| BRUSSELS/SIMFEROPOL, Ukraine, March 12
BRUSSELS/SIMFEROPOL, Ukraine, March 12 The EU
agreed on a framework on Wednesday for its first sanctions on
Russia since the Cold War, a stronger response to the Ukraine
crisis than many expected and a mark of solidarity with
Washington in the drive to make Moscow pay for seizing Crimea.
U.S. President Barack Obama warned Russia it faced costs
from the West unless it changed course in Ukraine, and pledged
to "stand with Ukraine" as he met with the country's new prime
minister in Washington.
"We will never surrender," Ukrainian Prime Minister Arseny
Yatseniuk vowed as he and Obama met in a White House show of
support for the embattled leader.
"Mr. Putin - tear down this wall - the wall of more
intimidation and military aggression," Yatseniuk told reporters
in remarks aimed at Russian President Vladimir Putin and a
reference to then-President Ronald Reagan's challenge to the
Soviet Union in a 1987 speech at the Berlin Wall.
The EU sanctions, outlined in a document seen by Reuters,
would slap travel bans and asset freezes on an as-yet-undecided
list of people and firms accused by Brussels of violating the
territorial integrity of Ukraine.
German Chancellor Angela Merkel said the measures would be
imposed on Monday unless diplomatic progress was made.
In Moscow, shares dropped 2.6 percent and the central
bank was forced to spend $1.5 billion to prop up the rouble as
investors confronted the prospect that Russia could face
unexpectedly serious consequences for its plans to annex Crimea.
Russian troops have seized control of the Black Sea
peninsula, where separatists have taken over the provincial
government and are preparing for a referendum on Sunday to make
the region part of Russia, which the West calls illegal.
The measures outlined by the EU are similar to steps already
announced by Washington, but would have far greater impact
because Europe buys most of Russia's oil and gas exports, while
the United States is only a minor trade partner. The EU's 335
billion euros ($465 billion) of trade with Russia in 2012 was
worth about 10 times that of the United States.
The travel bans and asset freezes could cut members of
Russia's elite off from the European cities that provide their
second homes and the European banks that hold their cash.
The fast pace of Russian moves to annex Crimea appears to
have galvanized the leaders of a 28-member bloc whose consensus
rules often slow down its decisions.
Merkel herself had initially expressed reservations about
sanctions but has been frustrated by Moscow's refusal to form a
"contact group" to seek a diplomatic solution over Crimea.
"Almost a week ago, we said that if that wasn't successful
within a few days, we'd have to consider a second stage of
sanctions," Merkel said. "Six days have gone by since then, and
we have to recognize, even though we will continue our efforts
to form a contact group, that we haven't made any progress."
In Crimea, the regional government is led by a Russian
separatist businessman whose party received just 4 percent of
the vote in the last provincial election in 2010 but who took
power on Feb. 27 after gunmen seized the assembly building.
Two days later, Putin announced that Russia had the right to
invade Ukraine to protect Russian citizens.
Preparations for Sunday's referendum are in full swing.
Banners hang in the center of Crimea's capital, reading: "Spring
- Crimea - Russia!" and "Referendum - Crimea with Russia!"
A senior Russian lawmaker on Wednesday strongly suggested
that Moscow had sent troops to Crimea to protect against any
"armed aggression" by Ukrainian forces during the referendum.
Putin and other Russian officials have said armed men who have
taken control of facilities in Crimea are local "self-defense"
Crimea has a narrow ethnic Russian majority, and many in the
province of 2 million people clearly favor rule from Moscow.
Opinion has been whipped up by state-run media that broadcast
exaggerated reports of a threat from "fascist thugs" in Kiev.
"Enough with Ukraine, that unnatural creation of the Soviet
Union, we have to go back to our motherland," said Anatoly, 38,
from Simferopol, dressed in camouflage uniform and a traditional
Cossack fur cap.
But a substantial, if quieter, part of the population still
prefers being part of Ukraine. They include many ethnic Russians
as well as Ukrainians and members of the peninsula's indigenous
Tatar community, who were brutally repressed under Soviet rule.
"Crimea has been with Ukraine since the 1950s, and I want to
know how they will cut it off from what was our mainland," said
Musa, a Tatar. "If the referendum is free and fair, at least a
little bit, I will vote against Crimean independence."
The referendum seems to leave no such choice: Voters will
have to pick between joining Russia or adopting an earlier
constitution that described Crimea as sovereign. The regional
assembly says that if Crimea becomes sovereign, it will sever
ties with Ukraine and join Russia anyway.
Still, with the streets firmly in control of pro-Russian
militiamen and Russian troops, there is little doubt the
separatist authorities will get the pro-Russian result they
seek. Many opponents, including Tatar leaders, plan a boycott.
There will be no Western observers. Election officials have
said openly that they proudly support union with Russia.
Journalists seeking accreditation for the vote are required to
promise not to report "negative news."
At the White House, Obama ridiculed the referendum, saying:
"The issue now is whether Russia is able to militarily dominate
a region of somebody else's country, engineer a slapdash
referendum and ignore not only the Ukrainian constitution but a
Ukrainian government that includes parties that are historically
in opposition with each other."
"We will continue to say to the Russian government that if
it continues on the path that it is on, then not only us but the
international community, the European Union and others will be
forced to apply a cost to Russia's violation of international
law and its encroachments on Ukraine," he added.
Yatseniuk said his government was eager for talks with
Russia about Ukraine but made clear his country "is and will be
a part of the Western world."
"We fight for our freedom, we fight for our independence, we
fight for our sovereignty, and we will never surrender," he said
at the White House.
While tightening his grip on Crimea, Putin seems to have
backed off from his March 1 threat to invade other parts of
eastern and southern Ukraine, where most of the population,
although ethnically Ukrainian, speak Russian as a first
That threat exposed the limits of Ukraine's military, which
would be little match for the superpower next door and has seen
its detachments in Crimea surrounded. The authorities in Kiev
announced the formation of a new national guard on Wednesday.
But if Putin had expected to be able to seize Crimea without
facing any consequences - as he did when he captured parts of
tiny Georgia after a war in 2008 - the push toward sanctions
suggests he may have miscalculated.
In a statement, the leaders of the G7 - the United States,
Britain, France, Germany, Italy, Japan and Canada - called on
Russia to stop the referendum from taking place.
"In addition to its impact on the unity, sovereignty and
territorial integrity of Ukraine, the annexation of Crimea could
have grave implications for the legal order that protects the
unity and sovereignty of all states," they said. "Should the
Russian Federation take such a step, we will take further
action, individually and collectively."
The U.S. Senate Foreign Relations Committee approved
legislation that would impose strict sanctions on Russians
involved in the intervention in Ukraine and provide aid to the
new government in Kiev. The bill now goes to the full Senate for
a vote and must also be approved by the House of
There has been a lot of diplomatic contact between Russia
and the West but no breakthrough. Putin spoke on Wednesday to
French President Francois Hollande and Swiss Foreign Minister
Didier Burkhalter, whose country chairs the Organization for
Security and Cooperation in Europe. U.S. Secretary of State John
Kerry is due to meet with Russian Foreign Minister Sergei Lavrov
in London on Friday.
Russia has pledged to retaliate for any sanctions, but EU
leaders seem to be betting that Moscow has more to lose than
they do. Merkel's finance minister, Wolfgang Schaeuble, said any
potential impact on Germany's economy was likely to be limited.
Storage tanks for natural gas across much of Europe are full
after a mild season, and the peak of winter demand is over.
Europe's trade volume with Russia accounts for just 1
percent of EU gross domestic product but 15 percent of Russia's,
said the German trade lobby group BGA. "A trade conflict would
be painful for the German economy, but for the Russian economy
it would be life-threatening," said its president, Anton
While the EU has agreed to wording for its sanctions, it is
still working on a target list. Talks took place in London this
week between officials from Britain, the United States, Italy,
France, Germany, Poland, Switzerland, Turkey and Japan.
"My understanding is that there was detailed discussion of
names at the meeting," an EU official said. "No definitive list
has been drawn up, but it will be ready by Monday."
European officials have indicated that Putin and Lavrov will
not be on the list, in order to keep channels of communication
open. The list is expected to focus on targets close to Putin in
the security services and the military, as well as lawmakers.
In the past, U.S. and EU sanctions against countries such as
Syria, Libya and Iran have started with lists of only around 20
people and companies. But those lists quickly evolved into more
powerful weapons as other people and firms were added.
The EU has said it is also prepared to take further steps,
such as an arms embargo and other trade measures.
(Additional reporting by Luke Baker in Brussels, Jason Bush in
Moscow, Ron Popeski in Kiev, Stephen Brown in Berlin, and Steve
Holland, Roberta Rampton and Patricia Zengerle in Washington;
Writing by Peter Graff and Peter Cooney; Editing by Kevin Liffey
and Jonathan Oatis)