A top U.S. diplomat has tried to play down the damage to
Washington's diplomacy in Ukraine from a leaked telephone
call, but German Chancellor Angela Merkel called an obscene
remark about the EU "absolutely unacceptable."
U.S. officials blamed Moscow for the Internet leak of
recordings of a senior State Department official and the U.S.
ambassador discussing a possible future government for
Ukraine, where Washington and Brussels back anti-Kremlin
Western officials described the leaks as a throwback to the
cloak-and-dagger tactics of the Cold War, apparently aimed as
much at sowing discord among Western allies as at
discrediting the opposition in Ukraine, a country of 46
million people on the verge of bankruptcy, torn between East
Senior State Department official Victoria Nuland is heard
using an expletive to tell the U.S. ambassador to Ukraine,
Geoffrey Pyatt, it would be better if a new Ukrainian
government is backed by the United Nations than the EU.
"F*** the EU," she says.
U.S. officials have not denied the authenticity of the
recording and said Nuland apologised to EU colleagues for the
Angela Merkel - already furious with Washington for several
months over reports that U.S. officials bugged her own phone
- found Nuland's remarks "totally unacceptable", a
spokeswoman for the German chancellor said.
Merkel also expressed support for EU foreign policy chief
Catherine Ashton, who heads the bloc's Ukraine policy.
In a separate leaked recording, an Ashton aide is overheard
complaining about the United States for telling Ukrainian
opposition members that Brussels was "soft" in its reluctance
to impose measures such as sanctions to hurt the pro-Russian
Nuland, who met President Viktor Yanukovich in Kiev on
Thursday before the Ukrainian leader flew off to meet
President Vladimir Putin at the Olympics in Russia, described
the bugging and leaks as "pretty impressive tradecraft" but
said it would not hurt her ties with the Ukrainian
Other U.S. officials directly blamed Moscow, noting that the
leaked recording, posted anonymously, was first highlighted
in a tweet from a Russian official.
"Tapping phone calls and releasing carefully selected bits to
support propaganda efforts is an age-old method by some type
of regimes," Swedish Foreign Minister Carl Bildt tweeted.
In Washington, U.S. officials said Nuland and Pyatt
apparently used unencrypted cellphones, which are relatively
easy to monitor. The officials said smart phones issued to
State Department officials had data encryption but not voice
In Nuland's bugged call, apparently recorded about 12 days
ago when Ukrainian opposition leaders were considering an
offer from Yanukovich to join his cabinet, she suggested that
one of three leading figures might accept a post but two
others should stay out. In the end, all three rejected the
The diplomatic furore with the EU draws attention to a gulf
between Washington and Brussels, who agree on the goal to
draw Ukraine closer to the West but disagree over how to
achieve it. Some U.S. officials want to threaten Yanukovich's
government with sanctions, including travel bans on
individuals. Many Europeans worry that such tactics could be
counterproductive by driving Ukraine's elite closer to
Relations between Washington and Moscow, frosty for years,
have been bitter recently, with disputes over Syria, human
rights and other issues leaving little to show for what
President Barack Obama's administration once billed as a
Within Ukraine, economic and political events have been
coming to a head three months into the political crisis that
began with Yanukovich's decision to walk away from a free
trade pact with the EU under Russian pressure.
The central bank imposed new capital controls overnight in a
bid to shore up the sliding hryvnia currency. Officials said
the measures - which include a six-day waiting period for
hard currency purchases, a maximum of around $5,700 for
private transfers abroad and a ban on buying hard currency to
pay back foreign loans early or invest abroad - were only
"The result will be a flourishing black market" in dollars,
said Tatiana Orlova, an emerging markets strategist at RBS in
Central bank governor Ihor Sorkin said: "When the situation
improves, these temporary measures will be removed."
On the political front, Yanukovich must name a new prime
minister after sacking a pro-Russian loyalist in a concession
to demonstrators only to fail to persuade opposition leaders
to take his place.
Russia, which bailed out Ukraine with an offer of $15 billion
in cheap gas and loans after Yanukovich snubbed the EU trade
pact, has cut off the funds until it learns who the new prime
minister will be. Yanukovich may discuss it with Putin.
Modern Ukraine is divided between eastern provinces that were
districts of Russia for centuries and where most people speak
Russian, and western sections that were annexed by the
Soviets from Poland and the former Austrian empire, where
most people speak Ukrainian and many resent Russian
Although many Ukrainians say they dream of integration with
the West, the Soviet economic legacy gives Moscow
extraordinary leverage: Ukraine's heavy industry depends on
imports of energy, above all Russian natural gas.
Moscow portrays the anti-Yanukovich demonstrators as paid
Western agents and seems to be pushing for Yanukovich to
order a crackdown to clear the streets.
In some of the sharpest language yet, the Kremlin's point man
on Ukraine, Sergei Glazyev, urged the Ukrainian leader to
stop negotiating with "putschists". He accused Washington of
arming, funding and training the opposition to take power.
Nuland called the remarks "pure fantasy".
"He could be a science fiction writer," she said.