Ukraine hosts key Western allies after loss of Crimea

KIEV - Ukraine hosts two vital allies on Saturday amid Western efforts to cement Kiev's leaning away from Moscow in a Cold War-style struggle for the ex-Soviet nation that has already seen Russia take Crimea.

Canadian Prime Minister Stephen Harper will be the first leader from the G7 group of top industrialised powers to meet interim president Oleksandr Turchynov in Kiev since last month's fall of a pro-Kremlin regime that had ultimately rejected closer ties to the West.

Mr Turchynov starts off by hosting German Foreign Minister Frank-Walter Steinmeier - his economic power playing a decisive role in formulating Europe's response to Russian President Vladimir Putin's increasingly belligerent stance.

The show of diplomatic solidarity may play an important psychological role in Kiev as it faces new rounds of pressure by Russia that include open threats to throw Ukraine's wheezing economy into convulsion by raising its gas rates and demanding colossal payments for disputed debts it could ill afford.

The biggest such signal from Europe came on Friday with the signing in Brussels of the very agreement on closer EU-Ukraine relations whose rejection by the Moscow-backed regime sparked three months of deadly protests that led to its February 22 fall.

The pact puts Ukraine on a firmer footing toward EU membership which the protesters - tired of corruption and Russian domination - sought and which Putin feared because of the doom it spelt for his dream of recreating a Kremlin-run empire of a post-Soviet state.

The political deal should be followed months later by an economic agreement permanently lifting trade barriers and requiring Ukraine to undertake structural changes that could kickstart two decades of stuttering growth.

But Ukraine is unlikely to hear its calls for US and EU military support answered despite the hourly advances Russian troops and pro-Kremlin militia are making on the rebel Black Sea peninsula of Crimea.

Russian forces on Friday marked Putin putting his name on a treaty sealing the Kremlin's absorption of the mostly Russian-speaking region by storming and seizing Ukraine's only submarine in the region.

"Don't worry mum, I'm picking up my things and then I'm coming home," one Ukrainian soldier in a camouflage uniform was heard saying on the phone as Russian troops raised their flag at the main entrance to the large Perevalne military base.

Both the United States and Europe have thus far limited their retaliation against Putin to targeted travel and financial sanctions that concern officials but clear of impacting the Russian economy.

Washington's steps have been more meaningful because they target what US officials call a Putin "crony bank" as well as oligarchs who are believed to be close to the Russian strongman and - in one case - actually be running a joint business with him.

Moscow appears to have been taken aback by the force of US President Barack Obama's message - as well as the threat to one day hit Russian industries - because its only response to date has been the publication of a list of nine US officials and lawmakers who will be barred from entering Russia.

Mr Putin on Friday made light of the US decision to effectively cut the bank suspected of being close to him from the Western financial system and suggested in televised comments that "we should for now hold off on reciprocal steps".

He notably made no mention of the Europeans - their punitive steps so far mostly limited to the largely symbolic suspension of free travel talks and a summit Mr Putin had been due to host in June.

Leading EU nations such as a Britain and Germany - their financial and energy sectors intertwined with Russia's - have particularly questioned why they should be the ones to suffer most in case of an all-out trade war.

Kiev scored one small success on Friday when Moscow removed its objections and allowed monitors from the Organisation for Security and Co-operation in Europe (OSCE) to be deployed in the heavily Russified southeastern swathes of Ukraine.

The interim leaders in Kiev fear the huge forces that Russia has amassed along their country's eastern frontier.

Mr Putin has vowed to use any means necessary to "protect" his compatriots against what he describes as violent ultranationalist elements now running wild in Ukraine.

But Moscow agreed to let an initial force of 100 OSCE monitors watch out for any possible troop movements or other forms of Russian incitement after the rights and security body of 57 nations agreed to stay out of Crimea - an area that it was already barred from entering this month.

Russia's OSCE ambassador Andrei Kelin said in Vienna after the decision the fact that the mission will not be deployed in Crimea was in line with "geopolitical realities".