Russia ups economic pressure on Ukraine while US, EU offer short-term aid

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Associated Press

Posted on March 4, 2014 at 3:02 PM

Updated Tuesday, Mar 4 at 3:06 PM

KIEV, Ukraine (AP) — Russian forces have taken over the strategic Crimean peninsula, but the struggle over Ukraine's future is also being waged with economic weapons.

Russia today cranked up the pressure on the new leaders in Kiev by ending discounts on its natural gas supplies. Russia had offered the discount in December following President Viktor Yanukovych's (yah-noo-KOH'-vich-iz) decision to ditch a pact with the European Union in favor of closer ties with Russia. President Vladimir Putin also says Ukraine owes Russia's state gas company some $2 billion.

Meanwhile, the U.S. and European Union are working on short-term aid for Ukraine. Secretary of State John Kerry says Washington will provide $1 billion in energy subsidies as Ukraine tries to fend off bankruptcy.

To help Ukraine in the longer term, International Monetary Fund experts are in Kiev working on a plan to stabilize the country's economy. Ukraine's finance minister has said the country needs $35 billion to get through this year and next.

U.S. officials traveling with Kerry also say the Obama administration is considering economic sanctions against Russia and has suspended discussions on a bilateral trade investment treaty.

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