Obama, Merkel Threaten 'Sectoral Sanctions' Unless Russia Stands Down

U.S., Germany present unified front in their desire to impose costs on Russia for its actions in Ukraine and for backing Ukraine, including financially.

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Obama and Merkel address a joint news conference on the White House grounds. May 2, 2014.
Obama and Merkel address a joint news conference on the White House grounds. May 2, 2014.Credit: Reuters

U.S. President Barack Obama said on Friday the United States would move to "sectoral sanctions" on Russia if Moscow impeded plans for elections in Ukraine later this month.

Obama was speaking to reporters at the White House after talks with German Chancellor Angela Merkel, who also supported a move to wider sanctions and said the European Union and the United States would continue to work in concert on the issue.

"The next step is going to be a broader-based sectoral sanctions regime," Obama said. Merkel agreed, saying that May was a critical date and "we will see to it that elections can take place."

The United States and the EU have imposed several rounds of sanctions on individuals and some companies to try to persuade Russian President Vladimir Putin to halt any interference in Russian-speaking areas of eastern Ukraine.

Energy and banking sectors are two of the most likely areas if those sanctions are widened.

Obama called on Russia to persuade pro-Russian military groups in Ukraine to stand down and said it was disgraceful that the militias were holding international observers.

The two leaders said they were united in their desire to impose costs on Russia for its actions in Ukraine and for backing Ukraine, including financially.

"We're united in our support for Ukraine, including the very important IMF program approved this week," Obama said, referring to the approval of a $17 billion two-year aid program for Ukraine.

He said the Russian account of events in eastern Ukraine that there was a spontaneous uprising by pro-Russian activists was belied by the use on Friday of surface-to-air missiles that brought down two of Ukraine's military helicopters.

"It is obvious to the world that these Russian-backed groups are not peaceful protesters. They are heavily armed militants," Obama said.

Hagel: Crimea crisis a 'clarifying moment' for NATO alliance

Earlier on Friday, U.S. Defense Secretary Chuck Hagel said that Russia's actions in Ukraine have shattered the myth of European security in the post-Cold War era, and underscored the danger NATO allies have created by failing to meet their defense spending pledges.

The Pentagon chief, in a speech on the future of the 28-nation alliance, said Russia's seizure of the Crimean peninsula and other action in the region had "reminded NATO of its founding purpose" and "presented a clarifying moment for the transatlantic alliance."

He also raised a longstanding U.S. concern about NATO defense spending, noting that American outlays on security are three times that of the other 27 partners combined, even though the U.S. gross domestic product is smaller than their total GDP.

"This lopsided burden threatens NATO's integrity, cohesion and capability - and ultimately, both European and transatlantic security," Hagel said in remarks at the Woodrow Wilson International Center in Washington. "We must see renewed financial commitments from all NATO members."

Only four of the NATO partners met their agreed target of spending 2 percent of GDP on defense in 2013 - Estonia, Greece, Britain and the United States. France and Turkey fell just shy of the 2 percent goal.

Hagel said one of the biggest obstacles to investment in defense was the sense that the prospect of conflict among nations had dissipated with the end of the Cold War.

"Russia's actions in Ukraine shatter that myth and usher in bracing new realities," he said. Given Moscow's actions in Ukraine, NATO in the future "should expect Russia to test our alliance's purpose, stamina and commitment," he added.

"We cannot take for granted, even in Europe, that peace is underwritten by the credible deterrent of military power," the U.S. defense chief said, calling for greater coordination among the allies on defense investments as well as higher levels of spending.

Hagel's comments came amid increased violence between Ukrainian loyalists and Russian separatists despite an international peace deal, and echoed calls by other top U.S. officials this week for NATO members to shore up their commitments.

To help meet the goal of increasing defense spending, Hagel called for NATO members' finance ministers or budget officials to attend an alliance meeting to discuss the issue.

Spending imbalances among the NATO partners has been a longstanding complaint of U.S. defense secretaries.

Three years ago, then-Defense Secretary Robert Gates used his final speech in Europe as Pentagon chief to deliver a parting shot at the allies, saying the NATO members risked "collective military irrelevance" unless they bore more of the burden and boosted military spending.

His remarks came in the context of the Western-backed 2011 ouster of Libyan dictator Muammar Gaddafi's government, which exposed a number of weaknesses among the European partners' militaries, such as a lack of intelligence and reconnaissance aircraft and specialists needed to identify bombing targets.

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