Russia faces more sanctions as observers abducted in Ukraine

Seven European observers detained at checkpoint and taken to rebel-held security headquarters in flashpoint eastern city of Slaviansk.

Ukrainian government forces man a newly erected checkpoint outside the eastern Ukrainain city of Slaviansk on April 25, 2014. Genya Savilov / AFP

SLAViANSK, Ukraine // Western powers warned on Friday that Russia faced fresh sanctions over Ukraine as Kiev accused Moscow of seeking to trigger a “third world war”.

The threat came amid heightened tensions on the ground as the Ukrainian military launched a new offensive to besiege the rebel-held city of Slaviansk and insurgents blew up an army helicopter with a rocket-propelled grenade.

At the entrance to Slaviansk, seven members of an Organisation for Security and Cooperation in Europe observer mission were detained and taken to the rebel-held security services building, sparking immediate international condemnation.

Following a conference call with the United States president, Barack Obama, and the leaders of Britain, France and Italy, Angela Merkel, the German chancellor, said European Union ministers would meet soon to agree to new measures targeting Russia.

“Given the absence of progress, we have to think about – and not just think about, but act on – the option of new sanctions,” she said. “For this purpose, European Union foreign ministers will meet as soon as possible.”

The US and the EU have already targeted the inner circle of the Russian president, Vladimir Putin, with visa and asset freezes and imposed sanctions on a key Russian bank. Western leaders have repeatedly threatened to hit Russia with measures aimed at the wider economy.

“The heads of state and government have called for a rapid reaction by the G7 and raised the prospect of new sanctions by the international community against Russia,” said France.

The leaders called on Russia to stop its intimidation of Ukraine and stressed that a presidential poll scheduled for May 25 was essential to stabilise the country.

The White House said that Moscow could “still choose a peaceful resolution to the crisis” by enacting a deal struck in Geneva last week to defuse the tension.

Meanwhile, Ukrainian authorities ratcheted up military operations against pro-Russian rebels in the east and their Cold War-style rhetoric.

“The world hasn’t forgotten the Second World War and Russia wants to start a third world war,” said Arseniy Yatsenyuk, the Ukrainian prime minister. “Russia’s support for the terrorists in Ukraine constitutes an international crime and we call on the international community to unite against the Russian aggression.”

Kiev said its forces were now seeking to blockade rebels inside Slaviansk, in an effort to prevent militant reinforcements from arriving and to spare civilian casualties. On Thursday, Ukrainian armoured vehicles and commandos had made a brief but dramatic incursion into Slaviansk, killing a 22-year-old insurgent.

But the rebels in Slaviansk were defiant. “We will not surrender the town,” they said.

Only 16 kilometres to the south, at an air base close to the city of Kramatorsk, a rocket-propelled grenade blew up a Ukrainian military helicopter sitting on the tarmac, said officials in Kiev.

The pilot escaped but was wounded.

Russia responded to Ukraine’s military offensive by ordering its troops massed on the border to launch new drills.

Sergei Lavrov, Russia’s foreign minister, claimed Kiev’s offensive was part of a US plot to seize Ukraine for its own “geopolitical ambitions and not the interests of the Ukrainian people”.

In a sign of the increasingly desperate efforts to prevent the conflict from spiralling out of control, the German foreign minister, Frank-Walter Steinmeier, warned: “There is not much time to end this madness.”

With the threat of sanctions hanging over Russia’s already shaky economy, Standard & Poor’s, the credit-ratings agency, on Friday downgraded Russia’s credit rating to one notch above junk status. Russia’s central bank reacted by raising its key interest rate in an attempt to offset “growing inflationary risks”.

The US secretary of state, John Kerry, had warned earlier of the economic consequences of sanctions if Moscow failed to de-escalate the crisis. “Let me be clear: if Russia continues in this direction, it will not just be a grave mistake, it will be an expensive mistake,” he said.

In an attempt to reduce Russia’s reliance on the West as the threat of further sanctions loomed, its lower house of parliament approved the creation of a national credit card system.

Mr Putin last month called for such a payment system, after Washington blacklisted several banks – notably those affiliated with Bank Rossiya, leaving their customers unable to use Visa and Mastercard credit cards.

Russia’s previous response to the threat of sanctions has been to warn that it would trigger a tit-for-tat cycle that no one would win.

Some EU states fear that further sanctions could hamper gas supplies from Russia and undermine a fragile European economic recovery, although Russia remains reliant on gas sales with its economy tipped to plunge into recession this year.

* Agence France-Presse