News.Kyiv.Me.

WRAPUP 5-G7 warns Russia of more sanctions if Ukraine crisis escalates

(Adds U.S. Senate action, Ukraine U.N. draft resolution,
paragraphs 13-14, 29-31)

* G7 leaders to hold own summit instead of going to Sochi

* Kyiv tells troops to leave Crimea after Russians take
another base

* Shooting reported as Russians storm Ukrainian landing ship

* Europeans wary of sanctions, fear for own economies

By Steve Holland and Aleksandar Vasovic

THE HAGUE/FEODOSIA, Crimea, March 24 (Reuters) – U.S.
President Barack Obama and major industrialised allies warned
Russia on Monday it faced damaging economic sanctions if
President Vladimir Putin takes further action to destabilise
Ukraine following the seizure of Crimea.

Leaders of the Group of Seven nations, meeting without
Russia, agreed to hold their own summit this year instead of
attending a planned G8 meeting in the Russian Olympic venue of
Sochi, along the Black Sea coast from Crimea, and to suspend
their participation in the G8 until Russia changes course.

On a day when Kyiv ordered its remaining troops to withdraw
from Crimea and Russian forces captured a Ukrainian marine base
and a landing ship in the region, leaders of the United States,
Germany, France, Britain, Italy, Japan and Canada condemned what
they called “Russia’s illegal attempt to annex Crimea in
contravention of international law”.

They also agreed their energy ministers would work together
to reduce dependence on Russian oil and gas and increase energy
security.

“We remain ready to intensify actions including coordinated
sectoral sanctions that will have an increasingly significant
impact on the Russian economy, if Russia continues to escalate
this situation,” they said in a joint statement.

The G7 leaders, who met on the sidelines of a nuclear
security summit in The Hague, said they would convene again in
Brussels in early June, the first time since Russia joined the
G8 in 1998 that it will have been shut out of the annual summit
of industrialised democracies.

They also urged the International Monetary Fund to reach a
rapid agreement with Ukraine to unlock urgently needed financial
aid for the country’s shattered economy.

Obama, who has imposed tougher sanctions on Moscow than
European leaders over its takeover of the strategic Crimean
peninsula, told reporters: “Europe and America are united in our
support of the Ukrainian government and the Ukrainian people”.

“We’re united in imposing a cost on Russia for its actions
so far,” he said of the visa bans and asset freezes slapped on
senior Russian and Crimean officials.

Russian Foreign Minister Sergei Lavrov played down the G8
snub.

“If our Western partners believe the format has exhausted
itself, we don’t cling to this format. We don’t believe it will
be a big problem if it doesn’t convene,” he told reporters.

RESISTANCE ENDED

In Washington, both Republicans and Obama’s fellow Democrats
said they were disappointed the G7 had not gone further.
Members of the U.S. Senate said Russia should be barred
permanently, not temporarily, from the G8.

By a vote of 78-17 on Monday, senators laid the groundwork
for debating a bill that would back a $1 billion loan guarantee
for the government in Kyiv, provide $150 million in aid for
Ukraine and neighboring countries and require sanctions on
Russians and Ukrainians responsible for corruption, human rights
abuses or undermining stability in Ukraine.

Complicating efforts to pass a Ukraine aid bill, however,
the Senate measure includes reforms to the International
Monetary Fund that are not included in a House of
Representatives’ version.

A State Department spokeswoman highlighted the economic
damage Russia has already suffered due to its action in Crimea,
a Russian-majority region, after the fall of Ukraine’s
pro-Russian president to months of mass protests.

“The Russian stock market’s down 20 percent this year
already. That’s the worst performing index in the world,”
spokeswoman Maria Harf told reporters. “That’s $75 billion of
market value wiped away, due in large part to the power and
reach of our sanctions.

“The Russian currency is near an all-time low as investors
have lost confidence in the economy and fled into dollars.”

Earlier on Monday, Russian troops forced their way into a
Ukrainian marine base in the port of Feodosia, overrunning one
of the last remaining symbols of resistance. They later stormed
and captured a Ukrainian landing ship, firing warning shots and
stun grenades. No casualties were reported in either incident.

In Kyiv, acting President Oleksander Turchinov told
parliament the remaining Ukrainian troops and their families
would be pulled out of Crimea in the face of “threats to the
lives and health of our service personnel”.

That effectively ends any Ukrainian resistance, less than a
month since Putin claimed Russia’s right to intervene militarily
on its neighbour’s territory.

White House officials accompanying Obama expressed concern
at what they said was a Russian troop buildup near Ukraine and
warned that any further military intervention would trigger
wider sanctions than the measures taken so far.

One U.S. official said Moscow had massed some 20,000
soldiers near the border. Russian intervention in eastern or
southern Ukraine would be the clearest trigger for additional
sanctions, as would violence in Crimea, another official said.

NATO also fears Putin may have designs on Transdniestria, a
part of another former Soviet republic, Moldova.

Russia has said it is complying with international
agreements on troop movements and has no plans to invade.

RUSSIA-UKRAINE TALKS

In what has become the biggest East-West confrontation since
the Cold War, the United States and the European Union have
imposed personal sanctions on some of Putin’s closest political
and business allies. But they have held back so far from
measures designed to hit Russia’s wider economy.

Obama also discussed the crisis at a meeting in The Hague
with Chinese President Xi Jinping, who has voiced support for
Ukraine’s sovereignty but refrained from criticising Russia.

The West wants Beijing’s diplomatic support in an effort to
restrain Putin. But while Xi called for a political solution, he
did not harden China’s position towards Moscow.

Russia formally annexed Crimea on March 21, five days after
newly installed pro-Moscow regional leaders held a referendum
that yielded an overwhelming vote to join Russia. Kyiv and the
West denounced the annexation as illegal.

Kyiv circulated a draft resolution at the U.N. General
Assembly that would declare the referendum invalid.

The text, which could go to a vote on Thursday, dismisses
the referendum as “having no validity, (and) cannot form the
basis for any alteration of the status of the Autonomous
Republic of Crimea or of the City of Sevastopol.”

The resolution would be non-binding, but a strong majority
in support of the measure could send a significant political
message about Russia’s lack of broad support on the Crimean
issue, Western diplomats told Reuters.

In one sign of a possible easing of tension, Lavrov agreed
to hold a first meeting with his Ukrainian counterpart, Andriy
Deshchytsya, on the sidelines of the nuclear security summit.

The first 50 out of 100 observers dispatched by the
pan-European OSCE security watchdog arrived in Ukraine on Monday
to monitor potential trouble spots and defuse tensions. Russia
relented late last week and agreed on a mandate after prolonged
wrangling, but the monitors will not be allowed to enter Crimea.

FURTHER COSTS

Western officials are now focused less on persuading Putin
to relinquish Crimea – a goal that seems beyond reach – than on
deterring him from seizing other parts of Ukraine, which was
under Moscow’s control within the Soviet Union until its
break-up in 1991.

Persuading Europeans to sign on to tougher sanctions could
be difficult. The EU does 10 times as much trade with Russia as
the United States and is the biggest customer for Russian oil
and gas. The EU’s 28 members include countries with widely
varying relationships to Moscow.

But German Chancellor Angela Merkel, the EU’s most powerful
leader, has taken a tough line with Putin and supported EU moves
to reduce the bloc’s long-term dependence on Russian energy.

Despite the disruption to East-West relations, Washington
wants other diplomatic business with Moscow to continue. U.S.
Secretary of State John Kerry held talks with Lavrov after
meeting the head of the Organisation for the Prohibition of
Chemical Weapons, overseeing the destruction of Syria’s toxic
stockpile in action sponsored jointly by Washington and Moscow.

Russia hit back symbolically at Canada, announcing personal
sanctions against 13 Canadian officials in retaliation for
Ottawa’s role in Western sanctions so far. Moscow has already
taken similar measures against senior U.S. Congress members but
has not yet targeted European officials.

(Additional reporting by Anthony Deutsch, Jeff Mason, Justyna
Pawlak and Andreas Rinke in The Hague, Gabriela Baczynska in
Simferopol, Natalia Zinets in Kyiv, Patricia Zengerle in
Washington and Louis Charbonneau at the United Nations; Writing
by Paul Taylor and Peter Cooney; Editing by Mark Heinrich and
Ken Wills)