Ukraine crisis: Russia gives ultimatum for surrender of ships, world markets in turmoil

Kiev, Ukraine: Russia pressed hard Monday for Ukrainian politicians to return to the Feb. 21 agreement that promised to create a new unity government which would rule until an early election no later than December.But the proposal seemed to be a non-starter as diplomats met in Brussels, Kiev and Geneva and warnings about the dangers of Russia's military actions were issued from a host of European capitals.On the ground, Russian troops controlled all Ukrainian border posts Monday in Crimea, as well as all military facilities and a key ferry terminal, cementing their stranglehold on the strategic Ukrainian peninsula.They also demanded that the crew of two Ukrainian warships immediately surrender or be stormed and seized, according to Maksim Prauta, the Ukrainian defense ministry spokesman. Four Russian navy ships in Sevastopol's harbor were blocking Ukraine's anti-submarine warship Ternopil and the command ship Slavutych, waiting for their answers, he said. Earlier in the day, Russian Foreign Minister Sergey Lavrov, at U.N. meetings in Geneva, explained the reasoning behind Russia's military invasion of Crimea. "This is a question of defending our citizens and compatriots, ensuring human rights, especially the right to life," he said.There have been no reports, however, of any hostilities toward Russian-speakers in Ukraine during the country's four months of political upheaval. Tension between Ukraine and Moscow rose sharply after President Viktor Yanukovych was pushed out by a protest movement made up of people who wanted closer ties with the European Union, more democracy and less corruption. Yanukovych fled to Russia last month after more than 80 demonstrators were killed — mostly by police — near Kiev's central square but insists he is still president. In Kiev, Ukraine's new prime minister admitted his country had "no military options on the table" to reverse Russia's military move into its Crimea region, where Ukraine's military admitted that pro-Russian troops have surrounded or taken over "practically all" its military facilities. While Prime Minister Arseniy Yatsenyuk appealed Monday for outside help and insisted that Crimea still remained part of his country, European foreign ministers held an emergency meeting on a joint response to Russia's military move that could include economic sanctions. But there was no immediate response to the Russian statement, which would void the new government that Ukraine installed just last week. "Any attempt of Russia to grab Crimea will have no success at all. Give us some time," Yatsenyuk said at a news conference with British Foreign Secretary William Hague in Kiev.In the meantime, Russian forces were clearly in charge in Crimea, home to 2 million mostly Russian-speaking people and landlord for Russia's critical Black Sea Fleet at Sevastopol. In addition to seizing barracks and border posts, troops also controlled a ferry terminal in the Ukrainian city of Kerch, just 20 kilometers (12 miles) across the water from Russia. That intensified fears in Kiev that Moscow will send even more troops into the peninsula via that route.The soldiers at the terminal refused to identify themselves Monday, but they spoke Russian and their vehicles had Russian license plates. Border guard spokesman Sergei Astakhov said the Russians were demanding that Ukrainian soldiers and guards transfer their allegiance to Crimea's new pro-Russian local government."The Russians are behaving very aggressively, they came in by breaking down doors, knocking out windows, cutting off every communication," he said.He said four Russian military ships, 13 helicopters and 8 transport planes had arrived in Crimea in violation of agreements that permit Russian to keep its naval base at Sevastopol.Now, fears in the Ukrainian capital of Kiev and beyond are that Russia might seek to expand its control by targeting and seizing other parts of Ukraine, especially in its pro-Russian east."The world cannot just allow this to happen," Hague said, but he ruled out any military action. "The U.K is not discussing military options. Our concentration is on diplomatic and economic pressure."Ukraine is also struggling on the financial front. The treasury is almost empty and its currency is under pressure after years of running large deficits. The International Monetary Fund said a fact-finding mission would visit Ukraine starting Tuesday for 10 days. Ukraine has asked the IMF for rescue loans and says it needs $35 billion to pay its bills over the next two years.Market reaction to the Russian invasion of Crimea was immediate Monday. In European trading, gold and oil rose while the euro and stock markets fell. The greatest impact was felt in Moscow, where the main RTS index was down 12 percent at 1,115 and the dollar spiked to an all-time high of 37 rubles.The U.N. Security Council has scheduled an open meeting on the crisis in Ukraine.Luxembourg's U.N. Ambassador Sylvie Lucas, the current council president, announced that the U.N.'s most powerful body would meet at 3:30 p.m. EST (2030 GMT) on Monday.It will be the third meeting of the Security Council since Friday, when Russia planes and troops started taking over the Crimea.The council meetings on Friday and Saturday were partly open. Monday's public meeting will give the 15 council members, and possibly the broader U.N. membership, an opportunity to speak.Russia, which has veto power, would almost certainly block any council action condemning its intervention. But the public meeting will allow countries representing all areas of the world to express their views on the Ukraine crisis.With Russia in effective control of Ukraine's Crimea peninsula and Western powers weighing sanctions against Moscow, investors around the world took fright Monday at how the crisis may escalate.The FTSE 100 index of leading British shares closed down 1.5 percent at 6,708.35 while the CAC-40 in France fell 2.7 percent to 4,290.87. The retreat on Germany's DAX was even greater — largely because the country is so reliant on Russian gas — with the index ending 3.4 percent lower at 9,358.89.Wall Street took a hit too, with the Dow Jones industrial average down 1.1 percent at 16,142 and the broader S&P 500 index 0.9 percent lower at 1,842.Among other financial markets, an ounce of gold was up 2.5 percent at $1,355 while oil prices pushed further above $100 a barrel, with a barrel of benchmark crude up 2.3 percent at $104.94. The euro was down 0.8 percent at 139.41 yen.