Russia rebuffs West on Crimea as EU offers Ukraine 15 bln euros in aid

PARIS / KIEV - Reuters

US. Secretary of State John Kerry, followed by Russian Foreign Minister Sergei Lavrov, ascend the steps of the Russian Ambassador's Residence for their meeting in Paris, March 5. AP photo

Russia rebuffed Western demands to withdraw forces in Ukraine's Crimea region to their bases on March 5 amid a day of high-stakes diplomacy in Paris aimed at easing tensions over Ukraine and averting the risk of war.

The European Union offered Ukraine's new pro-Western government 15 billion euros in financial aid in the next couple of years provided Kiev reaches a deal with the International Monetary Fund. Germany, the EU's biggest economy, also promised bilateral financial help.

The U.S. Defense Department, in an apparent attempt to signal resolve to Moscow, announced military measures to support eastern European NATO allies adjoining Russia and Ukraine.

Russia and the West are locked in the most serious battle since the end of the Cold War for influence in Ukraine, a former Soviet republic with historic ties to Moscow that is a major commodities exporter and strategic link between East and West.

Ukraine pulled out of a trade deal with the EU under Russian pressure last year, sparking months of protests in Kiev and the Feb. 22 ouster of President Viktor Yanukovych, a Russian ally.

Ukraine says Russia has occupied Crimea, where its Black Sea fleet is based, provoking an international outcry and sharp falls in financial markets on March 3, though they have since stabilised.

The foreign ministers of Russia, the United States, Britain, and Germany met their French counterpart and French President François Hollande in Paris to try to start a diplomatic process to defuse the crisis.

But diplomats said it was not clear whether Russian Foreign Minister Sergei Lavrov would take the crucial step of attending talks with Ukraine's new foreign minister, a member of a government Moscow has described as illegitimate. U.S. Secretary of State John Kerry left the meeting at Hollande's office without making any statement.

Lavrov skips key meeting

Russia did not attend a meeting with Kerry, British Foreign Secretary William Hague and Ukrainian Foreign Minister Andriy Deshchytsia of the so-called Budapest group created to assure Ukraine's security after it abandoned nuclear weapons in 1994. But Kerry and Hague said they would try to bring the Russian and Ukrainian ministers together.

Poland's foreign minister tweeted that he would attend a meeting in Paris with those two ministers plus the United States, Germany, Britain, France and the Organisation for Security and Cooperation in Europe (OSCE).  But there was no confirmation that all sides would attend the session, which could be the first step in a diplomatic mediation process.

Lavrov was later due to hold the first face-to-face talks with his U.S. counterpart since the crisis escalated, on the sidelines of a conference on Lebanon attended by the five permanent members of the U.N. Security Council.

Earlier, Lavrov repeated Moscow's assertion - ridiculed by the West - that the troops that have seized control of the Black Sea peninsula are not under Russian command.

Asked whether Moscow would order forces in Crimea back to their bases, Lavrov told a questioner in Madrid: "If you mean the self-defence units created by the inhabitants of Crimea, we give them no orders, they take no orders from us.

"As for the military personnel of the Black Sea Fleet, they are in their deployment sites. Yes, additional vigilance measures were taken to safeguard the sites ... We will do everything not to allow any bloodshed."

NATO and Russia were also set to hold talks in Brussels amid concerns that a standoff between Russian and Ukrainian forces in Crimea could still spark violence, or that Moscow could also intervene in Russian-speaking eastern Ukraine.

Pro-russian crowd recaptures administrative building

In a sign of heightened tensions in the east, a pro-Russian crowd in Donetsk, Yanukovych's hometown, recaptured a regional administration building they had occupied before being ejected by police, a Reuters witness said.

The West is pushing for Russia to return troops to barracks, accept international monitors in Crimea and Ukraine and negotiate a solution to the crisis through a "contact group" probably under the auspices of a pan-European security body.
    
France said European Union leaders meeting in Brussels on March 6 could decide on sanctions against Russia if there is no "de-escalation" by then. Other EU countries, including Germany, are more reticent about sanctions.

French Foreign Minister Laurent Fabius said early measures could include restrictions on visas, the assets of individuals and existing discussions on economic ties with Russia.

President Vladimir Putin on March 4 defended Russia's actions in Crimea, which used to be Russian territory, and said he would use force only as a last resort.

This eased market fears of a war over the former Soviet republic after sharp falls on Monday, though Russian shares and the rouble slipped again on Wednesday, and Ukraine's hryvnia dropped against the dollar.

Russian forces remain in control of Crimea, where Interfax reported they seized control of two Ukrainian missile defence sites overnight, and Putin gave no sign of backing down.

EU vows massive aid

In Brussels, European Commission President Jose Manuel Barroso said the EU would deliver assistance to Kiev in coordination with the European Bank for Reconstruction and Development and the European Investment Bank.

Some of it would be contingent on Ukraine signing an IMF loan deal, which will require painful economic reforms such as ending domestic gas subsidies and letting the hryvnia float.

The package combined could bring an overall support of at least 11 billion euros over the next couple of years, from the EU budget and EU-based international financial institutions," Barroso told a news conference. The United States offered Ukraine $1 billion in loan guarantees on March 4.

A senior U.S. official said President Barack Obama spoke to German Chancellor Angela Merkel and discussed a potential resolution to the crisis. The Russian-speaking German leader has good relations with the German-speaking Putin, and Berlin is Russia's biggest economic partner.

Defense Secretary Chuck Hagel told Congress the U.S. military was stepping up joint training through an aviation detachment in Poland and boosting participation in a NATO air policing mission over the Baltic states, Estonia, Latvia and Lithuania - the only former Soviet republics that are members of the Western alliance.