The cost of insuring Moscow's debt against default rose to its highest level in nearly two years.Rus...

1. Russia holds war games near Ukraine; Merkel warns of
catastrophe
The cost of insuring Moscow's debt against default rose to its highest level in nearly two years.
Russia's top general discussed Ukraine with the chairman of NATO's Military Committee by
telephone on Thursday, the Interfax news agency said.
The crisis has already forced several Russian firms to put plans on hold for public offerings to raise
cash abroad.
In an unusually robust and emotional speech, German Chancellor Angela Merkel warned of
"catastrophe" unless Russia changes course, while in Ukraine a man died in fighting between rival
protesters in a mainly Russian-speaking city.
Yet none of that appears to have slowed down Putin, who told officials of the Winter Paralympic
Games he is hosting in Sochi that Russia was "not the initiator" of the crisis.
It was the second big exercise Moscow has ordered since the crisis began; the first, involving
150,000 troops, began a few days before Russian forces seized Crimea.
The crisis over Crimea began after Yanukovich fled Kiev and pro-European politicians took charge,
following three months of demonstrations.
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In the Ukrainian city of Donetsk, a young man was stabbed to death and more than a dozen people
were in hospital after pro-Russian and pro-European demonstrators clashed. Secretary of State John
Kerry said serious steps would be imposed on Monday by the United States and Europe if a
referendum on Crimea joining Russia takes place on Sunday as planned.
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"We would not only see it, also as neighbors of Russia, as a threat. The violence was the worst since
last month's overthrow of Moscow-backed president Viktor Yanukovich.
The leader of pro-Moscow separatist politicians, who took power in Crimea after armed men seized
the regional parliament on February 27, predicted a strong vote in favor of union with Russia in
Sunday's referendum.
But in an apparently conciliatory move, Russia backed deployment of an OSCE monitoring mission in
Ukraine, including Crimea, the Swiss chairman of the European rights watchdog said.
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2. Aksyonov, whose election in a closed session of the regional parliament is not recognized by Kiev,
dismissed opponents' accusations that he will fix the referendum on Moscow's orders. It said $45
billion had already left Russia this year, mostly Russians stashing money abroad.
Her foreign minister, Frank-Walter Steinmeier, said European states would draw up a list over the
weekend of Russians who will face visa restrictions and asset freezes.
In Strasbourg, the European Court of Human Rights warned Russia and Ukraine that any military
action that harmed civilians would violate an international convention signed by both countries.
The Russian stock market hit a four-and-a-half-year low on Thursday and is down 20 percent since
mid-February. "We guarantee that all aspects of European law will be followed, including security
for voters," he said in an interview.
In a gesture of support for NATO's eastern members, U.S. They are due to meet in London on
Friday.
Goldman Sachs revised its prediction for Russian economic growth this year down to 1 percent from
3 percent, blaming the tension over Ukraine for capital flight that would cripple investment. EU-
Russian trade makes up 15 percent of Russia's economy and just 1 percent of Europe's. Secretary of
State Kerry and Russian Foreign Minister Sergei Lavrov spoke on Thursday as they have nearly
every day. Ukrainian border guards stand at a checkpoint at the border with Moldova breakaway
Transnistria region, near Odessa March 13, 2014.
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The Russian Defence Ministry said 8,500 troops were taking part in new military exercises near the
Ukrainian border, testing artillery and rocket launchers.
(Additional reporting by Lina Kushch in Donetsk, Aleksandar Vasovic in Simferopolm, Fredrik Dahl
in Vienna, Andrius Sytas in Vilnius, Gilbert Reilac and Alexandria Sage in Paris; Writing by Peter
Graff; Editing by Giles Elgood and David Stamp)
Diplomatic lines have been open between Russia and the West throughout the crisis: U.S. But if
Putin was hoping for a similarly tepid response this time, he may have misjudged.
Moscow has pledged to respond in kind to any Western sanctions. The prime minister of Lithuania -
a former Soviet republic that is now an EU member state, said Russia had suspended food product
imports through its port of Klaipeda.
But European leaders appear to be calculating that the damage to Russia would be far worse than to
Europe. "No, this would also cause massive damage to Russia, economically and politically."
1 of 13. It is a piece of political theatre that is being perpetrated at the barrel of a gun," Daniel Baer,
the U.S. "The referendum on Sunday will have no legitimacy, no legal effect, it can have no moral
effect. sanctions. ambassador to the OSCE, told reporters in Vienna.

3. Events have moved rapidly, perhaps signaling an effort by Moscow to turn the annexation into a fait
accompli before the West could coordinate a response.
Credit: Reuters/Yevgeny Volokin
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"We have a survey by renowned Ukrainian and Crimean polling experts showing clearly and plainly
that more than 80 percent of people in Crimea are ready to join the Russian Federation," Crimean
prime minister Sergei Aksyonov told Reuters.
In particular, he seems to have alienated Merkel, the Western leader with whom Putin - a German
speaker who was once a KGB spy in East Germany - has had the closest relationship.
Among efforts by the West to isolate Russia politically, the Organization for Economic Cooperation
and Development, a 34-member rich nations' club, announced it was suspending membership talks
with Russia, under way since 2007.
In Berlin, Merkel removed any suspicion that she might try to avoid a confrontation with Russian
President Vladimir Putin,
BERLIN/MOSCOW (Reuters) - Russia launched new military exercises near its border with Ukraine
on Thursday, showing no sign of backing down on plans to annex its neighbor's Crimea region
despite a stronger than expected drive for sanctions from the EU and United States.
BERLIN/MOSCOW Thu Mar 13, 2014 7:01pm EDT
Merkel, a fluent Russian speaker who grew up in Communist East Germany, has emerged in recent
days as a leading figure in threatening tough measures against Moscow.
U.S. EU action is critical because Europe does 10 times as much trade with Russia as the United
States, buying most of its gas and oil exports.
Western countries dismiss the vote as illegal. Share this
The prospect that EU measures could be implemented as soon as Monday has weighed down the
Russian economy.
Russia has taken territory from its former Soviet neighbors in the past with no serious consequences
- in 2008 it invaded Georgia and seized two breakaway regions. And it would not only change the
European Union's relationship with Russia," she told parliament. F-16 fighter jets landed at Poland's
Lask air base on Thursday.
By Stephen Brown and Timothy Heritage
Putin declared Russia's right to invade its neighbor on March 1, as Russian troops were already
seizing control of Crimea, a Black Sea peninsula with a narrow ethnic Russian majority and a
Russian naval base.
. Although EU countries depend on Russian gas imports, storage tanks are full after a mild winter
season.

4. Merkel was initially more cautious than other Western leaders on the Crimean crisis, but in recent
days she has pushed the European Union to match U.S