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Diplomatic exit for Ukraine? Talks, $15B in EU aid

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By LORI HINNANT and JUERGEN BAETZ

PARIS (AP) - The European Union prepared a $15 billion aid package to Ukraine on Wednesday and froze the assets of 18 people blamed for looting the treasury of the nearly bankrupt country. The moves came as top diplomats from the West and Russia gathered in Paris to defuse tensions that have approached Cold War levels.

NATO was taking up the issue directly with Russia in an extraordinary meeting in Brussels of the military alliance, originally created as a counterbalance to the Soviet Union, and an international team of military observers headed to Crimea.

The ultimate goal in Paris is to get the Russian and Ukrainian foreign ministers in the same room for the first time in the rapidly evolving dispute whose stakes have risen steadily since the departure of the pro-Russian president and Moscow's takeover of the strategic Crimean Peninsula. Neither side ruled out a meeting during a day of fast-moving diplomacy.

"It will be a test this afternoon of whether Russia is prepared to sit down with Ukraine, and we will strongly recommend that they do so," British Foreign Secretary William Hague said.

On the verge of economic collapse, Ukraine accused Russia of a military invasion after pro-Russian troops took over Crimea on Saturday, placing forces around its ferry terminal, military bases and border posts. Moscow does not recognize the new Ukrainian leadership in Kiev that ousted the pro-Russian president, and raised the pressure by threatening to end discounts on natural gas supplies.

Financial markets settled down after two days of big swings, a sign that investors believe the risk of war has been averted.

"In terms of the international stage, this does seem to have moved on from looking like a game of poker to one of chess," said Joao Monteiro, an analyst at Valutrades.

Wednesday's offer by the European Union matched the Russian bailout for fugitive President Viktor Yanukovych. Yanukovych took the Russian loans instead of a wide-ranging trade and economic agreement with the EU, which fuelled the protests that eventually led to his ouster. Hours later, the EU froze the assets of 18 people held responsible for misappropriating state funds in Ukraine, echoing similar action in Switzerland and Austria. The list, which likely targeted officials in the ousted government or businessmen related to them, were withheld until Thursday to prevent anyone from withdrawing the funds at the last minute.

"The situation in Ukraine is a test of our capability and resolve to stabilize our neighborhood and to provide new opportunities for many, not just a few," European Commission President Jose Manuel Barroso said.

Russian Foreign Minister Sergey Lavrov, speaking in Spain ahead of meetings planned with U.S. Secretary of State John Kerry in Paris, warned against Western support of what Moscow views as a coup. He said that could encourage government takeovers elsewhere.

"If we indulge those who are trying to rule our great, kind historic neighbor, we must understand that a bad example is infectious," Lavrov said.

Wednesday's Paris gathering, originally scheduled to deal with the Syrian refugee crisis, came after Russian President Vladimir Putin appeared to step back from the brink of war, but the crisis is far from resolved.

"This is my first trip to such an important venue where the Ukrainian future, maybe the future of the region, will be decided," Andriy Deshchytsia, Ukraine's foreign minister, said of the meetings in Paris. "We want to keep neighborly relations with the Russian people. We want to settle this peacefully."

On the flight from Kiev to Paris, Deshchytsia told reporters that Ukraine was unlikely to go to war to prevent Russia from annexing Crimea but said doing so wouldn't be necessary because Russia would be unwilling to suffer the resulting economic penalties and diplomatic isolation.

Russia has suggested that it will meet any sanctions imposed by Western governments with a tough response, and Putin has warned that those measures could incur serious "mutual damage."

The Organization for Security and Cooperation in Europe sent a team of 35 unarmed military personnel to Crimea on Wednesday at the fledgling government's request.

"They will not be contented with assurances that these people are volunteers, who bought their uniforms in a shop," Polish Defense Minister Tomasz Siemoniak said. The hope is to learn "who is in power there and conclusions the OSCE should draw from that."

In Washington, former Defense Secretary Robert Gates said he was pessimistic about a quick solution between the West and Russia.

The former CIA chief told CBS that Putin "knows exactly what he's doing. He's trying to re-establish Russian influence and a measure of control over the former states of the Soviet Union."

___

Juergen Baetz reported from Brussels. Associated Press writers Laura Mills in Moscow, Monika Scislowska in Warsaw, Poland, Lara Jakes, Greg Keller, and Sylvie Corbet in Paris, and Pan Pylas in London contributed.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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