BREAKING NEWS: U.S. Economy Up 3.5% in 3rd Quarter, Capping Best 6 Months in Over a Decade 

Search

World Leaders Discuss Ukraine as Worry Grows Over Russia

By Daryna Krasnolutska and Aliaksandr Kudrytski
March 24, 2014 9:40 AM EDT 254 Comments
U.S. Marine Corps helicopters carrying US President Barack Obama land on the 'Museumplein' in front of the Rijksmuseum in Amsterdam, Netherlands, on March 24, 2014.
Photographer: Olaf Kraak/AFP via Getty Images
U.S. Marine Corps helicopters carrying US President Barack Obama land on the 'Museumplein' in front of the Rijksmuseum in Amsterdam, Netherlands, on March 24, 2014.

World leaders gathered in The Hague to discuss Ukraine amid growing concern over a Russian buildup on its neighbor’s border as pro-Kremlin troops seized a Ukrainian base in Crimea.

Leaders of the U.S., the European Union, China, Japan and others meet today, with President Barack Obama seeking to mobilize opposition to Russia’s incursion into Crimea. As Russian President Vladimir Putin completed the annexation of Crimea and the two sides exchanged sanctions, attention shifted to whether Russia would seek to claim other parts of Ukraine.

U.S. intelligence and defense officials have warned that Russia has reinforced columns on approaches to major Ukrainian cities, raising concern that Moscow-backed troops may be preparing to carve off more provinces the country’s east and south in the worst standoff between Russia and its former Cold War enemies since the collapse of the Soviet Union.

Europe and America are united in our support of the Ukrainian government and the Ukrainian people,” Obama said at a news conference with Dutch Prime Minister Mark Rutte today. “We’re united in imposing a cost on Russia for its actions.”

A Snapshot of Ukraine's Past and Future

The Group of Seven major powers will discuss Crimea today, Rutte said. While it’s too early to say whether more targeted measures will be announced after a summit between Obama and EU officials in two days, the meetings will be dominated by Ukraine, an official from the bloc said, speaking on condition of anonymity due to the sensitivity of the issue. The U.S. and EU have ruled out military action.

Ruble Strengthens

The ruble gained 0.6 percent to 42.1890 against the central bank’s dollar-euro target basket by 4:55 p.m. in Moscow. Government bonds due February 2027 rose, pushing the yield down nine basis points to 9.33 percent. The benchmark Micex stock index has lost 13 percent and the ruble is down 8.4 percent against the dollar since Nov. 21, the start of protests that ousted Kremlin-backed former President Viktor Yanukovych and triggered the crisis.

The EU, moving more slowly than the U.S. on sanctions, expanded its list of Russians and Ukrainians punished with asset freezes and travel bans to 51 on March 21. The U.S. widened its list to 27 Russians and four Ukrainians the previous day. Obama also authorized potential future penalties on Russian industries, including financial services, energy, metals and mining, defense and engineering.

Economic Impact

“These sanctions wouldn’t only hurt the Russian economy, they could also have an impact on the global economy,” Obama said in an interview with Dutch newspaper Volkskrant published today. “We would have preferred it not come to this. But Russia’s actions are simply unacceptable. There have to be consequences. And if Russia continues to escalate the situation, we need to be prepared to impose a greater cost.”

Russian banks, including state-run VTB Capital, say the world’s ninth-biggest economy will shrink for at least two quarters as penalties for annexing Crimea rattle markets, curb investment and raise the cost of borrowing.

The chances of a war with Russia are increasing and “we are ready to respond,” Ukrainian Foreign Minister Andrii Deshchytsia said yesterday in an interview broadcast on ABC-TV’s “This Week” program.

German Chancellor Angela Merkel is concerned about Russian troops on Ukraine’s border, her spokesman Steffen Seibert said today. Merkel spoke with Putin by phone over the weekend and warned him about destabilizing Moldova, Seibert said. The parliament of Transnistria, a self-proclaimed republic wedged between Moldova and Ukraine with a Russian military presence, followed Crimea’s annexation by also asking to join Russia.

Like Adversary

U.S. Air Force General Philip Breedlove, the North Atlantic Treaty Organization’s top commander, yesterday called Russia’s troop presence on Ukraine’s eastern and southern border “very, very sizable and very, very credible.”

“We have to be positioned differently and be more ready,” Breedlove told a conference in Brussels. “We have continued to try to make a partner of Russia and now it’s very clear that Russia is acting much more like an adversary than a partner.”

U.S. intelligence and military officials said there are now Russian troops on virtually all of the country’s border with Ukraine. Some units have moved within 31 miles of the frontier, said the officials, who requested anonymity to discuss classified intelligence reports.

Double Strength

Russian troops in some areas, including near corridors leading to major Ukrainian cities, have been reinforced with armor, attack airplanes and helicopters, the officials said. There are also signs that the troops are receiving substantial logistical support, which could signal preparations for sustained operations, they said.

The number of Russian troops along the border is about double what it was when the Defense Ministry in Moscow announced its armed forces would hold exercises near eastern Ukraine, according to the officials. Even so, they said it’s hard to assess whether Russia is preparing for an invasion or is trying to intimidate the pro-EU government in Kiev.

Russia has no intention of entering other parts of Ukraine, Russia’s ambassador to the European Union Vladimir Chizov said in an interview with BBC TV. “Nobody has anything to fear from Russia, nobody in this world,” he said, adding that sanctions against Russia are “irrational” and politically motivated.

Base Stormed

Seven groups of inspectors from the U.S., Canada, the Baltic states, and Switzerland visited the border in the past several weeks and expressed no cause for alarm, Russian Deputy Defense Minister Anatoly Antonov said in an interview with broadcaster RT yesterday.

In Crimea, annexed after a Kremlin-backed referendum last week, Russian forces stormed the Feodosiya naval base at 4:30 a.m., Ukrainian Defense Ministry spokesman Vladyslav Seleznyov said on television Channel 5 today.

Aside from the Feodosiya base, pro-Kremlin forces seized Belbek airport in Crimea on March 22 and arrested its Ukrainian commander, Yuliy Mamchur. Belbek is near the port of Sevastopol, home to Russia’s Black Sea Fleet.

Ukraine will start pulling out 15,000 troops from positions on the peninsula this week, while the same number have decided to join Russian army, military official Oleksandr Rozmaznin said at a news conference in Kiev today.

Military Withdrawal

Ukrainian acting President Oleksandr Turchynov said the National Defense and Security Council had ordered military units to pull out of Crimea and evacuate soldiers’ families.

“There’s a threat to the lives and health of our army in Crimea,” Turchynov said in Kiev today.

Russia wants its neighbor to adopt a federal constitution that guarantees political and military neutrality, grants powers to Ukrainian regions and makes Russian a second official language. Ukraine’s government signed the political chapters of an association accord with the EU on March 21.

Russian Prime Minister Dmitry Medvedev called on state-run fixed-line operator Rostelcom to enter Crimea as soon as possible, arguing Russia shouldn’t entrust foreign operators to handle “confidential information.”

A mission to Ukraine from the Organization for Security and Cooperation in Europe will begin monitoring this week, Tatyana Baeva, an OSCE spokeswoman, said yesterday by phone from Vienna.

To contact the reporters on this story: Daryna Krasnolutska in Kiev at dkrasnolutsk@bloomberg.net; Aliaksandr Kudrytski in Minsk, Belarus at akudrytski@bloomberg.net

To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net Michael Winfrey

More related content »