US, Germany united in sanctioning Russia

US President Barack Obama and German Chancellor Angela Merkel on Friday warned of broader sanctions on Russia should it further destabilize Ukraine, in a show of unity amid worsening crisis in the former Soviet state.

But rifts between the countries were hard to hide over US surveillance practices during Merkel's much-anticipated visit to Washington for the first time since revelations from US whistleblower Edward Snowden last year showed Washington had eavesdropped on many of its allies, including Merkel.

UNITED IN IMPOSING COSTS ON RUSSIA

"We will not have a choice but to move forward with additional, more severe sanctions," if Russia disrupts Ukraine's presidential elections scheduled for May 25, Obama said at a joint news conference with Merkel at the White House.

"We are confident that we will have a package that will further impact Russia's growth and economy," Obama said, adding that the sanctions could target Russia's energy, arms and finance sectors.

Merkel said the European Union (EU) is prepared to slap a new round of sanctions on Russia with "a broad range of possibilities, " stressing that sanctions on Russia show that "we are serious about our principles."

The two leaders met as Kiev launched a major offensive against militants that have seized government buildings across Ukraine's east. Russia slammed the operation, saying that it would wipe out all hope for the viability of an agreement reached in Geneva last month.

Both the United States and the EU announced fresh sanctions on more Russian officials and firms Monday. But some European officials have expressed misgivings that the sanctions on Russia could backfire given Europe's dependence on Russia for energy.

On Friday, neither leader was specific about how potential sanctions on key sectors of Russian economy would be crafted. Tougher measures against Moscow have been opposed by a range of companies, especially European firms that have significant business interests in Russia.

Merkel's government is also facing immense pressure from some of the biggest names in German business, which urged Berlin not to take steps that would damage their interests in Russia.

While showing determination to impose more costs on Russia should it further destabilize Ukraine, both leaders expressed the hope that the crisis in Ukraine will be resolved through diplomatic means.

"Our preference is a diplomatic resolution to this issue," Obama said, adding that "our hope is that we do not have to deploy " the sanctions.

Obama said the sanctions are aimed at dissuading Russian President Vladimir Putin from his current course instead of " punishing the Russian people." Merkel said she agreed with Obama that sanctions "are not an end in itself."

RIFTS REMAIN OVER SPYING

When asked if trust between the two nations had been restored in the wake of the spying revelations, Merkel said, "I think the whole debate ...has shown that the situation is such that we have a few difficulties yet to overcome."

The disclosure by former U.S. National Security Agency (NSA) contractor Snowden that Merkel's mobile phone was tapped by the agency has caused indignation in Germany and strained ties between the two countries.

At that time, Merkel said that "spying between friends is simply unacceptable." She had also warned that it will take "more than one trip" to repair the damage.

On Friday, while admitting that the United States and Germany are not "perfectly aligned" on the "complicated" issue, Obama said, "We share the same values, and we share the same concerns."

"We have gone a long way in closing some of the gaps, but as Chancellor Merkel said, there are still some gaps that need to be worked through," he said.

Obama said the United States would hold a "cyber dialogue" with Germany to help address further differences on the intelligence practices.

The chancellor stressed the importance of a cyber dialogue between the two countries, adding that "this is also why there needs to be and will have to be more than just business as usual."

Obama also made clear that he was personally annoyed by the backlash in Berlin.

"Angela Merkel is one of my closest friends on the world stage, and somebody whose partnership I deeply value," Obama said. "It has pained me to see the degree to which the Snowden disclosures have created strains in the relationship."

The president, however, denied that the United States had offered Germany a no-spy agreement, adding that "we do not have a blanket no-spy agreement with any country, with any of our closest partners."