* Russia will suffer economically and politically, she says
* Merkel's diplomatic overtures to Putin have failed so far
* Germany dropping reticence on sanctions as crisis drags
By Stephen Brown and Madeline Chambers
BERLIN, March 13 Germany's Angela Merkel warned
Moscow on Thursday that it risked "massive" political and
economic damage if it refused to change course on Ukraine,
saying Western leaders were united in their readiness to impose
sanctions on Russia if necessary.
The chancellor, using her strongest language since the start
of the crisis and removing any suspicion that Germany might seek
to avoid a confrontation with President Vladimir Putin, said his
actions would lead to "catastrophe" for Ukraine and much more.
"We would not only see it, also as neighbours of Russia, as
a threat. And it would not only change the European Union's
relationship with Russia," she said in a speech in parliament.
"No, this would also cause massive damage to Russia,
economically and politically."
Merkel has acknowledged that her efforts to persuade Putin
to negotiate via a "contact group" with the transition
government in Kiev - which he accuses of ousting Russian-backed
president Viktor Yanukovich unlawfully - have failed and time is
Russian troops have seized control of the Ukrainian region
of Crimea on the Black Sea, backing separatists who have taken
over the local government and are preparing a referendum on
Sunday which could pave the way for annexation by Russia.
Merkel reiterated that if Putin continues to snub diplomacy
and lets the referendum in Crimea go ahead, the EU - in close
coordination with Washington and NATO - would impose tougher
sanctions than the largely symbolic measures taken so far.
Travel bans and asset freezes on people and firms accused by
Brussels of helping to violate Ukraine's territorial integrity
could be approved by EU foreign ministers on Monday.
European leaders, who meet next Thursday, will discuss
action affecting trade with Russia if it presses ahead with its
current course in Ukraine.
"To be absoultely clear, none of us want it to come to such
measures but we are all ready and determined to if they are
unavoidable," said Merkel.
Germany receives over a third of its gas and oil from Russia
and over 6,000 German firms are active there. A poll last week
showed that a majority of Germans oppose sanctions against
Merkel grew up behind the Iron Curtain, speaks Russian and
has tried to leverage her influence with Putin, whom she has
known for 14 years, in countless phone calls. The former KGB
officer, who himself speaks German, is said to respect her as a
But Merkel lamented in an unusually emotive speech that the
Russian leader was destroying years of post-Soviet rapprochement
and was dragging Europe back into "a conflict about spheres of
influence and territorial claims that we know from the 19th or
20th-century but thought were a thing of the past".
"The territorial integrity of Ukraine cannot be called into
question," she told the Bundestag lower house of parliament,
making clear that Crimea could not be compared to Kosovo, which
seceded from the former Yugoslavia in 2008.