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Leaks, barbs, dirty tricks as Russia, West feud over Ukraine

Source: Reuters - Fri, 7 Feb 2014 10:22 GMT
Author: Reuters
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(Adds Rogozin, central bank comments)

* "Leaks" of U.S., EU diplomats' conversation add dirty tricks to Ukraine standoff

* Russian deputy PM scoffs at "Westerners' intrigues and scandals"

* Ukraine leader flies to Sochi, Putin may discuss new government

* Kremlin aide calls for crackdown, says U.S. arming rebels

* Cold War echoes as Moscow warns it could intervene in Ukraine

By Alastair Macdonald

KIEV, Feb 7 (Reuters) - An east-west struggle over Ukraine turned nastier as Moscow accused the United States of fomenting a coup and Washington pointed a finger at Russia for leaking a recording of U.S. diplomats discussing how to shape a new government in Kiev.

As Russian President Vladimir Putin prepared to open the Winter Olympics at Sochi, the first Games in Russia since the Soviet Union hosted the 1980 summer edition, the showdown over Ukraine produced frosty Cold War rhetoric, with a Kremlin aide warning Moscow might act to block U.S. "interference" in Kiev.

U.S.-Russian relations have long been cool, but the ferocity of the exchanges was a mark of globally diverging interests - and of the importance of Ukraine, an ex-Soviet state of 46 million people that Putin wants to keep in Moscow's orbit despite mass street demonstrations against Russian influence.

Ukraine's economy has suffered, with the central bank introducing restrictions on foreign exchange purchases on Friday to try and stabilise a hryvnia currency that has lost 10 percent against the dollar since street protests against President Viktor Yanukovich began in November.

Putin is likely to meet Yanukovich in Sochi, possibly to discuss candidates for a new prime minister. Putin may also raise concerns, voiced by the Kremlin's point man on Ukraine, that Yanukovich needs to crack down on protesters who have been on the streets for over two months, demanding he quit.

The United States, for its part, described as "a new low in Russian tradecraft" the posting online of a recording of a senior State Department official discussing plans for a new Ukrainian government with the U.S. ambassador in Kiev. Victoria Nuland also disparaged the EU in a crudely pithy manner.

The White House spokesman said: "Since the video was first noted and Tweeted out by the Russian government, I think it says something about Russia's role." The State Department said Nuland had apologised to her EU counterparts for her language.

One diplomatic source pointed to a tweet from an aide to Deputy Prime Minister Dmitry Rogozin linking to the recorded phone call. The Russian aide later said on Twitter that he had simply spotted it on the Internet.

The Kremlin's point man on Ukraine, Sergei Glazyev, in a typically confrontational newspaper interview, urged the Ukrainian leader to crack down, instead of negotiating with "putschists" whom he accused Washington of arming, funding and training to take over the ex-Soviet state.

Rogozin himself, who visited Kiev this week and has long been a combative anti-Western voice in Moscow, tweeted on Friday the he was meeting Russian and Ukrainian industrialists later in the day to discuss cooperation in aerospace:

"While the Westerners are cooking up intrigues over there and getting into scandals, Russia is helping Ukrainian regions restore their lost relationships with our companies, and that means creating thousands of jobs," Rogozin said, referring to disruption of industrial ties after the Soviet Union broke up.

"Maybe then there will be fewer unemployed and bitter people around to organise pogroms in their towns with money from outsiders," he said, referring to Russian accusations that Western governments fund opposition groups, including far-right nationalists with a history of anti-Semitism.

RUSSIAN "TORPEDO"

Washington did not challenge the authenticity of what seems to be a phone call between diplomats bugged about 12 days ago, discussing how opposition leaders should best respond to an offer from Yanukovich to include them in a new government.

Similarly, EU officials said they would not comment on a "leaked alleged" call posted on the same anti-opposition website featuring a senior aide to EU diplomacy chief Catherine Ashton complaining about U.S. criticism that the EU was being "too soft" in its approach to imposing sanctions on Yanukovich.

The simultaneous release of the recordings, whatever their source and authenticity, appeared designed to discredit the Western powers, portray Ukraine's opposition as Western pawns and to drive a wedge between Brussels and Washington.

Apparently dating from just before Jan. 27, when opposition leader Arseny Yatsenyuk rejected Yanukovich's offer to be prime minister, the recording of Nuland and ambassador Geoffrey Pyatt included them agreeing that another opposition figure, boxing champion Vitaly Klitschko, should stay out of the cabinet.

"I don't think Klitsch (Klitschko) should go into the government," Nuland said in the recording, which carried subtitles in Russian. "I don't think it's a good idea."

She also discussed the prospect of a U.N. envoy endorsing a new government, suggesting it would be preferable to having a deal appear to be brokered by Brussels: "That would be great ... to have the U.N. help glue it and you know ... fuck the EU."

Pyatt responded: "Exactly. And I think we've got to do something to make it stick together because you can be pretty sure that if it does start to gain altitude, the Russians will be working behind the scenes to try to torpedo it."

The furore over the leaks raised questions over security standards among diplomatic missions in Kiev and over possible Russian or Ukrainian bugging of diplomatic lines.

Recent revelations of widespread U.S. monitoring of foreign communications may temper sympathy for Washington's officials.

YANUKOVICH DILEMMA

Yanukovich, who triggered the mass protests in November when he yielded to Russian pressure and backed out of a free trade pact with the EU, may tell Putin of plans for a new government to replace a pro-Russian prime minister he sacked last week.

After Yanukovich walked away from the EU pact, Russia promised $15 billion in aid. Moscow has frozen the aid until it finds out who will be the new prime minister.

Since the opposition's Yatsenyuk turned down the job, some opposition figures speculate that Yanukovich may now name one of his own hardline allies in an effort to please Moscow.

Kiev needs funds, though is loath to admit it. The central bank announced late on Thursday it was restricting purchases of foreign exchange to try to stabilise its banks and a currency that has fallen 10 percent in three months.

On Friday, central bank officials said the hryvnia rate was now "appropriate". Governor Ihor Sorkin told a news conference: "There have been strains on the currency market recently, but we are sure this is only a short-term trend."

Yanukovich met Nuland just before flying out for Sochi. He assured her, according a statement from his office, that he wanted talks not violence: "Only by dialogue and compromise can we get out of this crisis," he said. (Additional reporting by Natalia Zinets and Jack Stubbs in Kiev and Steve Holland in Washington; Writing by Alastair Macdonald; Editing by Peter Graff)

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