannot continue to function".
"There will certainly be a statement published at the end which will reflect the consensus on the evaluation of the situation and on how this group can respond to the situation created in Ukraine," the source said, on condition of anonymity.
Another EU diplomat said: "The G8 is dead, though I don't think anybody wants to say that.... The point that everybody will want to make is that we are all united." (Additional reporting by Fredrik Dahl in The Hague, Adrian Croft in Brussels, Thomas Escritt and Anthony Deutsch in Amsterdam, William James in London and Elizabeth Pineau in Paris, Gabriela Baczynska in Simferopol, Jeff Mason and Steve Holland in Washington, Natalia Zinets and Richard Balmforth in Kiev; Writing by Peter Graff; Editing by Paul Taylor)
* Carmakers rewriting strategic plans post "dieselgate" (Adds context)
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