German Chancellor Angela Merkel told Russian President Vladimir Putin that the “so-called referendum” in Crimea is “illegal” under both Ukraine’s constitution as well as international law.
On Sunday, Merkel also repeated Germany’s call for an “international contact group” to find a political solution to Ukraine. Last week Germany had warned that the EU could hit Russia with sanctions. Tensions in Ukraine are being seen as the biggest east-west dispute since the Cold War but Europe and Russia’s mutual dependency is tying both down heavily.
Crisis ridden Europe would not want to precipitate an oil crunch, neither would Russia want to burn a hole in its pocket. Europe relies heavily on Russia for its overall oil and gas needs.
Almost half the pipelines go through Ukraine. Russia is Europe’s biggest supplier of crude oil (34.5%) and natural gas (31.8%) according to European Commission. On the other hand, the US gets only 5% of crude oil from Russia. The vast majority of Russian exports (84%) go to European countries, particularly Germany (US Energy Information Administration figures). The EU is Russia’s top trading partner and accounts for 40.9% of all trade.
And despite the mounting tension, France has said it will not scrap its billion euro deal in which Moscow is buying state of the art Mistral warships. Ukraine is eager to sign the Association Agreement that the ousted President Viktor Yanukovych had refused to sign with the EU, sparking off protests. However the EU doesn’t seem to be in a big hurry even though it’s ready to give a $15 billion aid to Ukraine. President Putin had announced the same amount in loans to Ukraine last year, presumably for not signing the Association Agreement. Russia withdrew the offer last month.