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paul waldie

A Ukrainian soldier stands at a checkpoint near the village of Salkovo, near the Crimean border, March 10, 2014. A pro-Russian force opened fire in seizing a Ukrainian military base in Crimea on Monday and NATO announced reconnaissance flights along its eastern frontiers as confrontation around the Black Sea peninsula showed no sign of easing.VALENTYN OGIRENKO/Reuters

The Ukrainian government has proposed giving Crimea additional powers as a way of resolving the crisis gripping the territory, a move the U.S. ambassador to Ukraine called encouraging.

"We are able to hold a national dialogue about additional rights and powers [for] the autonomous Republic of Crimea, but not under the muzzles of Russian machine guns," Prime Minister Arseniy Yatsenyuk said Monday.

Mr. Yatsenyuk did not provide any details and Ukraine's constitution already treats Crimea as an autonomous region, with its own parliament and control over mining, agriculture and tourism. However, the announcement was seen as a positive sign by U.S. Ambassador Geoffrey Pyatt.

The United States "believes that Crimea is and should remain a part of Ukraine, discussion over," he told reporters in a separate press conference in Kiev on Monday. "That said, I have been encouraged to see comments from Prime Minister Yatsenyuk and others indicating that the government, the Ukrainian government, is open to enhanced levels of autonomy for the people in Crimea."

Mr. Pyatt added that ultimately it's up to Ukrainians to decide how much power to transfer and it cannot be done while there are Russian troops in Crimea.

It's not clear how far Mr. Yatsenyuk's proposal will go. The Crimean government is showing no sign of withdrawing its referendum next Sunday on joining Russia and it has been sending out daily pronouncements about the benefits of being part of the Russian Federation. Among them are development of the tourist trade, more jobs and higher wages. The government has also increased its attacks on the administration in Kiev, saying its acceptance of loans from the International Monetary Fund (IMF) will plunge the country into poverty and put more money in the pockets of oligarchs.

Mr. Yatsenyuk has begun a week of intense negotiation, travelling to Washington to meet President Barack Obama on Wednesday and then to New York to address the UN Security Council on Thursday. There are also signs the European Union is close to signing an association agreement with Ukraine and the IMF is expected to begin advancing loans soon. The U.S. has promised an immediate $1-billion in loan guarantees and the EU is considering a $15-billion package.

On Monday, a pro-Russian force opened fire in seizing a Ukrainian naval base near the town of Bakhchisaray, though no one was hurt. Also Monday, NATO announced reconnaissance flights along its eastern frontiers. The North Atlantic Treaty Organization said AWACS early-warning aircraft, once designed to counter feared Soviet nuclear missile strikes, will start reconnaissance flights over Poland and Romania to monitor the situation in Ukraine, flying from bases in Germany and Britain.

Meanwhile, the Russians have stepped up their efforts as well and, on Tuesday, ousted Ukrainian president Viktor Yanukovych is expected to hold a press conference in Russia. Russian Foreign Minister Sergei Lavrov also said the government is working on proposals to end the crisis.

Ukraine's Finance Minister Oleksandr Shlapak said that despite the turmoil, the central government was meeting its financial obligations to government employees and those on social benefits, including in Crimea. However, he said the country's economy had stagnated and the government was moving to cut expenses.

Another concern for the country has been the supply of natural gas from Russia. The country imports the majority of its gas from Russian gas giant Gazprom and the company has threatened to halt supplies because of unpaid bills totalling nearly $2-billion. There are also concerns Gazprom could cancel discounts Ukraine received in December after Mr. Yanukovych abandoned an association deal with the EU in favour of closer ties to Russia.

Mr. Pyatt said Ukraine's economy has modernized to the point where it could cope with a shortfall in gas through greater efficiencies, enhancing reverse flow of Russian gas headed to Europe and improving its nuclear capacity. He also pointed to the development of shale gas in Ukraine as a long-term solution to the overreliance on Russia.

With a report from Reuters

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