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mark mackinnon

Russian President Vladimir Putin takes journalists' questions on Ukraine at the Novo-Ogaryovo presidential residence outside Moscow on Tuesday, March 4, 2014.Alexei Nikolsky/The Associated Press

Russian President Vladimir Putin presented the new government in Ukraine with a stark choice on Tuesday: it can have a country that's united, or a country that's free from Russian influence. But it can't have both.

In his first public remarks since protesters in Kiev toppled the government of Viktor Yanukovych, Mr. Putin repeated the Kremlin's assertion that the street revolution was in fact a Western-backed coup. He said he has not yet decided to send Russian troops into Ukraine, and bizarrely denied that Russian military forces were already operating in the Crimean peninsula.

But he made it clear he would use all the levers at his disposal – from raising the price of the Russian natural gas on which Ukraine's economy relies, to the threat of wider military intervention – to reassert Russian influence over all or part of Ukraine.

The challenge that poses for Ukraine's post-revolutionary leaders is difficult to overstate. They can either back down and accept a government of national unity – Mr. Putin again called for a return to a Feb. 21 peace agreement that would have left Mr. Yanukovych in power until elections later this year – or face the Kremlin's unbridled wrath.

Choosing the former route appears to be nearly impossible. The protesters on Kiev's Independence Square who ushered the new government into power have repeatedly shown little appetite for compromise with the old regime, and would almost certainly try and block the formation of any cabinet that the Kremlin had an obvious hand in helping select. But refusing Russia comes with the growing risk of seeing Ukraine break into pieces.

Mr. Putin warned of exactly that during a performance that saw flashes of anger break through his trademark poise. He said Russian-speaking region of Crimea, in the south of Ukraine, had the right to determine its own future, and he named Kosovo – which declared independence from Serbia in 2008 with Western support and despite loud Russian opposition – as a possible precedent.

Asked about Russian military action in Ukraine, Mr. Putin said that "so far there is no such necessity, but there is such a possibility." He added that Russia could also intervene in eastern Ukraine, which has seen pro-Moscow demonstrations in recent days, "if we see this lawlessness starting in eastern regions, if people there ask us for help."

He blamed Western countries for orchestrating an "unconstitutional coup and seizure of power by force of arms" in Kiev, and spoke repeatedly about the possibility Ukraine could now fracture. "I told [the West] 1,000 times, 'Why are you dividing the country? Why are you splitting the country?' But they pressed ahead like elephants on a rampage."

The Kremlin further rattled nerves Tuesday by test-firing an intercontinental ballistic missile. U.S. officials said they had been warned about Tuesday's test before the Crimea crisis broke out, but the timing – even if coincidental – could hardly have been more provocative.

Mr. Putin broke his silence on a day packed with drama. The first shots were heard in the tense standoff in Crimea, as masked troops – wearing what appear to be Russian uniforms, and supported by military vehicles bearing Russian license plates – fired into the air as a crowd of unarmed Ukrainian soldiers approached the Belbek air base near Sevastopol. The base is now under control of the pro-Russian troops who seized it this week. The Ukrainians were demanding their jobs back.

Mr. Putin insisted on Tuesday that the fighters in Crimea were "local self-defense units," not Russian servicemen. "There are lots of uniforms that look similar," he said during the hour-long question-and-answer session with the Kremlin press pool at his residence outside Moscow.

That denial appeared to stun U.S. Secretary State John Kerry, who was in Kiev on Tuesday for meetings with the new leadership there. "He really denied there were Russian forces in Crimea?" Mr. Kerry said, shaking his head in disbelief, after being told of Mr. Putin's remarks.

Western efforts to pressure Russia into backing down appear to have had little effect on Mr. Putin. He warned that any sanctions targeting Russia would do "mutual harm," and seemed unbothered by the idea that some countries might boycott an upcoming G-8 summit in Sochi. "If they don't want to come, they don't need to," he shrugged.

Mr. Putin said Russia has begun low-level contacts with the new government in Kiev, but it still does not recognize interim President Oleksander Turchynov. Nor, Mr. Putin said, is Russia likely to accept the winner of a snap presidential election set for May 25. "If they are held in the same terror that we are now seeing in Kiev, we will not recognize them," he said, warning that "nationalists, semi-fascists and some anti-Semites" could come to power in the current environment in Ukraine.

In a move that seems intended to demonstrate the benefits of co-operating with Moscow, Mr. Putin said Russia will provide financial support to the breakaway government in Crimea, while ending the friendly discount the state-controlled energy giant Gazprom had been giving to Kiev. The latter would be a devastating blow: Ukraine is already $1.5-billion in debt to Gazprom, and there are expectations the gas price will jump on April 1 from $268.50 per thousand cubic metres to near $400.

With Ukraine's economy already in crisis, a hike in the gas price will make economic disaster extremely difficult to avert. The situation will get even grimmer if, as Mr. Putin also hinted, Russia – by far Ukraine's largest trading partner – also loses interest in buying Ukrainian exports.

If Russia did choose to take military action, Mr. Putin said it would be a "humanitarian mission" to protect the 8.3 million ethnic Russians living in Ukraine. It would also be a legal intervention, he said, since he had received a written appeal for help from Mr. Yanukovych, whom Moscow still considers to be Ukraine's legal president-in-exile. (Still Mr. Putin came close to disowning Mr. Yanukovych on Tuesday, saying he had no political future.)

"We act legitimately. If I decided to take the decision to use armed forces, it will be legitimate." He added snippily that such a legal basis didn't exist for the U.S. and NATO military interventions in Afghanistan, Iraq and Libya.

That's the chessboard the Kremlin sees the Ukraine crisis on. The U.S. and its allies disregarded the rules when it suited their geopolitical interests over the past decade. Now, Mr. Putin clearly feels unrestrained by the old rules of international behaviour.

U.S. President Barack Obama said Tuesday that while he accepted that Russia had special interests in Ukraine, nothing could justify military intervention in the country. "President Putin seems to have a different set of lawyers making a different set of interpretations," Mr. Obama said. "But I don't think that's fooling anybody."

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