(Reuters) – President Vladimir Putin put Russian combat troops on high alert for war games near Ukraine on Wednesday, the Kremlin’s most powerful gesture yet after days of sabre rattling since its ally Viktor Yanukovich was toppled as president in Kiev.
Thousands of ethnic Russians, who form the majority in Ukraine’s Crimea region, demonstrated for independence for the peninsula that hosts part of Moscow’s Black Sea Fleet. They scuffled with rival demonstrators, mainly from the Tatar minority, who support the new authorities in Kiev.
With the political turmoil hammering Ukraine’s economy, the hryvnia currency tumbled 4 percent on Wednesday, with ripples spreading to Russia where the rouble fell to five-year lows and bank shares took a hit.
Ukraine’s central bank, which has been rapidly spending its hard currency to protect the hryvnia, said it had abandoned a managed exchange rate in favor of a flexible currency.
Moscow denounced what it described as the rise of “nationalist and neo-fascist sentiment” in Ukraine’s mainly Ukrainian-speaking western areas, where it said Russian speakers were being deprived of rights. It has repeatedly expressed concern for the safety of Russian citizens in Ukraine.
“In accordance with an order from the president of the Russian Federation, forces of the Western Military District were put on alert at 1400 (0500 ET) today,” Interfax news agency quoted Russian Defence Minister Sergei Shoigu as saying, announcing a drill. The western district borders on Ukraine.
Shoigu also said Russia was “carefully watching what is happening in Crimea” and taking “measures to guarantee the safety of facilities, infrastructure and arsenals of the Black Sea Fleet,” in remarks reported by state news agency RIA.
In the latest of a series of increasingly strident statements, Russia’s foreign ministry said Ukrainian extremists were “imposing their will”, and a Ukrainian church affiliated with the Moscow-based Russian Orthodox Church had faced threats.
Western governments have repeatedly urged Moscow not to intervene. Asked about the Russian army drill, British Defence Secretary Philip Hammond said London was watching any Russian military activity.
“We would urge all parties to allow the Ukrainian people to settle their internal differences and then to determine their own future without external interference.”
Since Yanukovich’s downfall on Saturday, all eyes have been on Putin, who ordered an invasion of neighboring Georgia in 2008 to protect two self-declared independent regions with many ethnic Russians and others holding Russian passports. Moscow recognized the regions as independent states, effectively seizing control of the territory from its neighbor.
Any military action in Ukraine, a country of 46 million people that has close ties with European powers and the United States, would be far more serious – the closest the West and Russia have come to outright confrontation since the Cold War.
Ukraine’s new leadership plans to name its new cabinet on Wednesday, paving the way for urgent IMF talks to stave off financial meltdown now that Russia is all but certain to cut off a $15 billion financial lifeline it offered Yanukovich as the prize for turning his back on ties with the EU in November.
The International Monetary Fund has said it is prepared to send a team of negotiators to Kiev, but a government must first be formed there and request the aid. U.S. Deputy Secretary of State William Burns, visiting Kiev, said American financial experts were already in the country looking for ways to help.
Yanukovich fled his luxurious palace on the outskirts of Kiev on Friday night after days of violence in which scores of his countrymen were killed, including demonstrators shot dead by police snipers from rooftops.
A street leading to Independence Square where many were killed has been renamed “Avenue of the Glory of the Heavenly Hundred” for those slain. It is now covered with heaps of flowers and candles. Pictures of the dead are nailed to trees.
Ukraine has suffered an identity crisis throughout two decades of independence from the Soviet Union. With borders drawn by Bolshevik commissars, it is split between a largely Ukrainian-speaking west, including areas annexed by the Soviets from Austria and Poland, and eastern provinces where Russian is spoken, mainly Russian territory since the middle ages.