President Vladimir Putin on Friday signed a bill that completes Russia's annexation of Crimea. Earlier in the day he said Russia would not further retaliate against expanded U.S. sanctions, as Russia's upper house of parliament endorsed the annexation.
The upper house of parliament voted unanimously Friday to incorporate Crimea, after Sunday's hastily called referendum, in which residents of the Black Sea peninsula overwhelmingly backed breaking off from Ukraine and joining Russia. Ukraine and the West have rejected the vote, held two weeks after Russian troops took over Crimea.
The move was earlier approved by the lower house.
Meanwhile in Brussels, Ukrainian Prime Minister Arseniy Yatsenyuk and EU leaders signed an association agreement that was part of the pact that former President Viktor Yanukovich rejected in November in favor of a $15 billion bailout from Russia.
The deal commits Ukraine and the EU to closer political and economic cooperation, although more substantial parts of the agreement concerning free trade will only be signed after Ukraine has held new presidential elections in May.
Van Rompuy, the European Council president, said the agreement would bring Ukraine and its 46 million people closer to the heart of Europe and a "European way of life.”
In addition to closer political ties, the European Commission has agreed to extend nearly 500 million euros worth of trade benefits to Ukraine, removing customs duties on a wide range of agricultural goods, textiles and other imports.
Yanukovich’s decision to reject the association agreement ultimately led to his downfall and flight from the country last month, setting off one of Europe's worst political crises since the Cold War.
Moscow made its first retaliatory shot Thursday against expanded sanctions from the U.S. by barring nine U.S. officials and lawmakers from entering Russia, but Putin indicated that Russia would likely refrain from curtailing cooperation in areas such as Afghanistan. Moscow appears to hope to limit the damage from the latest U.S. and EU sanctions and avoid further Western blows.
But Putin's spokesman said Friday that Moscow will respond in kind to U.S. sanctions against Russian businessmen, according to Reuters, referring to Thursday's announcement that a second round of U.S. sanctions will target about two dozen members of Putin's inner circle and a major bank supporting them.
Russian military control over Crimea continues to tighten. Since Sunday's referendum, forces have moved aggressively to flush the Ukrainian forces out, storming some ships and military facilities. Heavily armed Russian forces and pro-Russia militias have blocked Ukrainian troops at their bases for weeks.
The Ukrainian government said it was drawing up plans to evacuate its outnumbered troops from Crimea, but many troops remained at their bases awaiting orders from Kiev.
Also Thursday, the United Nations Secretary-General Ban Ki-moon met with Putin, Foreign Minister Sergey Lavrov and other senior Kremlin officials and expressed his concern over the continued escalation in the region.
"I am seriously concerned that developments in Ukraine and the increasing tensions between Ukraine and Russia pose grave risks to the countries themselves, the region and beyond," Ban said.
"It is clear that that we are at a crossroad. We must employ every possible diplomatic tool at our disposal to solve this crisis, which has grave political and economic ramifications."
Ban later met with Yatsenyuk in Kiev, where he urged Ukrainian and Russian officials to engage in direct and constructive dialogue to avoid an "uncontrollable situation."
Putin said in televised remarks at Friday's session of the presidential Security Council that he sees no immediate need for further Russian retaliation and said sardonically that he would open an account in the targeted bank.
His statement appeared to signal to the West that Russia wants to maintain cooperation in other areas despite the tensions over Ukraine. He said that Russia will keep funding a program to service Afghan helicopters and train their crews that has been conducted jointly with NATO.
Russia is expected to play a major role in the planned withdrawal of U.S. and other NATO forces from Afghanistan later this year by providing transit corridors via its territory, and the statement seems to indicate that the Kremlin at this stage has no intention to shut the routes in response to U.S. and EU sanctions.
Al Jazeera and wire services