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Russian, EU deals widen Ukraine rift

UN chief tries to cool tensions

– Two almost simultaneous signatures Friday on opposite sides of Europe deepened the divide between East and West, as Russia formally annexed Crimea and the European Union pulled Ukraine closer into its orbit.

In this "new post-Cold War order," as the Ukrainian prime minister called it, besieged Ukrainian troops on the Crimean Peninsula faced a critical choice: leave, join the Russian military or demobilize. Ukraine was working on evacuating its outnumbered troops in Crimea, but some said they were still awaiting orders.

The chief of the U.N. came to Kiev and urged calm on all sides.

Many eyes were on Russian President Vladimir Putin, as they have been ever since pro-Western protests drove out Ukraine's president a month ago, angering Russia and plunging Europe into its worst crisis in a generation.

Putin sounded a conciliatory note Friday, almost joking about U.S. and EU sanctions squeezing his inner circle and saying he saw no reason to retaliate. But his government later warned of further action.

Russia's troubled economic outlook may drive its decisions as much as any outside military threat. Stocks sank further, and a possible downgrade of Russia's credit rating loomed.

Visa and MasterCard stopped serving two Russian banks, and Russia conceded it may scrap plans to tap international markets for money this year.

Despite those clouds, Putin painted Friday's events in victorious colors, and fireworks burst over Moscow and Crimea on his orders, in a spectacle reminiscent of the celebrations held when Soviet troops drove the Nazis from occupied cities in World War II.

At the Kremlin, Putin signed parliamentary legislation incorporating Crimea into Russia, hailing it as a "remarkable event."

At nearly the same time in a ceremony in Brussels, EU leaders sought to pull the rest of cash-strapped Ukraine westward by signing a political association agreement with the new Ukrainian prime minister.

The highly symbolic piece of paper is part of the same EU deal that touched off Ukraine's political crisis when then-President Viktor Yanukovych rejected it in November and chose a bailout from Russia instead. That ignited months of protests that eventually drove him from power.

Ukraine's new prime minister, Arseniy Yatsenyuk, a leader of the protest movement, eagerly pushed for the EU agreement.

"This deal meets the aspirations of millions of Ukrainians that want to be a part of the European Union," Yatsenyuk said in Brussels.

The agreement includes security and defense cooperation, he said, though it is far from full EU membership and doesn't include an important free-trade element yet.

But the EU decided to grant Ukraine financial advantages such as reduced tariffs to boost its ailing economy until the full deal can be signed. Those trade advantages are a blow to Russia, which had hoped to pull Ukraine into a pro-Moscow customs union instead.

In exchange for the EU pact, Ukraine's government is promising economic reforms.

"In the long term, the biggest challenge will be to build a strong Ukrainian economy, rooted in strong institutions that respect the rule of law," British Prime Minister David Cameron said at the EU summit.

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