Bloomberg News
Prime Minister Dmitry Medvedev arrived in Crimea in the first visit by a top official since Russia annexed the peninsula, as Ukraine rejected the Kremlin's demands that it grant its regions greater powers.
Medvedev's trip today came just hours after U.S. Secretary of State John Kerry demanded Russia pull its forces back from Ukraine's border at talks in Paris with Russian Foreign Minister Sergei Lavrov, saying they are 'creating a climate of fear and intimidation in Ukraine.' Lavrov demanded that Ukraine should devolve power to give its regions more autonomy and ensure the rights of Russian speakers.
Shrugging off sanctions from the U.S. and its European allies, President Vladimir Putin has justified Russia's takeover of Crimea as righting a historical wrong that split the region off from Russia when the Soviet Union collapsed. In the worst confrontation since the fall of the Iron Curtain, he has criticized the European Union and NATO for expanding into former Soviet territory.
'Russia's leaders should deal with the problems of the Russian Federation, not Ukraine's problems,' acting Ukrainian President Oleksandr Turchynov said in a statement on his website.
Kerry expressed concern that what the U.S. estimates to be 40,000 troops massing on Ukraine's border may signal Russia is ready to invade. 'Any real progress in Ukraine must include a pullback of the very large Russian force,' he told a news conference after the Lavrov meeting.
Market Optimism
Last night's meeting spurred optimism the crisis, which has rattled markets, won't escalate.
The Russian ruble strengthened 1.1 percent to 35.3850 per dollar at 3:03 p.m. in Moscow, trimming this quarter's decline to 7.1 percent, the worst performance after Argentina's peso among 24 emerging-market peers monitored by Bloomberg. The Micex Index (INDEXCF) added 0.5 percent to 1,350.70, cutting its three-month drop to 10 percent.
In Ukraine, the yield on the government's debt due April 2023 fell 11 basis points to 8.68 percent by 1:45 p.m. in Kiev and was down 82 basis points this month.
'No resident of Crimea or Sevastopol should lose anything as a result of joining Russia, they should only gain,' Medvedev told a government meeting in the Crimean capital, Simferopol. 'This is what people are expecting from us, that we provide the conditions for a stable and decent life, certainty in the future and the feeling that they are part of a great nation. We must meet these expectations.'
Salary Increase
Russia will create a special economic zone in Crimea, Medvedev said at a media briefing. He pledged to raise state salaries to the Russian average by July.
Russia is in the process of granting citizenship and contracts to 7,800 Crimean military personnel who asked to join Russian forces, Deputy Defense Minister Nikolay Pankov said in an interview in Simferopol.
'We're not forcing anyone,' Pankov said. 'We're not trying to convince anyone. We're being genuine and respectful to everyone.'
After their four-hour meeting, Kerry and Lavrov said at separate briefings the sides would hold further talks to seek an outcome acceptable to Ukraine.
Lavrov said that while he and Kerry expressed differing views on the reasons behind the crisis, they were in agreement on 'the need to seek common ground on the diplomatic path for an exit from this situation that will meet the interests of the Ukrainian people,' Russia's Foreign Ministry cited him as saying in a statement on its website.
Non-Aligned Status
Russia wants Ukraine to grant greater powers to its regions, have a non-aligned status outside the North Atlantic Treaty Organization and make Russian a second official language. Kerry said the international community stands with Ukraine and won't allow for decisions to be made without it.
'This principle is clear: No decisions about Ukraine without Ukraine,' Kerry said.
President Barack Obama's administration has called for more international monitors in Ukraine, starting a direct dialogue between Russia and the new government in Kiev, and advancing the process of constitutional reforms and May 25 national elections, a State Department official said.
The U.S. and European Union have vowed to intensify sanctions on Russia's military, energy and financial industries if the country pushes further into Ukraine. Kerry said the U.S. considers Russia's actions to be 'illegal and illegitimate,' and said it was 'on the wrong side of history.'
'Process of Reflection'
German Chancellor Angela Merkel said further violations of international law would trigger more sanctions and condemned Russia's 'either-or' mentality. The crisis is a setback, even as sanctions have given Russia reason for pause, she said.
'I have the impression that a process of reflection has begun,' in Russia, she told students at a Berlin school today.
In a call with Obama last week, Putin highlighted a 'rampage of extremists' intimidating officials and residents 'in various regions,' according to a statement from his office at the Kremlin.
Backed by state-run media in Russia, Putin's administration has accused neo-Nazi and Russophobe groups of taking over the government in Kiev and insists it has the right to defend Russian-speakers from attacks. Ukraine says there are no such attacks and accuses Russia of fomenting unrest by sending pro-Russian agents to provoke clashes in its eastern regions.
To contact the reporters on this story: Ilya Arkhipov in Simferopol, Crimea, at iarkhipov@bloomberg.net; Henry Meyer in Moscow at hmeyer4@bloomberg.net; Kateryna Choursina in Kiev at kchoursina@bloomberg.net
To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net Eddie Buckle, Mark Williams
Posted by Unknown on Monday, March 31, 2014 - Rating: 4.5
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