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U.S., EU levy sanctions on Russia, Ukraine officials over Crimea vote

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WASHINGTON — In the most direct East-West confrontation since the Cold War, the White House and the European Union imposed sanctions against more than two dozen Russian and Ukrainian officials Monday and threatened more penalties if Moscow does not back down in Crimea.

However, Russian President Vladimir Putin issued a decree that recognized Crimea as "sovereign and independent" after Sunday's overwhelming vote there in favor of secession from Ukraine.

Legislators in Crimea on Monday declared the region independent of Ukraine and set a course to formally join Russia: They adopted the Russian ruble as the official currency and began to nationalize assets of the Ukrainian government and state-owned companies.

Officials said Moscow had granted Crimea more than $400 million in aid. The region will be on Moscow time as of March 30, which will move the clocks forward two hours.

U.S. officials, who denounced the vote as illegal and riddled with anomalies, said they expected Putin on Tuesday to formally ask the Russian parliament to annex Crimea. That is likely to worsen the tense standoff between the Kremlin and the West.

In a coordinated effort with Europe, President Obama imposed an asset freeze and visa ban on seven Russian government figures, including a deputy prime minister and two presidential aides. The penalties also targeted the deposed president of Ukraine, Viktor Yanukovich, plus his chief of staff and two Crimea-based separatist leaders.

The European Union slapped similar sanctions on 21 mostly lower-ranking Russian and Ukrainian officials. The leaders of the 28 EU nations will meet Thursday, and EU foreign ministers said stronger sanctions could be announced then.

"We'll continue to make clear to Russia that further provocations will achieve nothing except to further isolate Russia and diminish its place in the world," Obama said at the White House. "Continued Russian military intervention in Ukraine will only deepen Russia's diplomatic isolation and exact a greater toll on the Russian economy.

"We can calibrate our response on whether Russia chooses to escalate or de-escalate the situation," he added.

Obama urged Russia to pull its military troops in Crimea back to their bases, to support the deployment of additional international monitors and negotiate with the interim government in Ukraine, which took power after a popular uprising ousted the Russian-backed Yanukovich.

Catherine Ashton, the top EU diplomat, said there was "still time to avoid a negative spiral."

Acting Ukrainian Defense Minister Ihor Tenyukh said late Sunday that the Ukrainian and Russian defense ministries had agreed that at least until Friday, Russian troops in Crimea "will not be taking any actions in regard to Ukraine armed forces units stationed" in the peninsula.

"Further decisions will depend on how the situation is developing," he said.

A senior Obama administration official called the U.S. sanctions "far and away" the most extensive since the Soviet Union's collapse in 1991. But it was not immediately clear whether the seven Russian officials had U.S. bank accounts or investments.

Many experts said they doubted the sanctions would make Putin reverse course.

The sanctions thus appeared to be a warning that Washington and its European allies are prepared to impose more severe punishment if Russia formally annexes Crimea or sends its military into other parts of Ukraine.

The enduring damage is more likely to be to Russia's reputation as a reliable business partner, both as a place to invest and as a supplier of the oil and gas exports on which it depends to fund a large part of its budget.

"Can you imagine going to a board of directors today and saying, 'We'd like to invest our money in Russia?' " said Keith Crane, head of Rand Corp.'s environment, energy and economic development program. "Anybody with big equity investments in Russia really has to be rethinking that strategy right now."

The impact is likely to be felt first by oligarchs who control much of Russia's production and trade. They depend on Kremlin favoritism and access to affordable credit on international markets.

At least initially, Moscow's stock market and the ruble both rebounded strongly Monday, a sign that investors view the sanctions as more symbolic than substantial so far. Russian Deputy Prime Minister Dmitry Rogozin, who is responsible for the nation's defense industry, mocked the White House for putting his name on the list.

"Comrade Obama, what will you do with those who have neither accounts nor property abroad? Or didn't you think of that?" Rogozin wrote on his Twitter account.

The White House did not target Putin or key decision-makers in his inner circle. They also stopped short of targeting Russian financial institutions, energy companies or business tycoons with major investments abroad. Although that might get Putin's attention, it could also cause considerable economic pain for Western companies with significant Russian interests, analysts said.

Michael McFaul, U.S. ambassador to Russia until last month, said recently that even if the administration aimed sanctions at Russian banks, they probably wouldn't change Putin's course.

"How much does Putin really care? I think not so much," said Fiona Hill, director of the Center on the United States and Europe at the nonpartisan Brookings Institution in Washington. "His view is that people make sacrifices for the greater good. He seems to be of the mind of 'Bring it on and we can put up with it.' "

But David Cortright, director of policy studies at the University of Notre Dame's Kroc Institute for International Peace Studies, said sanctions could "impose costs on Russia's elite and the tycoons" who have benefited under Putin's rule.

"Hopefully Russia will soon realize its blunder and seek a way out of the crisis," he said. "Until then the United States and Europe should apply steady but measured pressure while keeping the door open for a diplomatic solution that preserves Ukrainian sovereignty while granting greater autonomy to Crimea."

Vice President Joe Biden left Monday for Europe, where he will meet with leaders of Estonia, Latvia and Lithuania, all former Soviet republics, and Poland, a former Warsaw Pact member. The four nations, now members of the North Atlantic Treaty Organization, are wary of Russia's military moves. Obama will travel to Europe next week and consult with allies.

"Our message will be clear," Obama said. "As NATO allies, we have a solemn commitment to our collective defense, and we will uphold this commitment."

An administration official downplayed the likelihood that the crisis would spill into other disputes. The White House needs Russian cooperation on an array of global issues and hot spots, including the civil war in Syria, nuclear negotiations with Iran and the U.S. troop withdrawal from Afghanistan.

Although the White House aims to show unity in the West, the European Union is divided. Some nations argue that they need to safeguard supplies of Russian oil and gas, and note that Crimea is historically and culturally part of Russia.

However, British Foreign Secretary William Hague said it was important to focus on principle.

"Nobody is pretending that it changes all the calculations of President Putin," he said. "But it is very important for us to be clear about how we regard these events, how international disputes cannot be resolved by armed force and the prospect of annexation in Europe in the 21st century."

Hague said Europe has begun discussing how to reduce its dependency on Russian energy supplies to ensure that future sanctions result in the "biggest costs in the long term."

kathleen.hennessey@latimes.com

christi.parsons@latimes.com

sergei.loiko@latimes.com

Hennessey and Parsons reported from Washington and Loiko from Simferopol, Ukraine. Times staff writers Henry Chu in London and Carol J. Williams in Los Angeles contributed to this report.

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