Putin ’not fooling anybody’ over Ukraine: Obama

KIEV: US President Barack Obama on Tuesday said Russia was not "fooling anybody" over the crisis in Ukraine after Vladimir Putin denied that Russian forces were operating on the flashpoint Black Sea peninsula of Crimea.
In a show of support for the new interim leaders in Kiev, visiting US Secretary of State John Kerry condemned Russia's "act of aggression" and accused Moscow of "working hard to create a pretext for being able to invade further".
Pro-Kremlin forces are in de facto control of the strategically crucial, majority-Russian Crimean peninsula where Ukrainian troops remain blocked inside their barracks in the worst standoff between the West and Russia since the end of the Cold War.
But world financial markets rebounded Tuesday as traders interpreted comments by Putin that force was "a last resort" as a sign that tensions in Europe's largest country were easing.
There was further relief when Ukraine's interim Prime Minister Arseniy Yatsenyuk announced his government had made the first "timid" contacts with Russian leaders aimed at resolving the crisis.
"So far, (the talks) have been rather timid. But the first steps have been made," Yatsenyuk said in a statement after talks with Kerry.
Obama said the European Union and allies like Canada and Japan all believed Russia had violated international law by mobilising troops following the ouster of pro-Kremlin president Viktor Yanukovych.
"President Putin seems to have a different set of lawyers, maybe a different set of interpretations. But I do not think that is fooling anybody," Obama said during a visit to a school in Washington DC.
Putin, breaking over a week of silence with a press conference in Moscow, said his country reserved the right to use "all available means" in the crisis. "This is a last resort," he added.
He rejected claims that Russian forces were operating in Crimea, saying that only "local forces of self-defence" were surrounding Ukrainian military bases in the region.
Asked if Russian forces took part in operations in Crimea he said, "No, they did not participate," adding: "There are lots of uniforms that look similar."
When told of Putin's remarks by a reporter in Kiev, Kerry responded: "He really denied there were Russian forces in Crimea?" and shook his head, bewildered.
The top US diplomat also laid flowers and lit a candle at the scene of memorials to the nearly 100 people who died on Kiev's Independence Square last month.
The square was the focal point of three months of protests sparked by Yanukovych's decision to reject a key EU deal in favour of closer ties with Moscow.
During Kerry's visit, the US confirmed $1 billion in loan guarantees to help shore up Ukraine's debt-laden economy.
The European Commission also offered an aid package reportedly worth more than one billion euros, as cash-strapped Ukraine says it needs 25 billion euros ($35 billion) over two years.
Warning shots in Crimea:
Despite intense diplomatic efforts, there was no immediate sign of calm returning to Crimea, which has housed the Russian Black Sea Fleet since the 18th century and provides access to the Mediterranean within a day's sailing.
In one alarming incident, Russian forces fired warning shots in the air as unarmed Ukrainian soldiers approached them at a base near Sevastopol in what appeared to be the first shots fired since the Crimean crisis erupted.
After talks with the soldiers, the Ukrainian servicemen returned to their base, where they were welcomed by applause from gathered loved ones.
In Sevastopol, a bastion of pro-Kremlin sentiment, pro-Russian activists had surrounded the headquarters of the Ukrainian navy in Crimea.
An AFP reporter said about 100 pro-Russia activists were gathered outside the offices and formed a human chain, as Russian forces with automatic rifles stood nearby.
Ukrainian defence officials said Russian vessels were also blocking Ukrainian warships from trying to leave the port.
West to step up pressure?
In a sign of profound Western frustrations with Russia, Kerry warned that unless Russia acts to reduce tensions, it will face further international action after the US suspended military cooperation Monday.
"If Russia does not choose to de-escalate then our partners will have absolutely no choice but to join us to continue to expand the kind of steps we have taken in recent days in order to isolate Russia politically, diplomatically and economically," he said.
A US official travelling with Kerry said Russia was "likely" to face US moves to introduce sanctions as early as this week.
Putin warned in response that sanctions would lead to "mutual losses" while Russian Foreign Minister Sergei Lavrov called the threats "ill-advised".
The EU is due to hold an emergency summit on the situation Thursday and EU foreign policy chief Catherine Ashton will visit Kiev on Wednesday.
But Washington and its allies appear to have few options beyond limited punitive measures to halt what they perceive as Putin's drive to rebuild vestiges of the Soviet empire irrespective of the wishes of nations such as Ukraine.
Stocks bounce back:
By announcing $1 billion in loan guarantees, the US signalled its keenness to cushion ordinary Ukrainians from the impact of the crisis.
US Treasury Secretary Jacob Lew said the move aimed to protect "the most vulnerable Ukrainian households from the impact of the needed economic adjustment."
That came after Russian state-controlled energy giant Gazprom said Tuesday it would end a discount it gives to Ukraine on gas prices from April, instead proposing a loan of up to $3 billion to cover its debt.
Moscow is often accused of using its gas exports as a diplomatic weapon aimed at influencing decisions of ex-Soviet nations that contemplate closer relations with the West.
Ukraine relies on imports for about three-quarters of its oil and natural gas supplies.
After Putin's comments calmed fears of an immediate war, Asian and European markets bounced back from deep losses suffered on Monday London's FTSE closed up 1.72 percent while Frankfurt's DAX was up 2.46 percent and Paris's CAC was up 2.45 percent.
Stocks on Wall Street shot up by more than one percent.
Russia's stock market also clawed back almost half of the 11-percent slump it suffered on a Black Monday of trading that also sent the ruble to historic lows.