Kerry Warns Russia of Further Steps, Offers Ukraine Aid

Daily News Article — Posted on March 5, 2014

(by Jay Solomon, The Wall Street Journal) KIEV, Ukraine — Secretary of State John Kerry, during an emergency visit to Kiev on Tuesday, pledged aid to Ukraine’s new government and warned the U.S. and its allies would impose sanctions against Russia if it didn’t begin pulling troops from the former Soviet state.

Secretary of State John Kerry shakes hands with Ukrainian interim Prime Minister Arseniy Yatsenyuk, right, and Ukrainian interim President Oleksandr Turchynov, left, during their meeting in Kiev, Tuesday.

The financial assistance to Ukraine – a pledge of $1 billion in loan guarantees and technical support for the country’s central bank and finance ministry – marked the first concrete American assistance offered to Ukraine since opposition forces overthrew pro-Russian President Viktor Yanukovych last month.

The warning to Russian President Vladimir Putin came as U.S. officials have steadily intensified threats of punitive measures against Moscow for sending thousands of Russian troops into Ukraine’s Crimean region in the past week.

“If Russia does not choose to de-escalate…then our partners will have absolutely no choice but to join us to continue to expand upon steps we have taken in recent days in order to isolate Russia politically, diplomatically and economically,” Mr. Kerry said. “I would emphasize to the leaders of Russia this is not something we are seeking to do; this is something Russia’s choices may force us to do.”

The U.S. wants Russia to “return its troops to the barracks,” Mr. Kerry said, and abide by basing agreements with Ukrainians. U.S. officials said that if Mr. Putin doesn’t take these steps, the Obama administration is preparing to enact financial sanctions on Russian leaders, companies and military officers “within days.”

Mr. Kerry arrived in Kiev Tuesday for a visit lasting several hours and aimed at displaying American support for Ukraine’s interim government in the face of thousands of Russian troops deployed this week by Mr. Putin.

Mr. Kerry, while talking tough to Moscow, still stressed to Mr. Putin that the U.S. sought a diplomatic situation to end Ukraine’s political crisis. He said Moscow’s “legitimate” interests in the country, such as military bases in the Crimea region, could be respected.

Mr. Kerry was flying to France later Tuesday. He was scheduled to have a bilateral meeting with Russian Foreign Minister Sergei Lavrov, their first since the Ukraine crisis erupted last month.

Meanwhile, President Obama said Russia’s military incursion into Ukraine could end up driving countries away from Russia, instead of closer to it, according the Associated Press. Mr. Obama said there is a strong belief around the world that Russia’s actions are violating international law and that force shouldn’t be used to exert influence inside Ukraine.

The financial assistance pledged by the Secretary of State is a bid to help Ukraine face down twin economic and energy crises while its new government seeks a wider bailout from the International Monetary Fund.

American officials said that the $1 billion in loan guarantees was expected to help Ukraine finance purchases of energy imports. [gas mainly]

“The United States is prepared to work with its bilateral and multilateral partners to provide as much support as Ukraine needs to restore financial stability and return to economic growth, if the new government implements the necessary reforms,” Treasury Secretary Jacob Lew said in a statement.

U.S. technical experts will be sent to Ukraine to assist the country’s central bank and finance ministry to fashion a response to Kiev’s mounting financial and energy crises, U.S. officials said.

American advisers will also help Kiev develop an anticorruption drive and system to trace assets believed to have been plundered by Mr. Yanukovych’s government, officials said. U.S. experts will also be sent to help Ukraine prepare for May 25 elections.

During the Kiev visit, Mr. Kerry met with the country’s president and prime minister and other Ukrainian political leaders. U.S. officials said Mr. Kerry is seeking the establishment of a formal dialogue between Ukraine and Russia to enable Moscow to begin pulling back thousands of troops it has deployed in the Crimean region of the country over the past week.

U.S. officials said they are closely monitoring Russian troop movements in Ukraine and remained concerned Mr. Putin could press a military offensive beyond the Crimean peninsula and toward Kiev.

Russia has massed troops on the isthmus that divides Crimea from the rest of eastern Ukraine, these officials said, and Russian jets have repeatedly entered Ukrainian airspace.

Background

Ukraine's financial trouble:

Concerns over Ukraine's financial condition - whose treasury account is, by its own admission, almost empty - rose after Russian state gas company Gazprom said it would cancel a substantial discount on natural gas granted in December. President Vladimir Putin, meanwhile, noted Ukraine's state gas company Naftogaz will owe $2 billion for gas, including February's bill.
The Russian position is a shift from last year, when Moscow tolerated Ukraine piling up unpaid bills. The discount was granted under a $15-billion Russian bailout in December - but that was halted following the ouster of pro-Russian President Viktor Yanukovych by a protest movement by people who want closer ties with the European Union.
Putin said the decision to raise the gas prices for Ukraine was not political.
"There was an agreement," Putin said. "We give you the cash and a discount on gas, and you pay us on time. We have given them money, we have cut the price, but there have been no payments."
To counter Moscow's tougher stance, U.S. Secretary of State John Kerry, who was visiting Kiev on Tuesday, offered $1 billion in loan guarantees. The European Commission, the European Union's executive arm, will decide on a package of support measures on Wednesday, spokeswoman Pia Ahrenkilde Hansen told reporters in Brussels without providing details. Ukraine's parliament signed off on the terms of 610 million euros from an earlier EU aid package - but that money won't be paid until Ukraine seals a bailout deal with the IMF.
That short-term support is key because a full financial assistance program from the IMF may take time to conclude. Analyst Gevorgyan said that for the IMF to commit any substantial assistance the country would need a more stable government, which was only likely after a new president is elected May 25.
That still leaves Ukraine some time, as major debt repayments are not due until June. The key risk until then is whether Russia actually demands prompt payment for its gas. That could put more pressure on the country's finances. (from an AP story by David McHugh posted at yahoonews)

About the U.S. State Department:
The U.S. Department of State advises the President in the formulation and execution of foreign policy and promotes the long-range security and well-being of the United States. The Department determines and analyzes the facts relating to American overseas interests, makes recommendations on policy and future action, and takes the necessary steps to carry out established policy. …The Department … negotiates treaties and agreements with foreign nations; speaks for the U.S. in the United Nations and other international organizations in which the U.S. participates; and represents the U.S. at international conferences. (from about.com)

The Department operates the diplomatic missions [embassies and consulates] of the U.S. abroad and is responsible for implementing our foreign policy and diplomacy efforts.
The Department is led by the Secretary of State, who is nominated by the President and confirmed by the Senate and is a member of the Cabinet.
The current Secretary of State is John Kerry. The Secretary of State is the first Cabinet official in the order of precedence and in the presidential line of succession.
(from wikipedia)