BRUSSELS -- 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.

With fears running high of clashes between the two sides or a grab by Moscow for more of Ukraine, the chief of the U.N. came to the capital city Kiev and urged calm all around.

All 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.


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Despite those clouds, Putin painted Friday's events in victorious colors and fireworks burst over Moscow and Crimea on his orders.

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 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 Moscow-focused 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.

The deal comes at a critical moment financially: Amid its political crisis, Ukraine is teetering on the verge of bankruptcy, struggling to pay off billions of dollars in debts in the coming months. The U.S. and the EU have pledged to quickly offer a bailout.

Russia's foreign minister dismissed the EU pact, saying the current Ukrainian leadership lacks popular support and should have held elections before making such a decision.

Meanwhile, in what was seen a possible slight de-escalation in tensions, Russia accepted a plan to send an international fact-finding team of at least 100 members into Ukraine to assess security in the country.