WASHINGTON/KIEV: The U.S. warned Russia Wednesday it would be a “grave mistake” to intervene militarily in Ukraine, after President Vladimir Putin put 150,000 combat troops on high alert for war games near the turmoil-ridden country.
“For a country that has spoken out so frequently ... against foreign intervention in Libya, in Syria and elsewhere, it would be important for them to heed those warnings as they think about options in the sovereign nation of Ukraine and I don’t think there should be any doubt whatsoever that any kind of military intervention that would violate the sovereign territorial integrity of Ukraine would be a huge – a grave mistake,” U.S. Secretary of State John Kerry told a small group of reporters.
The U.S. is also mulling providing a $1 billion loan guarantee to help Ukraine stave off economic collapse, Kerry added.
“We are formulating initially a $1 billion loan guarantee with some other pieces,” Kerry said, adding the European Union was also looking at offering $1.5 billion in loan guarantees to the former Soviet satellite.
The comments came as Russia’s second-largest bank, VTB, joined Sberbank in saying it would halt new lending in Ukraine, underlining concerns over financial risks due to political turmoil.
“It is hard to evaluate the risk at the moment,” VTB Chief Executive Andrei Kostin said at a news conference.
The move followed a similar statement from German Gref, head of Russia’s largest bank Sberbank, who said Friday that the bank had temporarily suspended lending.
In a separate warning, the U.S. Treasury has advised banks to look out for potentially suspicious transfers of financial assets by Ukraine’s deposed President Viktor Yanukovich, who is in hiding, or members of his inner circle
Moscow denied that the previously unannounced drill in the western military district near Ukraine was linked to events in its neighbor but it came amid a series of increasingly strident statements about the fate of Russian citizens and interests.
With the political turmoil hammering Ukraine’s economy, the central bank said it would no longer intervene to shield the hryvnia currency, which tumbled 4 percent and is now down a fifth since Jan. 1. The abrupt abandonment of Ukraine’s currency peg sent ripples to Russia where the ruble fell to five-year lows and bank shares fell.
Also, thousands of ethnic Russians, who form the majority in Ukraine’s Crimea region, demonstrated for independence and scuffled with rivals supporting the new Kiev authorities.
One person died in the Crimea protest, apparently of a heart attack during a crush of the crowd, Interfax news agency reported. A Reuters correspondent on the scene reported surging crowds and scuffles but no major violence.
In Kiev, protest leaders named former Economy Minister Arseny Yatseniuk as their choice to head a new national unity government.
NATO defense ministers, meeting in Brussels, issued a statement supporting “Ukrainian sovereignty and independence, territorial integrity, democratic development, and the principle of inviolability of frontiers.”
Their statement made no direct mention of the Russian war games.
The Russian and German foreign ministers, meanwhile, called for steps to improve security, the Russian Foreign Ministry said in a statement. “The importance of taking urgent measures to restore law and order and to immediately cease violence was stressed,” it said in a statement after Sergey Lavrov and Frank-Walter Steinmeier spoke by telephone. “Agreeing on the need for close monitoring of ongoing events in Ukraine, the German minister argued in favor of intensive interaction between Russia and the EU on Ukraine,” the ministry said.
Russia has repeatedly expressed concern for the safety of Russian citizens in Ukraine, using language similar to statements that preceded its invasion of Georgia in 2008.
“In accordance with an order from the president of the Russian Federation, forces of the Western Military District were put on alert at 2 p.m. today,” Interfax news agency quoted Russian Defense Minister Sergei Shoigu as saying.
Shoigu also said Russia was also “carefully watching what is happening in Crimea” and taking “measures to guarantee the safety of facilities, infrastructure and arsenals of the Black Sea Fleet,” in remarks reported by state news agency RIA.
Since Yanukovich’s downfall Friday all eyes have been on Putin, who ordered the invasion of neighboring Georgia in 2008 to protect two self-declared independent regions with many ethnic Russians and others holding Russian passports, and then recognized the regions as independent states.
Any military action in Ukraine would be far more serious – the closest the West and Russia have come to outright confrontation since the Cold War.
Despite the alarm raised by the saber-rattling, many analysts expect Putin will pull back before taking armed action.
The war games would cause tension in Ukraine and Europe but were probably for show, said Moscow-based military analyst Alexander Golts: “Any rational analysis says that Russia would get nothing out of military intervention – it would become an international outcast.”
Ukraine’s new authorities say they are worried about separatism in Crimea, the only part of Ukraine where the majority is ethnic Russian.
Demonstrators poured into the regional capital Simferopol, where the provincial parliament was debating the crisis.
Pro-Russian crowds, some cossacks in silk and lambswool hats, shouted “ Crimea is Russian!”
More were bussed in, swelling the crowd. Rival demonstrators backing the new authorities – mainly ethnic Tatars repressed under Soviet rule – rallied under a pale blue flag, shouting “Ukraine! Ukraine!”