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Ukraine crisis: Russia threatens to cut Ukraine gas amid Crimea tensions

Published on Mar 8, 2014 6:29 AM
Valves of a gas pipe-line in a gas station not far from Kiev on March 4, 2014. Russia threatened on Friday to cut off gas supplies to Ukraine after the West warned of sanctions and pro-Kremlin gunmen blocked a foreign observer mission aimed at defusing tensions in Crimea. -- FILE PHOTO: AFP

SIMFEROPOL, Ukraine (AFP) - Russia threatened on Friday to cut off gas supplies to Ukraine after the West warned of sanctions and pro-Kremlin gunmen blocked a foreign observer mission aimed at defusing tensions in Crimea.

The warning by Russian state-run energy giant Gazprom, which could affect supplies to other parts of Europe, seemed to be a tit-for-tat response to an EU warning it could toughen sanctions against Moscow.

The latest developments underscored the Kremlin's resolve to stand its ground over a flare-up that has endangered European security and tested the West's commitment to uphold the sovereignty of Ukraine.

In a sign of the tensions racking the peninsula, Ukraine's defence ministry said late Friday that unidentified militants had smashed through the gates of a Ukrainian air force base in Sevastopol.

No shots were fired in the incident.

A convoy of vehicles from the Organization for Security and Co-operation in Europe (OSCE) was stopped earlier at a checkpoint guarded by armed men.

Russia's foreign ministry accused the OSCE of attempting to enter the Black Sea peninsula "without considering the opinions and recommendations of the Russian side (and) without waiting for official invitations from the Crimean side." The OSCE observer mission is a crucial part of the so-called "off-ramp" that US President Barack Obama is pushing to de-escalate a crisis that threatens to splinter the vast ex-Soviet state of 46 million.

The heads of Russia's two houses of parliament said Friday they would respect a decision by lawmakers in the flashpoint Black Sea region to renounce ties with Kiev and stage a March 16 referendum on switching to Kremlin rule.

"Should the people of Crimea decide to join Russia in a referendum, we...will unquestionably back this choice," said speaker of the upper house Valentina Matviyenko.

"We will respect the historic choice of the people of Crimea," said her lower house counterpart Sergei Naryshkin.

Moscow police said more than 65,000 people attended a rally outside the Kremlin supporting Russia's full annexation of the region of two million people.

Russian gas threat

The escalating threat of Ukraine being partitioned between its pro-European west and more Russified southeast prompted Obama to place an hour-long call to Russian counterpart Vladimir Putin.

The White House said Obama "emphasised that Russia's actions are in violation of Ukraine's sovereignty and territorial integrity, which has led us to take several steps in response, in coordination with our European partners." The European Union has moved to impose stiff sanctions on Russia while also vowing to sign an historic trade pact aimed at pulling Kiev out of Moscow's orbit before Ukraine holds snap presidential polls on May 25.

Yet with Russian forces in effective control of Crimea - a predominantly ethnic Russian peninsula roughly the size of Belgium and the base of the Kremlin's Black Sea Fleet - the threat of Ukraine's division seemed more real than at any point since Mr Putin won parliamentary approval to use force against his western neighbour.

Western allies have been grappling with a response to Mr Putin's seeming ambition to create a Soviet-style sphere of influence that Moscow argues provides a defence for ethnic Russians coming under attack.

"Can Russia stand idly by when Russians somewhere in the world - especially in neighbouring Ukraine - face mortal danger?" Mr Putin spokesman Dmitry Peskov asked on Russian state television on Friday.

Russian Foreign Minister Sergei Lavrov meanwhile told US Secretary of State John Kerry that sanctions against Moscow would strike like a "boomerang" against the United States.

The foreign ministry added that Russia would not leave any EU punitive measures "without a response".

Gazprom - often seen as being wielded as a political weapon by the Kremlin against Western-leaning ex-Soviet states - said a few hours later it might have to cut off Ukraine for the first time since 2009 due to a debt of $1.89 billion (1.36 billion euros).

"Ukraine has de facto stopped paying for gas," said chief executive Alexei Miller. "We cannot deliver gas for free".

Frankfurt's DAX 30 stock exchange in Germany - which imports about 40 percent of its gas from Gazprom - dropped more than one percent, moments after Mr Miller's announcement.

Western pressure

Washington announced visa bans on targeted Russians and Ukrainians in the latest in a series of moves by the US administration to punish Moscow for its intervention in Ukraine.

Obama also authorised freezing the assets of officials involved in ordering Russia's military manoeuvres in Crimea.

European leaders for their part renewed a commitment to sign an EU association accord with Ukraine by May.

Ousted Ukrainian president Viktor Yanukovych's decision to ditch that pact in November in favour of closer ties with Russia sparked the initial wave of protests that led to his regime's downfall late last month and the rise of the new pro-EU government.

The EU agreed after six hours of tense discussions to suspend visa and economic talks with Russia - a blow for Moscow's years-long efforts to win open European travel rights.

It also demanded that Moscow enter into negotiations in the next few days to produce "results" on cooling the crisis - threatening travel bans and asset freezes along with the cancellation of an EU-Russia summit in June if it did not.

Obama's terms of a diplomatic solution would see Russia call back troops to their barracks and accept international observers from both the United Nations and the OSCE.

But analysts said the United States and its European allies in particular seem unwilling to go further in the face of nuclear-armed Russia's military and energy might.

"Despite sharp criticism of the Russian move, there is clearly no appetite in Europe or the US for either a military confrontation with Moscow or meaningful economic sanctions," Citi Investment Research said in a report.