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Obama warns Russia of 'costs' for intervention in Ukraine

Source: Reuters - Sat, 1 Mar 2014 03:02 GMT
Author: Reuters
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* Obama steps into Ukraine-Russia tension over Crimea

* U.S., allies would consider skipping G8 summit in Russia

* Former ambassador says U.S. has few good options

* IMF sees no need to panic on Ukraine economy (Adds Biden's call to Ukrainian prime minister, paragraph 10)

By Steve Holland and Matt Spetalnick

WASHINGTON, Feb 28 (Reuters) - President Barack Obama warned Russia on Friday that military intervention in Ukraine would lead to "costs," as tension with old foe President Vladimir Putin rose in a Cold War-style crisis.

"We are now deeply concerned by reports of military movements taken by the Russian Federation inside of Ukraine," he told reporters.

Obama and European leaders would consider skipping a G8 summit this summer in the Russian city of Sochi if Moscow intervenes militarily in Ukraine, a senior U.S. official said. The G8 includes the world's seven leading industrial nations and Russia.

"The United States will stand with the international community in affirming that there will be costs for any military intervention in Ukraine," Obama said in the White House briefing room.

Facing yet another confrontation with Putin after butting heads with him over Syria, Obama said any violation of Ukraine's sovereignty and territorial integrity would be "deeply destabilizing."

Obama did not spell out what he meant by Russian military intervention.

Russia has a huge naval base in Ukraine's Crimea Peninsula and says it has the right to move troops in Ukraine under an agreement between the two former Soviet neighbors.

U.S. officials said they saw indications of Russian troop movements into Crimea but that their numbers and intentions were unclear.

The chairman of the U.S. House of Representatives Intelligence Committee, Republican Mike Rogers, said in a statement: "It appears that the Russian military now controls the Crimean peninsula."

Vice President Joe Biden called Ukrainian Prime Minister Arseny Yatseniuk on Friday "to reaffirm the United States' strong support for the new government and our commitment to the sovereignty, territorial integrity, and democratic future of Ukraine," the White House said.

The crisis has presented Obama with a difficult challenge days after the ouster of Viktor Yanukovich, Ukraine's pro-Moscow president, who fled to Russia following three months of protests in Kiev.

Armed men took control of two airports in the Crimea region in what the new Ukrainian leadership described as an invasion by Moscow's forces, and Yanukovich surfaced in Russia a week after he fled Kiev.

Ukraine fell into political crisis last year when Yanukovich spurned a broad trade deal with the European Union and accepted a $15 billion Russian bailout that is now in question.

A U.S. response to any Russian intervention in Ukraine could include avoiding deeper trade and commerce ties that Moscow is seeking, the senior U.S. official said.

Steven Pifer, a former U.S. ambassador to Ukraine now at the Brookings Institution think tank, said it was inconceivable that the United States would consider a military response were Russia to seek to gain control of Crimea, and that it had few plausible options to oppose such a move.

"If you look at the U.S.-Russian relationship, what kinds of things could we do to punish them? There are not a lot of good levers there," he added.

Putin has proved immune to U.S. calls for Moscow to stop supporting Syria's government in its three-year-old civil war. And the United States was unable to prevent Putin from staging Russian incursions into neighboring Georgia in 2008.

IMF SEES NO PANIC

In the struggle between the West and Russia for influence in Ukraine, both sides are wielding money.

Putin last year offered $15 billion for Kiev, $3 billion of which has been delivered, in what was widely seen as a reward for Yanukovich's turning away from the EU deal.

Now, support from the Washington-based International Monetary Fund is seen as critical to shoring up Ukraine's collapsing finances. The United States and the EU say they are willing to provide funds alongside an IMF program.

Russia also supports the fund's involvement, and an IMF team is set to arrive in Kiev early next week to collect information and start working on a loan program.

But IMF Managing Director Christine Lagarde on Friday suggested there was no rush to help Ukraine, which says it needs $35 billion over two years to avoid default and may need $4 billion immediately.

"We do not see anything that is critical, that is worthy of panic at the moment," Lagarde told reporters. "We would certainly hope that the (Ukrainian) authorities refrain from throwing lots of numbers which are really meaningless until they've been assessed properly."

U.S. lawmakers are hammering out details of an assistance package for Ukraine. Senator Chris Murphy, chairman of a Senate subcommittee on European affairs, said the package would be part of a broader, coordinated program with the EU, the IMF and other international partners.

"I encourage the new government to implement the necessary economic reforms to stabilize the economy and set Ukraine on a path to prosperity, including rooting out corruption and increasing transparency in government finances," Murphy said.

Republican Senator John McCain, a long-time Putin critic, said diplomatic and economic sanctions could be imposed. But Putin does not fear the United States, he told CNN. (Additional reporting By Matt Spetalnick; Arshad Mohammed, Lesley Wroughton, Patricia Zengerle, Mark Felsenthal and Jeff Mason; Editing by Alistair Bell and Mohammad Zargham)

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