World

Grasping for diplomatic exit, EU offers $15 billion in aid to Ukraine as envoys converge

  • Secretary of State John Kerry, center, walks up the stairs to board his plane before his departure from Kiev, Ukraine, Tuesday, March 4, 2014. Ahead of Kerry on the stairs is Ukraine Foreign Minister Andrii Deshchytsia, who is travelling to Paris with Kerry. Kerry announced an economic package and technical assistance for Ukraine in a show of support for its new government amid escalating tensions with Russia. Kerry's visit comes as Washington and its Western allies step up pressure on Moscow to withdraw its troops from Ukraine's Crimea region or face economic sanctions and diplomatic isolation.  (AP Photo/Kevin Lamarque, Pool)

    Secretary of State John Kerry, center, walks up the stairs to board his plane before his departure from Kiev, Ukraine, Tuesday, March 4, 2014. Ahead of Kerry on the stairs is Ukraine Foreign Minister Andrii Deshchytsia, who is travelling to Paris with Kerry. Kerry announced an economic package and technical assistance for Ukraine in a show of support for its new government amid escalating tensions with Russia. Kerry's visit comes as Washington and its Western allies step up pressure on Moscow to withdraw its troops from Ukraine's Crimea region or face economic sanctions and diplomatic isolation. (AP Photo/Kevin Lamarque, Pool)  (The Associated Press)

  • Russian Foreign Minister Sergey Lavrov raises his hands to take off his headphones at the end of a news conference at the Spanish foreign ministry in Madrid, Spain Wednesday March 5, 2014. Lavrov held talks on the Ukraine crisis with European Union High Representative Catherine Ashton in Madrid on Tuesday, and met with Spanish Prime Minister Mariano Rajoy and later King Juan Carlos. Tension has risen in recent weeks with Western countries backing the country’s new caretaker government while Moscow accuses them of supporting an anti-constitutional coup and pledges to protect Russians in Ukraine. (AP Photo/Paul White)

    Russian Foreign Minister Sergey Lavrov raises his hands to take off his headphones at the end of a news conference at the Spanish foreign ministry in Madrid, Spain Wednesday March 5, 2014. Lavrov held talks on the Ukraine crisis with European Union High Representative Catherine Ashton in Madrid on Tuesday, and met with Spanish Prime Minister Mariano Rajoy and later King Juan Carlos. Tension has risen in recent weeks with Western countries backing the country‚Äôs new caretaker government while Moscow accuses them of supporting an anti-constitutional coup and pledges to protect Russians in Ukraine. (AP Photo/Paul White)  (The Associated Press)

  • U.S. Secretary of State John Kerry, centre, hosts the Budapest Memorandum Ministerial meeting with Ukrainian Foreign Minister Andrii Deshchytsia, 3rd right, and British Foreign Secretary William Hague, 2nd left, at  U.S. ambassador's residence in Paris, Wednesday  March 5, 2014. U.S. Secretary of State John Kerry is in Paris where he is expected to hold talks with his Russian counterpart, Sergey Lavrov, about the crisis in Ukraine's Crimea Peninsula which is now controlled by Russian troops.  (AP Photo/Kevin Lamarque, Pool)

    U.S. Secretary of State John Kerry, centre, hosts the Budapest Memorandum Ministerial meeting with Ukrainian Foreign Minister Andrii Deshchytsia, 3rd right, and British Foreign Secretary William Hague, 2nd left, at U.S. ambassador's residence in Paris, Wednesday March 5, 2014. U.S. Secretary of State John Kerry is in Paris where he is expected to hold talks with his Russian counterpart, Sergey Lavrov, about the crisis in Ukraine's Crimea Peninsula which is now controlled by Russian troops. (AP Photo/Kevin Lamarque, Pool)  (The Associated Press)

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."

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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.

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