Ukraine crisis: Russia, West grapple for solution in Paris

Facing off in Europe's capitals Wednesday, Russia and the West began building the elements of a diplomatic solution to Europe's gravest crisis since the Cold War even as the West appeared increasingly resigned to an entrenched Russian presence in Crimea.

NATO hit back by putting Russia on suspension, and the European Union extended $15 billion in aid to Ukraine, matching the amount the country's fugitive president accepted from Moscow to turn his back on an EU trade accord.

As peace efforts got underway in Paris and Brussels, volatility reigned on the ground in Ukraine: A special UN envoy visiting Crimea came under threat by armed men who forced him to leave the region. Meanwhile, hundreds of demonstrators, many chanting "Russia! Russia!" stormed a government building in eastern Ukraine renewing fears that turmoil could spill out of Crimea and engulf other Russian-dominated parts of Ukraine.

Ukraine's prime minister told The Associated Press in his first interview since taking office that he still feared Russian President Vladimir Putin might attempt more land grabs: "Mr. President," Arseniy Yatsenyuk said, "stop this mess."

Yatsenyuk vowed to keep Crimea as part of Ukraine, but expressed openness to granting it more autonomy. Ukraine's foreign minister, Andriy Deshchytsia, told the AP that pro-Russian citizens in Crimea must be willing to replace armed forces with international observers if they want a vote on more self-rule.

But most of the bargaining chips Wednesday belonged to Russia, whose troops are fanned out across Crimea and control most of its strategic facilities.

Diplomatic talks in Paris

A growing chorus of prominent American voices expressed resignation that Crimea was lost to Russia: "I'm not optimistic they're going to leave," said Michael McFaul, who served as Obama's ambassador to Russia until last week.

U.S. Secretary of State John Kerry, Russian Foreign Minister Sergey Lavrov and several European counterparts conducted an intense round of diplomacy in Paris to try to find an exit strategy in Ukraine.

Speaking at a news conference after the talks, Kerry said the encounter was "very constructive, without promising something that is not defined yet, without raising hopes that are inappropriate to raise."

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"I want to be realistic. This is hard tough stuff, and a very serious moment," Kerry said. "But I'd rather be where we are today than where we were yesterday."

"I personally feel that I have something concrete to take back and talk to President Obama about," Kerry said, though he didn't specify what that was.

While negotiations were inconclusive, top European officials expressed optimism that at least the two sides were talking and making progress.

"For the first time, starting with this meeting in Paris, something moved in the right direction," said French Foreign Minister Laurent Fabius.

Lavrov, speaking in Spain before meeting with Kerry, warned against Western support of what Moscow views as a coup in Ukraine, saying that could encourage government takeovers elsewhere.

For the first time, starting with this meeting in Paris, something moved in the right direction- French Foreign Minister Laurent Fabius

"If we indulge those who are trying to rule our great, kind historic neighbour," Lavrov said, "we must understand that a bad example is infectious."

Russian President Vladimir Putin's former financial and policy adviser Andrei Illarionov told CBC News Wednesday that the Russian president is "extremely eager to seize Ukrainian territory."

"The benefit to get Crimea, to get Eastern Ukraine, to destabilize and to overthrow the new government in Ukraine is incomparable to all the so-called sanctions and international reaction," said Illarionov. "Those who think that their condemnation or expressions of concern would somehow influence Mr. Putin's decisions are seriously mistaken."

While Russia expressed openness to international mediation, a major sticking point has been Moscow's refusal to recognize Ukraine's new leaders much less sit down at the table with them.

"I wish I could give you some good news," said Polish Foreign Minister Radoslaw Sikorski, "but unfortunately it hasn't been possible to bring together the foreign ministers of Ukraine and Russia."

Wednesday's Paris gathering, originally scheduled to deal with the Syrian refugee crisis, came after Putin appeared to step back from the brink of war, telling reporters in his first comments since the Crimea takeover that he has no intention to "fight the Ukrainian people."

NATO tried to apply pressure on Moscow in its own talks with Russia in Brussels.

The Western alliance's secretary-general, Anders Fogh Rasmussen, said that ambassadors for the alliances 28 member states decided after a meeting with their Russian counterpart to suspend plans for a joint mission as well as all civilian and military meetings.

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Rasmussen said because of Russia's military action in Ukraine's Crimean Peninsula, "the entire range of NATO-Russia cooperation [is] under review." Rasmussen said the alliance will continue to meet with Moscow at the political level but insisted that halting all other cooperation "sends a very clear message to Russia."

One key piece of leverage that the West has over nearly bankrupt Ukraine: hard cash. The three months of protests that triggered Ukraine's crisis erupted when Yanukovych accepted $15 billion in aid from Putin in exchange for dropping an economic partnership deal with the EU. On Wednesday, the EU matched the aid which the Russians withdrew after Yanukovych's downfall and the U.S. topped that up with an additional $1 billion.

Meanwhile, Ukraine's former prime minister the heroine of Ukraine's 2004-2005 Orange Revolution and Yanukovych's arch-enemy called on the West to force Russia to withdraw troops from Crimea.

Yulia Tymoshenko, who was released from prison two weeks ago, said that any negotiations about Ukraine's future should be conducted directly between the United States, the European Union and Russia and insisted no compromises should be made to appease Moscow.

Demand for Russians to return to Black Sea bases

"We believe that the aggressor must leave without any conditions," Tymoshenko told the AP in an interview.

British Foreign Secretary William Hague said a key demand was for Russia's military to pull back to its Black Sea bases to show a tangible de-escalation, but he did not press for a Thursday deadline as European diplomats initially had. EU talks about possible sanctions against Russia were scheduled Thursday in Brussels.

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The EU on Wednesday also froze the assets of 18 people held responsible for misappropriating state funds in Ukraine, echoing similar action in Switzerland and Austria. The list, which likely targets officials in the ousted government or businessmen related to them, was withheld until Thursday to prevent anyone from withdrawing the funds at the last minute.

Russia has suggested that it will meet any sanctions imposed by Western governments with a tough response, and Putin has warned that those measures could incur serious "mutual damage."

In Crimea, UN special envoy Robert Serry was threatened by 10 to 15 armed men as he was leaving naval headquarters in Crimea, said UN deputy secretary-general Jan Eliasson. When the men ordered Serry to go to the airport, Serry refused but then found himself trapped because his car was blocked, Eliasson said.

The Dutch envoy was later spotted by reporters in a coffee shop, as men in camouflage outfits stood outside. He got into a van with the men, and was taken to Simferopol airport.

'Continued restraint' urged

Later, an AP reporter found Serry in the business class lounge of the Simferopol airport.

"I'm safe. My visit was interrupted for reasons that I cannot understand," the Dutch diplomat said in a statement to AP. He said nothing more.

The Obama administration took steps Wednesday to support the defences of U.S. allies in Europe in response to Russia's takeover of Ukraine's Crimean Peninsula.

Testifying before the Senate Armed Services Committee, Defence Secretary Chuck Hagel said the U.S. was stepping up joint aviation training with Polish forces. The Pentagon also is increasing American participation in NATO's air policing mission in its Baltic countries, he said.

In his remarks, Hagel focused on U.S. diplomatic and aid efforts since Moscow's incursion into Ukrainian territory and said he would speak later Wednesday with Ukraine's new defence minister. U.S. Joint Chiefs Chairman Gen. Martin Dempsey spoke to his Russian counterpart earlier in the day. Neither Hagel nor Dempsey mentioned military options.

"I urge continued restraint in the days ahead in order to preserve room for a diplomatic solution," Dempsey told the Senate panel.

Canadian among 35 unarmed military observers

Meanwhile, the Organization for Security and Co-operation in Europe sent a team of 35 unarmed military observers to Crimea on Wednesday at the fledgling government's request.

A Canadian is among the unarmed military observers being sent to Ukraine.

"They will not be contented with assurances that these people are volunteers, who bought their uniforms in a shop," Polish Defence Minister Tomasz Siemoniak said of the troops without insignia who have taken control of airports, administrative buildings and military bases in Crimea. The hope is to learn "who is in power there and conclusions the OSCE should draw from that."

Financial markets settled down Wednesday after two days of big swings, a sign that investors believe the risk of war has been averted.

"In terms of the international stage," said analyst Joao Monteiro, "this does seem to have moved on from looking like a game of poker to one of chess."