Moscow-Washington talks aim to avert sanctions over Crimea crisis

Russia and the United States plan emergency talks today, to defuse a military and diplomatic crisis over Ukraine that could trigger sanctions with major economic consequences after Sunday's referendum in Crimea.

Ahead of their scheduled meeting in London, Moscow's foreign minister Sergei Lavrov and US secretary of state John Kerry discussed Ukraine by telephone last night and Russian president Vladimir Putin gathered top security officials to consider "how to conduct relations with our partners and friends in Ukraine and with our other partners in Europe and the United States".

Mr Putin called the meeting hours after German chancellor Angela Merkel said that if Russia "continues on the course of the last weeks it won't just be a catastrophe for Ukraine . . . It would also cause massive economic and political damage to Russia."

Leaders of EU states say they will freeze Russian assets and impose travel bans if Moscow continues to support a planned referendum on whether Crimea should split from Ukraine and join Russia.

Moscow’s troops have taken control of the Black Sea peninsula over the last fortnight, besieging Ukrainian soldiers in their bases as local Kremlin-backed political leaders supported unification with Russia and set a vote for Sunday to confirm it.

Mr Kerry said in Washington last night that "there will be a very serious series of steps on Monday in Europe and here" in the absence of significant progress on Crimea.

In her toughest comments on the crisis, Dr Merkel told Germany’s lower house of parliament that Russia was dragging Europe into “a conflict about spheres of influence and territorial claims that we know from the 19th or 20th century but thought were a thing of the past”.

She said Moscow's continued military interference in Ukraine would "change the relationship of the European Union as a whole to Russia" and would make sanctions inevitable.

'Mutual' damage
Russia says it will respond in kind to any western sanctions and that economic damage would be "mutual".

In a possible breakthrough last night, Thomas Greminger, Switzerland’s ambassador to the Organisation for Security and Co-operation in Europe, said Russia now “supported the idea of a rapid approval and rapid deployment of a special monitoring mission for Ukraine”.

Russian stocks fell to their lowest level in more than four years yesterday and the value of Moscow’s government bonds and the rouble also declined.

In a development that may trouble some of Russia’s and Ukraine’s so-called oligarchs, police in Austria arrested one of Kiev’s richest tycoons, Dmytro Firtash, on a US warrant issued by the FBI that accuses him of corruption.

Mr Firtash was heavily involved in the import of Russian gas to Ukraine, and analysts said his detention in Vienna shows that the US and Europe are now prepared to take serious, co-ordinated action against businessmen whose wealth and influence have long offered them protection.

Mr Firtash was a key player in Ukraine's energy market under Viktor Yanukovich, who was ousted as president last month after huge protests and deadly riots against his rule.

Russia has given him refuge and insists he is still Ukraine’s rightful leader. Mr Putin says the new Kiev government includes far-right elements that threaten Russian-speakers in Crimea and other parts of southern and eastern Ukraine, and he claims the right to use force to protect them.

Ukraine said its troops were on full alert and that a new 60,000-strong national guard was being formed, as Russia conducted its second recent round of major military exercises near Ukraine’s border.

Mr Kerry said he believed Russia “did not have the assets in the places necessary to be able to march in and take over all of Ukraine, but that could change very quickly and we recognise that”. The US military is conducting war games in Poland and the Black Sea and Nato spy planes are monitoring Ukraine.

Propaganda campaign
Russian flags now fly across Crimea and billboards have sprung up supporting unification with Russia, amid a huge propaganda campaign waged by Moscow to destroy ethnic Russians' already meagre faith in Kiev's new pro-western leaders.

Most of Crimea’s ethnic Russians, who make up 60 per cent of its two million population, appear to favour Moscow rule. Many of Crimea’s Tatars and ethnic Ukrainians oppose such a move, however, and complain that Sunday’s referendum offers no real prospect of remaining with Kiev.

The first question asks if people want Crimea to join Russia, while the second asks if they support a return to Crimea’s 1992 status within Ukraine.

The 1992 constitution effectively made Crimea an independent entity inside Ukraine, with the right to forge any kind of relations with any country. Crimea’s parliament has already voted to join Russia and Moscow is preparing legislation to accept it, so this appears to offer only a slightly longer route into the Kremlin’s embrace.