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 U.S. officials blamed Moscow for the Internet leak of recordings
of Assistant Secretary of State Victoria Nuland and the U.S.
ambassador in Kiev discussing a possible future government for
Ukraine, where Washington and Brussels back anti-Kremlin
demonstrators.
On Friday Nuland tried to limit the diplomatic fall-out from her
comment. "I am not going to comment on private diplomatic
conversations. But it was pretty impressive tradecraft. The audio
was extremely clear," she told reporters during a visit to Kiev.
She said she did not foresee damage to relations with opposition
leaders, saying they "know exactly where we stand in respect of a
non-violent solution to the problem."
Of relations with Russia, she said Washington and Moscow had "very
deep, very broad and complex" discussions on a range of
international issues including Iran and "frank and comradely
discussions" on Ukraine.
Western officials described the leaks as a throwback to the
cloak-and-dagger tactics of the Cold War, apparently aimed as much
at sowing discord among Western allies as at discrediting the
opposition in Ukraine, a country of 46 million people on the verge
of bankruptcy, torn between East and West.
In the call, Nuland is heard using an expletive to tell the U.S.
ambassador to Ukraine, Geoffrey Pyatt, it would be better if a new
Ukrainian government is backed by the United Nations than the EU.
"Fuck the EU," she says.
U.S. officials did not deny the authenticity of the recording and
said Nuland apologized to EU colleagues for the comment.
Angela Merkel, already furious with Washington for several months
over reports that U.S. officials bugged her own phone, found
Nuland's remarks "totally unacceptable", a spokeswoman for the
German chancellor said.
Merkel also expressed support for EU foreign policy chief Catherine
Ashton, who heads the bloc's Ukraine policy.
In a separate leaked recording, an Ashton aide is overheard
complaining about the United States for telling Ukrainian opposition
members that Brussels was "soft" in its reluctance to impose
measures such as sanctions to hurt the pro-Russian government.
Nuland met President Viktor Yanukovich in Kiev on Thursday before
the Ukrainian leader flew off to meet President Vladimir Putin at
the Olympics in Russia.
TAPPED CALLS
Some U.S. officials blamed Moscow for leaking the call, noting that
the recording, posted anonymously, was first highlighted in a tweet
from a Russian official.
In Washington, U.S. officials said Nuland and Pyatt apparently used
unencrypted cellphones, which are easy to monitor. The officials
said smart phones issued to State Department officials had data
encryption but not voice encryption.
In Nuland's call, apparently recorded about 12 days ago when
Ukrainian opposition leaders were considering an offer from
Yanukovich to join his cabinet, she suggested that one of three
leading figures might accept a post but two others should stay out.
In the end, all three rejected the offer.
The diplomatic furor with the EU drew attention to a gulf between
Washington and Brussels, who agree on the goal to draw Ukraine
closer to the West but disagree over how to achieve it.
Some U.S. officials want to threaten Yanukovich's government with
sanctions, including travel bans on individuals. Many Europeans
worry that such tactics could be counterproductive, driving
Ukraine's elite closer to Moscow.
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Relations between Washington and Moscow, frosty for years, have been
bitter recently, with disputes over Syria, human rights and other
issues leaving little to show for what President Barack Obama's
administration once billed as a diplomatic "reset".
In Ukraine, economic and political events have been coming to a head
three months into a political crisis that began with Yanukovich's
decision to walk away from a free trade pact with the EU under
Russian pressure.
CAPITAL CONTROLS
Ukraine's central bank imposed new capital controls overnight in a
bid to shore up the sliding hryvnia currency. Officials said the
measures were only temporary. The include a six-day waiting period
for hard currency purchases, a maximum of around $5,700 for private
transfers abroad and a ban on buying hard currency to pay back
foreign loans early or invest abroad.
"The result will be a flourishing black market" in dollars, said
Tatiana Orlova, an emerging markets strategist at RBS in London.
Central bank governor Ihor Sorkin said: "When the situation
improves, these temporary measures will be removed."
On the political front, Yanukovich must name a new prime minister
after sacking a pro-Russian loyalist in a concession to
demonstrators only to fail to persuade opposition leaders to take
his place.
Russia, which bailed out Ukraine with an offer of $15 billion in
cheap gas and loans after Yanukovich snubbed the EU trade pact, has
cut off the funds until it learns who the new prime minister will
be. Yanukovich may discuss it with Putin.
Modern Ukraine is divided between eastern provinces that were
districts of Russia for centuries and where most people speak
Russian, and western sections that were annexed by the Soviets from
Poland and the former Austrian empire, where most people speak
Ukrainian and many resent Russian domination.
Although many Ukrainians say they dream of integration with the
West, the Soviet economic legacy gives Moscow extraordinary
leverage. Ukraine's heavy industry depends on imports of energy,
above all Russian natural gas.
Moscow portrays the anti-Yanukovich demonstrators as paid Western
agents and seems to be pushing for Yanukovich to order a crackdown
to clear the streets.
In some of the sharpest language yet, the Kremlin's point man on
Ukraine, Sergei Glazyev, urged the Ukrainian leader to stop
negotiating with "putschists". He accused Washington of arming,
funding and training the opposition to take power.
Nuland called the remarks "pure fantasy".
"He could be a science fiction writer," she said.
(Additional reporting by Richard Balmforth, Jack Stubbs and Alastair
Macdonald in Kiev and Stephen Brown in Berlin; editing by Peter
Graff and Janet McBride)
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