US-Russia hold talks on Ukraine as EU backs massive aid package

EU unveils aid package worth at least €11b to support Ukraine’s new pro-Western leaders

PUBLISHED : Wednesday, 05 March, 2014, 7:16pm
UPDATED : Thursday, 06 March, 2014, 5:41pm

US and Russian top diplomats headed for crucial talks on Ukraine on Wednesday as the EU unveiled an aid package worth at least €11 billion (HK$117 billion) to support the country’s new pro-Western leaders.

The talks in Paris to defuse the worst East-West stand-off since the cold war came as pro-Moscow forces seized part of two missile bases in Ukraine’s Crimea peninsula, although all missiles remained in Ukrainian hands.

US Secretary of State John Kerry and Russia’s Sergei Lavrov were meeting for the first time since Ukraine’s Moscow-backed president Viktor Yanukovych was ousted late last month after three months of protests which left nearly 100 dead.

US President Barack Obama said on Tuesday Russia was “not fooling anyone” after it claimed it had no troops operating in Crimea, where pro-Russian forces have taken control.

Lavrov reiterated its claim on Wednesday, saying: “If they are the self-defence forces created by the inhabitants of Crimea, we have no authority over them. They do not receive our orders.”

But while stepping up diplomatic pressure Washington – with the support of European heavyweights France, Germany and Britain – is also seeking to offer President Vladimir Putin a way out of the crisis in the ex-Soviet state.

But Obama also spoke to German Chancellor Angela Merkel on Tuesday and agreed on the importance of a “de-escalation” with the deployment of international observers and the start of talks between Moscow and Kiev, a US official said.

Watch: Kerry confirms discussions with Ukraine, Russia to continue


“De-escalation” on the Russian side would include its troops going back inside their bases in Crimea, home to Russia’s Black Sea naval fleet since the 18th century, the official added.

Russian doubts on the legitimacy of Kiev’s interim government would be resolved by elections planned for May.

A diplomatic source said on Wednesday that 15 member states of the Organisation for Security and Co-operation in Europe (OSCE), including the United States, have agreed to send military observers to Ukraine.

The EU’s biggest powers, France and Germany, want “very firm” steps against Putin while moving towards talks, French Foreign Minister Laurent Fabius said.

Merkel called on Russia not to do anything to destabilise the situation, after Putin insisted on Russia’s right to use “all available means” there.

EU foreign policy chief Catherine Ashton indefinitely postponed a Kiev trip but was to meet Western and Ukrainian leaders in Brussels and Paris ahead of an emergency Brussels summit.

Announcing the crucial aid package for Ukraine, European Commission president Jose Manuel Barroso said it was “designed to assist a committed, inclusive and reforms-oriented Ukrainian government.”

He will discuss details in Brussels on Thursday with interim Prime Minister Arseniy Yatsenyuk, who will be attending the EU summit called to resolve a crisis first sparked by Yanukovych’s scrapping of a key partnership deal with the bloc.

Crimea tense

Tensions were highlighted in Crimea on Wednesday as gunmen part-seized two missile facilities, in Evpatoria on Crimea’s western coast, and Cape Fiolent near Sevastopol, Ukrainian officials said,

The part-seizure seemed to have occurred without violence however.

Watch: Why Crimea is important to Russia?

At Cape Fiolent Russian soldiers were holding some parts of the base although the missile depot remains in Ukrainian hands, Volodymyr Bova, a defence ministry spokesman in the peninsula, said.

Pro-Moscow forces were also in partial control of the base in Evpatoria, which does not have missiles on its grounds.

Ukrainian soldiers held the command post and control centre there, said another spokesman for the defence ministry in Kiev, Oleksey Mazepa.

Some 20 Russian soldiers, backed by hundreds of pro-Moscow forces, had already tried to occupy the Evpatoria base on Tuesday evening, leading to some skirmishes although no shots were fired.

Crimea is an autonomous area within Ukraine but is located next to Russia and has a Russian ethnic majority. It is strategically vital, offering access to the Mediterranean within a day’s sailing.

Elsewhere on the peninsula, the situation was mostly calm on Tuesday.

At the border post of Port Krym on the Strait of Kerch, there was little sign of a mass exodus of ethnic Russians despite Russian media reports to the contrary.

Only three cars were parked outside the station. “There is no panic, people are not fleeing on masse,” said a Ukrainian.

At the entrance to a Ukrainian base nearby, a dozen troops were deployed.

“These are professional soldiers from the Russian army. They arrived three days ago,” said Ukrainian marine commander Alexei Nikoforov, adding the base was still under Ukrainian control.

Stock markets bullish

Markets were mixed on Wednesday as some traders betted on tensions easing in the crisis – but experts warned that a full resolution may be a long time coming.

At the start of trading in Europe, London’s benchmark FTSE 100 index dropped 0.20 per cent, Frankfurt’s DAX 30 slipped 0.28 per cent and Paris’s CAC 40 lost 0.26 per cent compared to Tuesday’s closing values.

In Asia, Tokyo stocks closed 1.20 per cent higher while Hong Kong’s Hang Seng lost 0.34 per cent and Shanghai’s composite index fell 0.89 per cent.

Russia revealed earlier that it sold a record US$11.3 billion in foreign currency on Monday to support the ruble.

The day was dubbed “Black Monday” as concern about the Ukraine conflict sent stock markets falling around the world.

Credit Agricole said that while the tension in Ukraine had not passed, it expected market sentiment to remain “relatively healthy” barring further dramatic developments.