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Putin signs to annex Crimea as part of Russia

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BRUSSELS (AP) - Two almost simultaneous signatures Friday on opposite sides of Europe deepened the divide between East and West, as Russia formally annexed Crimea and the European Union pulled Ukraine closer into its orbit.

In this "new post-Cold War order," as the Ukrainian prime minister called it, besieged Ukrainian troops on the Crimean Peninsula faced a critical choice: leave, join the Russian military or demobilize. Ukraine was working on evacuating its outnumbered troops in Crimea, but some said they were still awaiting orders.

The chief of the U.N. came to Kiev and urged calm on all sides.

Many eyes were on Russian President Vladimir Putin, as they have been ever since pro-Western protests drove out Ukraine's president a month ago, angering Russia and plunging Europe into its worst crisis in a generation.

Putin sounded a conciliatory note Friday, almost joking about U.S. and EU sanctions squeezing his inner circle and saying he saw no reason to retaliate. But his government later warned of further action.

Russia's troubled economic outlook may drive its decisions as much as any outside military threat. Stocks sank further, and a possible downgrade of Russia's credit rating loomed. Visa and MasterCard stopped serving two Russian banks, and Russia conceded it may scrap plans to tap international markets for money this year.

Despite those clouds, Putin painted Friday's events in victorious colors, and fireworks burst over Moscow and Crimea on his orders, in a spectacle reminiscent of the celebrations held when Soviet troops drove the Nazis from occupied cities in World War II.

At the Kremlin, Putin signed parliamentary legislation incorporating Crimea into Russia, hailing it as a "remarkable event."

At nearly the same time in a ceremony in Brussels, EU leaders sought to pull the rest of cash-strapped Ukraine westward by signing a political association agreement with the new Ukrainian prime minister.

The highly symbolic piece of paper is part of the same EU deal that touched off Ukraine's political crisis when then-President Viktor Yanukovych rejected it in November and chose a bailout from Russia instead. That ignited months of protests that eventually drove him from power.

Ukraine's new prime minister, Arseniy Yatsenyuk, a leader of the protest movement, eagerly pushed for the EU agreement.

"This deal meets the aspirations of millions of Ukrainians that want to be a part of the European Union," Yatsenyuk said in Brussels.

The agreement includes security and defense cooperation, he said, though it is far from full EU membership and doesn't include an important free-trade element yet.

But the EU decided to grant Ukraine financial advantages such as reduced tariffs to boost its ailing economy until the full deal can be signed. Those trade advantages are a blow to Russia, which had hoped to pull Ukraine into a Moscow-focused customs union instead.

In exchange for the EU pact, Ukraine's government is promising economic reforms.

"In the long term, the biggest challenge will be to build a strong Ukrainian economy, rooted in strong institutions that respect the rule of law," British Prime Minister David Cameron said at the EU summit.

Amid its political crisis, Ukraine is teetering on the verge of bankruptcy, struggling to pay off billions of dollars in debts in the coming months. The U.S. and the EU have pledged to quickly offer a bailout.

Russia's foreign minister dismissed the EU pact, saying the current Ukrainian leadership lacks popular support and should have held elections before making such a decision.

Meanwhile, U.N. Secretary-General Ban Ki-moon, visiting Ukraine's capital, urged talks between Kiev and Moscow.

"At times like this, it is vital that all parties refrain from any provocative actions that could exacerbate an already very tense and very volatile situation," he said.

The EU hit 12 more people with sanctions Friday over Russia's annexation of Crimea, bringing its list of those facing visa bans and asset freezes to 33. They include one of Russia's deputy prime ministers, a Putin adviser and the speaker of Russia's upper house of Parliament, according to a document obtained by The Associated Press.

Annexing Crimea "is a flagrant breach of international law and something we will not recognize. This behavior belongs to the Europe of the last century not this one," Cameron said.

Still, the EU roster fell short of the high-powered U.S. list, in an apparent reflection of European wariness of going as far as Washington to punish Russia - Europe's neighbor, energy supplier and trade partner.

President Barack Obama on Thursday ordered a second round of sanctions against 20 members of Putin's inner circle and a major bank supporting them. The list included four businessmen considered to be Putin's lifelong friends.

Moscow retaliated by banning nine U.S. officials and lawmakers from entering Russia.

Putin tried to play down the sanctions at Friday's televised session of the presidential Security Council.

"We should keep our distance from those people who compromise us," he said, a jocular reference to the officials on the sanctions list, some of whom attended the meeting.

Putin added sardonically that he would open an account to keep his salary in the targeted Bank Rossiya, owned by Yuri Kovalchuk, considered to be Putin's longtime friend.

At the same time, Putin said he sees no immediate need for further Russian retaliation over the U.S. sanctions, adding that Russia will keep funding a program jointly with NATO to service Afghan helicopters and train their crews.

However, just a few hours later, the Russian Foreign Ministry said Moscow will "harshly" respond to the latest round of U.S. sanctions, and Putin's spokesman, Dmitry Peskov, said Russia will retaliate.

Russian Defense Minister Sergei Shoigu told Putin on Friday that 72 Ukrainian military units in Crimea have decided to join the Russian military. His claim couldn't be independently confirmed.

At the Ukrainian military air base in Belbek, outside the Crimean port of Sevastopol, Col. Yuly Mamchur told reporters he was still waiting for orders from his commanders on whether to evacuate.

Meanwhile, pushing back against demands to supply arms to Ukraine, Obama administration officials said Friday that economic sanctions would remain the primary weapon as the U.S. and its European allies seek a diplomatic solution to Russia's aggression.

"Our interest is not in seeing this situation escalate and devolve into hot conflict," Obama National Security Adviser Susan Rice said. "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 cost imposed on Russia for its actions."

President Barack Obama, traveling across the Atlantic next week, will seek a cohesive stance from European leaders unnerved by Russia's annexation of the Crimean Peninsula but cautious about the economic punishment the United States says it's willing to unleash if Moscow makes further expansionist moves.

The trip, scheduled long before Russia moved to annex the Crimean Peninsula away from Ukraine, had initially aimed to nurture international relationships as well as feature a high-profile audience with Pope Francis. But Russia's actions will now dominate Obama's visit as the president and U.S. allies seek to confront one of the most serious political crises in Europe since the Cold War.

Underscoring the gravity with which the United States and the West perceive Russia's intervention in Ukraine, Obama will meet with leaders of the Group of Seven leading economies on Monday to display a unified stance against Moscow.

"What will be clear for the entire world to see is that Russia is increasingly isolated, and that the United States is leading the international community in supporting the government of Ukraine and the people of Ukraine, and in imposing costs on Russia for its aggression against Ukraine," Rice said.

Obama this week ordered sanctions against nearly two dozen members of Putin's inner circle and a Russian bank and he signed an executive order that would allow the U.S. to sanction key Russian industries. U.S. officials said Russia's energy, financial services and metals and mining sectors are among the industries that could be targeted.

On Friday, the European Union announced its own new sanctions, aiming for a deputy prime minister, two presidential advisers and the speakers of both houses of parliament. It also stated that further steps by Russia to destabilize Ukraine would lead to unspecified economic consequences and asked its members to prepare possible targets.

In that sense, the EU actions and threats against Russia fall short of the U.S. efforts, illustrating the European nations' caution over matching the U.S. measures against a country that is so intertwined with their own economies as both a trading partner and energy supplier.

Sen. John McCain, R-Ariz., who recently returned from a trip to Ukraine, said the U.S. needs to provide financial aid to Ukraine, immediately send defensive weapons to the country, resume work on the missile defense system in Poland, develop a long-term plan to get energy to Europe and Ukraine and speak up for the people.

Critics also say Obama has not been swift enough in imposing sanctions.

"This incrementalist approach is failing, and it will continue to fail," said Andrew Kuchins, the director of the Russia program at the Center for Strategic and International Studies. "He's got to step outside of his comfort zone and seize the initiative, take measures that put Putin on the defensive."

Beyond presenting a joint front against Russia, Obama while in Europe will be sure to make an appeal for European political and economic assistance for Ukraine, which has been left reeling in the wake of the February street protests that upended the government and provided an opening for Russian President Vladimir Putin to seize Crimea.

Obama, however, will have to make that request empty-handed. Congress has yet to approve $1 billion in loan guarantees for Ukraine because of Republican objections over provisions to expand the lending authority of the International Monetary Fund.

On Tuesday, Obama will meet with NATO Secretary-General Anders Fogh Rasmussen, an opportunity to reassure Eastern European members of the alliance, including the Baltic states, which have become especially alarmed by Putin's moves.

Rice said the economic measures were already taking a toll on Russia.

"You can see that these measures have had at least an initial impact when you look at the markets, when you look at the currency, when you look at the ratings by the major ratings agencies which have downgraded Russia from stable to negative just in the last 24 hours that these steps are consequential," she said.

But Rice would not say under what circumstances Obama would advance to broader, harder- hitting sanctions on Russia's economic sector.

"We have not taken that decision; as the president said yesterday, that is not our preference," she said. "But if the situation escalates, that remains a tool at our disposal."

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