Ukraine crisis: Obama calls Putin, orders sanctions

U.S. President Barack Obama ordered the West's first sanctions in response to Russia's military takeover of Crimea today, declaring his determination not to let the Kremlin carve up Ukraine. He asserted that a hastily scheduled referendum on Crimea seceding and becoming part of Russia would violate international law.

European leaders announced their own measures but split over how forcefully to follow the U.S. lead. Obama threatened further steps if Russia persists.

After announcing his sanctions at midday, Obama emphasized his resolve in a personal telephone call with Russian President Vladimir Putin later Thursday, the White House said. In a one-hour discussion, Obama affirmed his contention that Russia's actions violate Ukraine's sovereignty.

The U.S. president told Putin there was still a way to resolve the dispute diplomatically, the White House said with Russian forces moving back to their base in Crimea, the governments of Ukraine and Russia holding direct talks and international monitors arriving.

All signs pointed to a continuing diplomatic battle over Ukraine's territorial integrity and what could prove a broader fault line in Europe's post-Cold War order.

While East and West no longer threaten nuclear war and have vastly expanded commercial ties, Russia is determined to dominate the future of the former Soviet republics along its borders. Washington, its NATO partners and others across the continent are striving to pull these nations out of Moscow's orbit.

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"The proposed referendum on the future of Crimea would violate the constitution and violate international law," Obama said. "We are well beyond the days when borders can be redrawn over the heads of democratic leaders."

Underscoring his resolve to President Vladimir Putin, Obama issued an executive action slapping new visa restrictions on Russian and other opponents of Ukraine's government in Kyiv and authorizing wider financial penalties against those involved in the military intervention or in stealing state assets. None of the measures appeared aimed at the Russian president personally.

"Today the world can see that the United States is united with our allies and partners in upholding international law and pursuing a just outcome that advances global security and the future that the Ukrainian people deserve," Obama said at the White House. "That's what we're going to continue to do in the days to come until we have seen a resolution to this crisis."

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Obama hailed U.S. co-operation with the European Union, which imposed its own sanctions on Russia on Thursday. In an emergency meeting in Brussels, EU leaders decided to suspend talks with Putin's government on a wide-ranging economic agreement and on granting Russian citizens visa-free travel within the 28-nation bloc a long-standing Russian objective. Yet at the same time, Europe's presidents and prime ministers were divided on more drastic steps such as freezing assets and issuing travel bans on Russian officials.

European hesitancy reflected the reality that targeting influential Russian businessmen or major Russian companies would also harm Europe's economic interests. Russian investors hold assets worth billions in European banks, particularly in Britain and Cyprus, and major exporters such as Germany and the Netherlands have far more at stake than the United States in Russia's consumer economy. Many other European countries depend on Russia for oil and gas supplies.

Jack Ablin, CIO of BMO Private Bank in Chicago, believes Russia has more to lose than the EU.

The biggest challenge for Putin is probably the markets themselves, he said in an interview with CBCs The Lang & OLeary Exchange.

The fact that on the first day of this incursion the Russian market was down 11 percentage points, the ruble was down nearly 15 percentage points and I think probably he saw a big pushback there, he continued.

Russian troops have seized control of much of Crimea, where ethnic Russians are the majority. Moscow doesn't recognize the Ukrainian government that came to power after protesters ousted the country's pro-Russian president last month. Putin and other officials have cited strategic interests as well as the protection of ethnic Russians in making the case for intervention. Russia leases a major navy base there.

The Western debate over how strongly to penalize Russia is important given that neither the U.S. nor Europe is advocating the use of force. The U.S. military has stepped up joint aviation training with Polish forces and American participation in NATO's air-policing mission in its Baltic countries. But the Pentagon, like its NATO partners, has strictly ruled out military options.

In the latest threatening move Thursday, Crimean lawmakers voted 78-0 to schedule a referendum on March 16 on whether the region should secede from Ukraine and join Russia.

Rare consensus across party lines

Obama said such a vote would "violate the Ukrainian constitution and violate international law." Because Ukraine is a member of the United Nations, any action that is unconstitutional in Ukraine would be considered illegitimate in international law.

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But the West supported Kosovo's independence six years ago, which included no consent by Serbia's government and occurred despite Russian objections. Obama might have been trying to differentiate Ukraine's situation by arguing that borders shouldn't be "redrawn over the heads of democratic leaders."

The U.S. sanctions push has prompted a rare case of broad agreement among the Obama administration and most Democratic and Republican lawmakers.

The House of Representatives voted 385-23 on Thursday in favour of the first U.S. aid bill for Ukraine's fledgling government, following on an Obama administration promise of $1 billion in loan guarantees. The House Foreign Affairs Committee unanimously approved a separate resolution condemning Russia's takeover of Ukraine's Crimea and urging visa, financial and trade sanctions. Senators are at work on a larger bill putting together all elements of a U.S. response and hope to introduce the legislation next week.

The EU offered $15 billion in aid to help Ukraine's cash-depleted economy on Wednesday, still far short of the $35 billion that Ukraine's government says it needs in bailout loans through next year. The U.S., EU and others are trying to work out a package with the International Monetary Fund.

Western leaders fear Russia is becoming entrenched in Crimea and could turn its focus to Ukraine's industrial heart in the east, where Russian speakers similarly are a majority. Central and Eastern European countries that lived for decades under the Soviet Union's domination are especially sensitive to the threat. Lithuanian President Dalia Grybauskaite warned, "After Ukraine will be Moldova, and after Moldova will be different countries."