MOSCOW – President Vladimir Putin completed his annexation of Crimea on Friday, signing the Black Sea peninsula into Russia just as Ukraine itself sealed a deal pulling the country closer into Europe's orbit.
Putin said he saw no need to further retaliate against U.S. sanctions, a newly conciliatory tone apparently aiming to contain one of the worst crises in Russia's relations with the West since the Cold War. His spokesman, however, later kept the Kremlin's warning open that it could consider various options.
At Ukrainian bases on the peninsula, troops hesitated, besieged by Russian forces and awaiting orders. Russia claimed some had already switched sides and agreed to join the Russian military. Friday had been the deadline for Ukrainian troops to leave Crimea, join the Russian military or demobilize.
Russia rushed the annexation of the strategic peninsula after Sunday's hastily called referendum in which its residents overwhelmingly backed leaving Ukraine and joining Russia. Ukraine and the West have rejected the vote, held two weeks after Russian troops had seized control of Crimea. The U.S. and EU have responded to the crisis by slapping sanctions on Russia.
Putin hailed the incorporation of Crimea into Russia as a "remarkable event" before he signed the parliament bills into law Friday in the Kremlin. He also ordered fireworks in Moscow and Crimea.
At nearly the same time in a ceremony in Brussels, Ukraine's new prime minister pulled his nation closer to Europe by signing a political association agreement with the European Union. It was the same deal that touched off Ukraine's political crisis, the deal that President Viktor Yanukovych rejected in November, igniting the months of protests that drove him from office and sent him fleeing to Russia.
"Russia decided to actually impose a new post-Cold War order and revise the results of the Second World War," Ukrainian Prime Minister Arseniy Yatsenyuk said in Brussels. "The best way to contain Russia is to impose real economic leverage over them."
President Barack Obama on Thursday ordered a second round of sanctions against nearly two dozen members of Putin's inner circle and a major bank supporting them.
Moscow retaliated by banning nine U.S. officials and lawmakers from entering Russia, but Putin indicated that Russia would likely refrain from curtailing cooperation in areas such as Afghanistan. Moscow appears to hope to limit the damage.
But the latest U.S. sanctions, which targeted Putin's chief of staff along with other senior Kremlin aides and four businessmen considered to be his lifelong friends, dealt a painful blow to Russia. Obama also warned that more sweeping penalties against Russia's economy, including its robust energy sector, could follow.
International rating agencies downgraded Russia's outlook and Russian stocks tumbled Friday.
"The economic impact of the sanctions is already visible — on the stock exchange, the value of the Ruble, the investment climate," EU President Herman Van Rompuy told VRT network.
Putin tried to play down the sanctions' toll on Russia at Friday's televised session of the presidential Security Council.
"We should keep our distance from those people who compromise us," he said, a jocular reference to the officials on the sanctions list, some of whom attended the meeting.
Putin added sardonically that he would open an account to keep his salary in the targeted Bank Rossiya, a private bank that is owned by Yuri Kovalchuk, considered to be Putin's longtime friend and banker. With about $10 billion in assets, Rossiya ranks as the 17th-largest bank in Russia and maintains numerous ties to banks in the United States, Europe and elsewhere.
At the same time, Putin said he sees no immediate need for further Russian retaliation to the U.S. sanction.
"We must refrain from retaliatory steps for now," Putin said.
But Putin's spokesman, Dmitry Peskov, later said that Russia would retaliate to the latest U.S. sanctions.
"We will react every time. We responded to the first round of sanctions, and we will respond to those too," he said, according to the ITAR-Tass news agency. He did not elaborate.
Russia is expected to play a major role in the planned withdrawal of U.S. and other NATO forces from Afghanistan later this year by providing transit corridors via its territory, and Putin seemed to indicate that the Kremlin at this stage has no intentions of shutting the route.
Moscow also appeared to be warming to the deployment of monitors from the Organization for Security and Cooperation in Europe, the top trans-Atlantic security and rights group.
Foreign Minister Sergey Lavrov said that Russia would welcome sending the OSCE observers to Russian-speaking regions in eastern Ukraine on condition that their number and locations are clearly set, but he made it clear that they wouldn't be let into Crimea.
In Crimea, heavily armed Russian forces and pro-Russia militia have blocked Ukrainian military at their bases for weeks. Following Sunday's referendum they have moved aggressively to flush the Ukrainians out, storming some ships and military facilities.
The Ukrainian government said it was drawing up plans to evacuate its outnumbered troops from Crimea, but many soldiers still remained. At the Ukrainian military air base in Belbek, outside Sevastopol, Col. Yuly Mamchur told reporters Friday he was still waiting for orders from his commanders on whether to vacate.
Russian Defense Minister Sergei Shoigu on Friday told Putin that 72 Ukrainian military units in Crimea have decided to join the Russian military. His claim couldn't be independently confirmed.
Amid its political crisis, Ukraine is teetering on the verge of bankruptcy, struggling to pay off billions of dollars in debts in the coming months. The U.S. and the European Union have pledged to quickly offer a bailout.
It owes Russia $2 billion in overdue payments for natural gas supplies. Putin made it clear that Russia will further raise the heat on Ukraine by urging it to pay back a $3 billion bailout loan granted to Yanukovych in December.
In addition, Russian Prime Minister Dmitry Medvedev suggested that Russia should reclaim $11 billion in gas rebates it gave Ukraine in exchange for a deal extending Russia's lease on its navy base in Crimea until 2042. Medvedev argued that since Crimea is part of Russia now, the deal is void.