KIEV, Ukraine (AP) — Lawmakers in Ukraine accepted the resignation of the defense minister Tuesday as thousands of troops began withdrawing from the Crimean Peninsula, now controlled by Russia.

In an address to parliament, Igor Tenyukh said he rejected criticism that he had failed to issue clear instructions to troops, but that he reserved the right to step down. Lawmakers initially refused his resignation, but later accepted it. A majority then voted to appoint Col. Gen. Mikhail Kovalyov as his replacement.

Authorities in Ukraine have come under criticism for their often-hesitant reaction to Russia's annexation of Crimea, which was formalized following a hastily organized referendum this month.

In Crimea, Ukrainian soldiers piled onto buses and began their journey to Ukrainian territory on Tuesday, as a former comrade saluted them from outside a base overrun by Russian forces.

Tenyukh said he had received requests to leave Crimea from about 6,500 soldiers and family members— meaning about two-thirds of the 18,800 military personnel and relatives stationed there were so far taking their chances in the peninsula newly absorbed by Russia.

"4,300 servicemen and 2,200 family members wish to continue serving in Ukraine's armed forces and will be evacuated from the autonomous republic of Crimea," Tenyukh said.

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U.S. President Barack Obama looks up as he and Netherlands' Prime Minister Mark Rutte hold a joi …

In an apparent effort to consolidate control from Kiev, Ukrainian police forces trying to detain a prominent member of a radical nationalist movement key in recent anti-government demonstrations killed the man after he opened fire, the Interior Ministry said.

Right Sector's Oleksandr Muzychko, better known by his nom de guerre Sashko Bily, had become a recurring figure in Russian attempts to portray Ukraine's interim government as dominated by radical nationalists. Moscow has cited the purported influence of groups like Right Sector to justify the absorption of Crimea.

Many in Ukraine downplay Right Sector's importance. Police say Muzychko was sought for organized crime links, hooliganism and for threatening public officials.

Ukraine's new government has struggled to exert authority since last month's overthrow of Russian-supported President Viktor Yanukovych.

Officials in Moscow, meanwhile, are warning Kiev that the country's new government may have to pay more for Russian gas, which is the main part of Ukraine's energy mix.

We'll drink Vodka with Russia: Ukraine foreign …Play video

President Vladimir Putin's spokesman Dmitry Peskov said on Tuesday that the gas discount was linked to the lease deal for the Russian Black Sea fleet's presence in Crimea. Now that Crimea is part of Russia and Moscow does not have to pay for the lease, Russia sees "no reason for the discount," Peskov said, quoted by Russian news agencies.

But he added that it is up to gas company Gazprom to set the price for Ukraine.

NATO member Norway suspended joint activities with Russia's military, adding to Western efforts to isolate Moscow over the incursion into Crimea. But Russia has so far shrugged off sanctions, including its effective exclusion from what had been a two-decade-old coalition known as the Group of Eight.

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Adam Pemble in Feodosia, Crimea, Nataliya Vasilyeva in Moscow and Karl Ritter in Stockholm contributed to this report.

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THE HAGUE, Netherlands (AP) — With no sign of Russia abandoning the Crimean Peninsula, President Barack Obama said Tuesday he's concerned that Moscow will move deeper into Ukraine and warned Russian President Vladimir Putin that that would be a bad choice.

Obama stood fast on his insistence that Crimea remains a part of Ukraine, even as the fledgling Ukrainian government in Kiev ordered its troops to pull back from the disputed territory.

"We're not recognizing what is happening in Crimea," Obama said at his first news conference since Russia moved to annex Crimea after a referendum 10 days ago. Obama rejected "the notion that a referendum sloppily organized over the course of two weeks" would "somehow be a valid process."

"We also are concerned about further encroachment by Russia into Ukraine," Obama said at a joint news conference with Dutch Prime Minister Mark Rutte. Obama noted Western sanctions and said that Putin "just has to understand there is a choice to be made here."

Obama was pursuing efforts to pressure Russia out of its aggressive pose as world leaders met for an international Nuclear Security Summit. But to the east, the Russian annexation of Crimea was beginning to take root and Moscow shrugged off Obama's drive to leave Putin in the cold.

The U.S. and some of its closest allies cut Russia out indefinitely from a major coalition of leading industrial nations and canceled a summer summit Russia was to host in its Olympic village of Sochi. Obama also sought to win backing from other foreign leaders in hopes of ostracizing or even shaming Putin into reversing his acquisition of Crimea and backing away from any designs he might have on other Eastern Europe territory.

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U.S. President Barack Obama looks up as he and Netherlands' Prime Minister Mark Rutte hold a joi …

In a strongly worded joint statement, the United States, France, Canada, Britain, Germany, Italy and Japan denounced a referendum in Crimea to secede from Ukraine and Russia's ensuing annexation. In so doing, the seven leaders also effectively excluded Russia from what had been a two-decade-old coalition known as the Group of Eight.

"This clear violation of international law is a serious challenge to the rule of law around the world and should be a concern for all nations," the declaration said.

Still, Monday's international gestures in Amsterdam and in The Hague got only a dismissive reaction from Russian Foreign Minister Sergei Lavrov.

"The G-8 is an informal club," he said. "It has no membership tickets, and it can't purge anyone by definition."

Obama also raised the issue with Chinese President Xi Jinping. White House aides later commended the Chinese for refusing to side with Russia, a longtime ally, on a U.N Security Council vote last week declaring the secession vote illegal. Russia, a Security Council permanent member, voted against it, while China abstained.

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Russia's Foreign Minister Sergey Lavrov, third from top right corner, watches as U.S. President …

And in an addition to his public schedule, Obama sat down with Putin ally President Nursultan Nazarbayev of Kazakhstan. As Obama and Nazarbayev wrapped up their meeting, the White House released a joint statement from Obama and Nazarbayev that did not address the Ukraine situation, but focused instead on bilateral cooperation on nuclear security and nonproliferation — the theme of concurrent summit serving as the official purpose for Obama's visit to the Netherlands.

Obama praised action at the summit, including new commitments by Japan, Italy and Belgium to reduce their stocks of nuclear materials. Obama began the nuclear summit series in 2010 in an attempt to secure materials and keep them out of the hands of terrorists. Obama said the next summit, in 2016, will be held in his hometown of Chicago.

Later Tuesday, Obama was to meet with Prince Mohamed bin Zayed, crown prince of Abu Dhabi, the richest emirate in the United Arab Emirates federation. He also has a joint meeting scheduled with Japanese Prime Minister Shinzo Abe and South Korean President Park Geun-hye.

Both those meetings are likely to focus less on Ukraine and more on regional tensions in the Middle East and in Northern Asia. The visit with the Abu Dhabi crown prince will also serve as precursor to Obama's on Friday visit to Saudi Arabia, where he will meet with King Abdullah to address Arab anxieties over the Syrian civil war and U.S. nuclear talks with Iran, a Saudi Arabia rival in the region.

The meeting with Park and Abe brings together two U.S. Asian allies who have been quarreling over recent Abe gestures that have rekindled memories of Japan's aggression in World War II. It will be the first meeting between the two Asian leaders since they took office more than a year ago.

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Follow Jim Kuhnhenn on Twitter: https://twitter.com/jkuhnhenn

The president says he is worried that Moscow will further encroach on Ukraine after seizing Crimea.
Warning for Putin

U.S. banks enjoy "too-big-to-fail" advantage: Fed study

By Emily Stephenson and Jonathan Spicer

NEW YORK, March 25 (Reuters) - A landmark study by Federal Reserve economists found that large U.S. banks enjoy a "too-big-to-fail" advantage in financial markets, confirming the suspicions of many Wall Street critics more than five years after the financial crisis.

The series of research papers, published on Tuesday by the U.S. central bank's influential New York branch, suggests the biggest and most complex banks benefited even after the financial crisis from lower funding and operating costs compared to smaller firms. The researchers used data through 2009.

The biggest banks also, Fed economists found, can take bigger risks than their smaller peers.

While the study did not pinpoint the reason big banks borrow more cheaply, Wall Street critics say it is because investors believe the U.S. government would again rescue them in a panic, despite new rules adopted in the wake of the 2007-2009 crisis and aimed at avoiding future bailouts.

"The evidence presented in this paper on the additional discount that bond investors offer the largest banks ... is novel and consistent with the idea that investors perceive the largest U.S. banks to be too big to fail," Joao Santos, a vice president at the New York Fed, wrote in a paper on fund-raising by banks, insurance companies and corporations.

Fed economists estimated the funding advantage for the five largest banks over smaller peers to be about 0.31 percent, which they said was statistically significant. The Fed said the papers represented the conclusions of their individual authors, not the central bank itself.

Banks and Wall Street critics have been at loggerheads for years over whether enough has been done to prevent regulators from bailing out banks in a future crisis. The study could influence regulators as they decide how strict forthcoming rules related to the 2010 Dodd-Frank financial reform law will be.

The financial services industry, eager to avoid more regulation, has argued that Dodd-Frank did its job.

The Clearing House, an industry group for the biggest banks, published a study last week that found the difference in funding costs between large and small firms was negligible.

Banks pass stress test but that doesn't mean much: …Play video

But Democratic Senators Elizabeth Warren of Massachusetts and Sherrod Brown of Ohio and other skeptics in Congress repeatedly warn that the nation's biggest banks, such as Bank of America Corp and JPMorgan Chase & Co, are still viewed as too integral to the U.S. economy to fail.

Brown called The Clearing House study an attempt by banks to "protect the status-quo that requires hardworking taxpayers to pay for their risky activities."

The 11 papers published on Tuesday represent an effort by the Fed to join a conversation that still dominates Washington. The New York branch conducts the Fed's trading in financial markets and is its frontline in supervising Wall Street.

SOLUTIONS

Fed staff wrote in one paper that a greater likelihood of government support leads to more risk-taking at big banks, including impaired lending and net charge-offs.

But in another, they cautioned that the solution may not be to impose limits on the size of banks. That could disrupt economies of scale that keep the cost of banking services low for most Americans, they said.

They noted that limiting bank holding companies' assets to no more than 4 percent of U.S. gross domestic product, as some have suggested, would increase industry-wide non-interest expenses by $2 billion to $4 billion each quarter.

"Limiting the size of banking firms could still be an appropriate policy goal, but only if the benefits of doing so exceeded the attendant reductions in scale efficiencies," researchers and economists Anna Kovner, James Vickery and Lily Zhou wrote.

Regulators have shied away from suggestions that they should break up banks, pointing instead to the new rules that require banks to reduce leverage, maintain a supply of assets they could sell quickly, and stop making risky trades with their own money.

Officials say they also have made strides to ensure regulators are equipped to resolve big banks in a crisis rather than bail them out.

The Dodd-Frank law assigned new powers to the Federal Deposit Insurance Corp (FDIC) to allow it to take over and unwind giant failed banks. The FDIC could seize a failing firm, replace its management and wipe out shareholders. Creditors would take a haircut and become the firm's new shareholders.

For this plan to work, the FDIC has said holding companies, also known as parent companies, need to issue long-term debt to creditors who could not run away when the firm got into trouble.

Fed officials are considering requiring banks to hold minimum amounts of long-term debt, also referred to as 'bail-in' debt. Researchers at the New York Fed backed that idea.

"Parent-level bail-in is quick and simple, compared to the alternatives," Joseph Sommer, an assistant vice president at the New York Fed, wrote in a paper titled "Why Bail-In? And How!"

"At worst, bail-in creates orderly liquidation."

Regulators could link the new requirement to banks' use of risky liabilities such as uninsured deposits, repurchase agreements, or repos, or commercial paper, four New York Fed researchers argued in a separate paper.

Relying on those liabilities, which are subject to runs in crises, makes bank failures costly and threatens the stability of financial markets, wrote James McAndrews, head of research at the New York Fed, and three others.

If regulators forced banks to offset those liabilities with long-term debt, the firms would have less incentive to use risky funding sources, they said.

(Reporting by Jonathan Spicer and Emily Stephenson; Editing by Karey Van Hall and Paul Simao)

Study confirms critics' claim about big banks

Even after the financial crisis, certain firms enjoyed significant advantages over their smaller counterparts.
'Too big to fail'

By Jeff Mason and Katya Golubkova

THE HAGUE/MOSCOW (Reuters) - Russia and the West drew a tentative line under the Ukraine crisis on Tuesday after U.S. President Barack Obama and his allies agreed to hold off on more damaging economic sanctions unless Moscow goes beyond the seizure of Crimea.

Describing Russia as a "regional power" and not the biggest national security threat to the United States, Obama said Russian forces would not be removed militarily from Crimea, but the annexation of the Black Sea region was not a "done deal" because the international community would not recognize it.

"It is up to Russia to act responsibly and show itself once again to be willing to abide by international norms and ... if it fails to do so, there will be some costs," he told a news conference at the end of a nuclear security summit in The Hague.

After scoffing at a decision by Obama and his Western allies to boycott a planned Group of Eight summit in Sochi in June and hold a G7 summit without Russia instead, the Kremlin said it was keen to maintain contact with G8 partners.

"The Russian side continues to be ready to have such contacts at all levels, including the top level. We are interested in such contacts," President Vladimir Putin's spokesman, Dmitry Peskov, told Interfax news agency.

Obama said he was concerned at the possibility of further Russian "encroachment" into Ukraine and believed Putin was still "making a series of calculations". He insisted Russian speakers face no threat in the country, contrary to Moscow's assertions.

He urged Putin to let Ukrainians choose their own destiny free from intimidation, saying he was sure they would opt for good relations with both the European Union and Moscow rather than making a zero-sum choice for one against the other.

"Russia is a regional power that is threatening some of its immediate neighbors, not out of strength but out of weakness," Obama said. "We (the United States) have considerable influence on our neighbors. We generally don't need to invade them in order to have a strong cooperative relationship with them."

Rising cost of breakfast: blame UkrainePlay video

Asked what was to stop a further Russian "land grab", the U.S. president drew a distinction between an attack on members of NATO, covered by its Article V mutual defense clause, and on non-members where the West could apply international pressure, shine a spotlight on those states and provide economic support.

The rouble firmed and Russian assets climbed on Tuesday after Obama and fellow G7 leaders held back from new sanctions and investors took the view that the crisis had been contained for now.

Dutch Prime Minister Mark Rutte said the United States and European Union allies were aligned in their response, contrary to media reports that Washington was pushing reluctant Europeans fearful for their economic interests to get tougher.

CONCILIATORY GESTURES

Moscow made two conciliatory gestures on Monday after its deputy economy minister said up to $70 billion in capital may have fled his country in the first quarter of the year.

Foreign Minister Sergei Lavrov met his Ukrainian counterpart Andriy Deshchytsia for the first time, even though Russia does not recognize the Kiev government.

Moscow also allowed monitors from the pan-European security watchdog OSCE to begin work in Ukraine after prolonged wrangling over their mandate, which Russia says excludes Crimea.

The Ukrainian Foreign Ministry said Deshchytsia protested at the annexation of Crimea. Lavrov said Russia did not intend to use force in eastern and southern regions of Ukraine, and "the two sides agreed not to fuel further escalation in the Crimea problem that could cause casualties", it said.

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Russian sailors take part in a flag rising ceremony onboard the ship Suzdalets at the Crimean port o …

Ukraine ordered its remaining forces in Crimea to withdraw for their own safety on Monday after Russian forces fired warning shots and used stun grenades when they stormed a marine base and a landing ship. There were no casualties.

That order came too late to save the job of interim Defense Minister Ihor Tenyukh, sacked by parliament on Tuesday over his handling of the crisis, after it emerged that fewer than a quarter of soldiers in Crimea plan to stay in the military.

Lawmakers elected Mykhailo Koval, head of the Ukrainian border guard, to replace Tenyukh.

In the Perevalnoye base, 25 km (15 miles) southeast of the capital Simferopol, sombre-looking Ukrainian troops loaded a freight truck with furniture, clothes and kitchen appliances.

"We are not fleeing, but leaving to the mainland where we will continue to serve," said a soldier who identified himself only as Svyatoslav. "One cannot be a soldier without a country and we have to relocate," he said.

But in the Belbek air base stormed four days ago, officers and soldiers refused to leave until the Russian military releases their commander, Colonel Yuliy Mamchur, who became a symbol of Ukrainian resistance in Crimea.

According to his aides, Mamchur is being held in the Russian Black Sea Fleet's home port of Sevastopol.

IMF DEAL SOUGHT

Ukrainian Finance Minister Oleksander Shlapak said he was negotiating with the International Monetary Fund for a loan package of $15-20 billion because the economy had been severely weakened by months of political turmoil and mismanagement. He forecast a 3 percent contraction in the economy this year.

Obama also urged the IMF to reach agreement swiftly on a financial support package for Kiev, which would unlock additional aid from the European Union and Washington.

Both the West and Russia sought to woo other key nations present in The Hague.

Obama, who discussed the Ukraine crisis with Chinese President Xi Jinping on Monday, met President Nursultan Nazarbayev of Kazakhstan, which is part of a customs union with Russia but is also seeking to join the World Trade Organisation.

Nazarbayev, a ruling politburo member before the collapse of the Soviet Union in 1991, expressed understanding for Russia's position in a telephone call with Putin on March 10.

Lavrov meanwhile sought support from foreign ministers of the BRICS grouping of emerging economic powers - Brazil, Russia, India, China and South Africa.

In a joint statement that did not mention Ukraine or take a position on the annexation of Crimea, they said: "The escalation of hostile language, sanctions and counter-sanctions, and force does not contribute to a sustainable and peaceful solution..."

European diplomats said tentative signs that Putin may have decided to go no further than Crimea in his campaign to protect ethnic Russians in former Soviet republics may reflect concern about the mounting economic consequences.

The crisis is also taking a toll in Western Europe. German business morale dropped for the first time in five months in March as firms in Europe's largest economy began to worry that a standoff with Russia and further sanctions over Ukraine would hurt them in a key market, the Munich-based Ifo institute said.

(Additional reporting by William James and Steve Holland in The Hague, Lidia Kelly and Darya Korsunskaya in Moscow, Richard Balmforth in Kiev and Aleksandar Vasovic in Perevalnoye, Crimea; Writing by Paul Taylor; editing by Philippa Fletcher)

KB/SL

Dr. Kevin Barrett, a Ph.D. Arabist-Islamologist, is one of America’s best-known critics of the War on Terror. Dr. Barrett has appeared many times on Fox, CNN, PBS and other broadcast outlets, and has inspired feature stories and op-eds in the New York Times, the Christian Science Monitor, the Chicago Tribune, and other leading publications. Dr. Barrett has taught at colleges and universities in San Francisco, Paris, and Wisconsin, where he ran for Congress in 2008. He is the co-founder of the Muslim-Christian-Jewish Alliance, and author of the books Truth Jihad: My Epic Struggle Against the 9/11 Big Lie (2007) and Questioning the War on Terror: A Primer for Obama Voters (2009). His website is http://www.truthjihad.com. More articles by Dr. Barrett