EU moves toward sanctions on Russians; Obama meets Ukraine PM

 

 

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.

 

But Obama and Yatseniuk outlined a potential diplomatic opening that could give Russians a greater voice in the disputed Crimean region, where a referendum is scheduled for Sunday on whether it should become part of Russia.

 

Yatseniuk told a forum in Washington after his White House meeting that his interim government was ready to have a dialogue and negotiations with Russia about Moscow's concerns for the rights of ethnic Russians in Crimea.

 

Asked what a political solution would look like, Yatseniuk said: "If it is about Crimea, we as the Ukrainian government are willing to start a nationwide dialogue (about) how to increase the rights of (the) autonomous republic of Crimea, starting with taxes and ending with other aspects like language issues."

 

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.

A Russian stock index dropped 2.6 percent and the central bank was forced to spend $1.5 billion to prop up the ruble 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 Sunday's referendum, 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."