Ukraine considered resuming operations to oust militants from eastern cities as an agreement with Russia to reduce tensions in the region lay in tatters.
Acting Ukrainian President Oleksandr Turchynov yesterday called on security forces to move against the separatists after the discovery of two bodies in the country’s eastern region, saying that “terrorists” backed by Russia had “crossed the line.” He spoke hours after meeting in Kiev with U.S. Vice President Joe Biden, who pledged American support including $50 million in aid.
With the April 17 accord faltering, Ukraine is inching closer to a renewed push to dislodge militants in defiance of Russia’s warnings that such a move risks sparking civil war. The “active phase” of the offensive was suspended five days ago as Ukraine’s government pledged to abide by the deal negotiated in Geneva by Ukraine, the European Union, the U.S. and Russia.
In a call yesterday with Russian Foreign Minister Sergei Lavrov, U.S. Secretary of State John Kerry voiced concern “over the lack of positive Russian steps to de-escalate” the crisis, according to a State Department release. Lavrov, in a statement from his office, told Kerry that Ukraine must retract orders to use its army in the southeast and proceed with disarming local “ultra-nationalist” militias to comply with the accord.
The government in Kiev accuses Russian President Vladimir Putin of stirring unrest and exploiting the situation to possibly lay the groundwork for an invasion. The separatists who took over buildings in eastern Ukrainian cities have said they’re not bound by the Geneva agreement.
‘Coming Days’
The crisis has hit both Russian and Ukrainian markets. Russia’s Micex Index (INDEXCF) dropped 0.7 percent to 1,335.62, extending its slide since Putin’s intervention in Crimea started on March 1 to 7.6 percent. The hryvnia, the world’s worst-performing currency this year, retreated after the biggest rally on record last week, depreciating 3.2 percent to 11.67 per dollar.
Ukraine’s government is doing its part to uphold the Geneva accord and “Russia needs to comply with the commitments it made” or face more sanctions, White House spokesman Jay Carney told reporters traveling with U.S. President Barack Obama. A decision to impose additional penalties may be made in the “coming days,” he said.
The U.S. and European Union have urged Russia to withdraw about 40,000 troops from its border with Ukraine. The Obama administration has threatened further measures against Russian interests, including the banking and energy industries, unless progress is made in easing the crisis sparked by Russia’s annexation of Crimea last month.
Chief Abducted
During a day marked by incidents with the pro-Russian groups, a Ukrainian military plane was damaged by gunfire during a reconnaissance flight near insurgent-held Slovyansk, where government buildings have been seized and road blocks set up, according to the Defense Ministry.
Separatists abducted the chief of police in the eastern city of Kramatorsk and took him to Slovyansk, Ihor Diomin, the spokesman for the Donetsk regional police, told Ukrainian TV 5.
The two bodies recovered yesterday showed signs of torture, Turchynov said. While the identity of one of the victims wasn’t known, one of the dead was a member of the municipal council from the nearby town of Horlivka in the Donetsk region, he said. The politician was identified as a member of presidential candidate and former Prime Minister Yulia Tymoshenko’s Batkivshchyna party, to which Turchynov also belongs.
Biden Visit
Valentyn Nalyvaichenko, the director of Ukraine’s national security service, said government authorities have arrested or detained 21 Russian agents, including three intelligence officers being held and questioned in Kiev.
“They gave us very important information and evidence,” he said during an online discussion sponsored by the Washington-based Atlantic Council.
The U.S. aid unveiled yesterday will help Ukraine pursue political and economic changes to stabilize its government, Biden’s office said in a statement. It includes $11.4 million for a May 25 presidential election that Biden said “may be the most important” to date for the country of 45 million people. The U.S. will also help on issues including non-lethal military aid to the fight against corruption, Biden’s office said.
“The opportunity to generate a united Ukraine, getting it right, is within your grasp,” Biden told a group of prominent Ukrainians including Tymoshenko, confectionery magnate Petro Poroshenko, and former world boxing champion Vitali Klitschko. “And we want to be your partner and friend in the project.”
IMF Package
The International Monetary Fund’s executive board will receive within days a staff report detailing Ukraine’s proposed loan program, in an effort to approve emergency financing by early May, a board official said.
The report, which will describe the economic outlook, financing needs and policy steps Ukraine agreed to take, may trigger a request for an expedited board review, according to the official, who spoke about private discussions on condition of anonymity. That means a typical two-week period for the board to study the report may be cut in half, with a vote next week, the person said.
The IMF is leading a $27 billion international loan package with a contribution of as much as $18 billion, which was agreed to in principle almost four weeks ago. The fund is seeking to complete its report.
After meeting Turchynov and Prime Minister Arseniy Yatsenyuk, Biden said Obama’s administration was also ready to help on energy issues “so that Russia can no longer use energy as a political weapon against Ukraine and Europe.”
U.S. Troops
Russia will demand advance payments for gas supplies to Ukraine unless the country resumes paying its bills, Russian Prime Minister Dmitry Medvedev said yesterday. The move, which would cut off gas to Ukraine without the payments to Russia, would “be a tough but fair decision,” Medvedev said in Russia’s State Duma.
With the crisis in Ukraine raising concerns across eastern Europe, the U.S. will send 600 troops from the Army’s 173rd Airborne Brigade Combat Team to four European nations for bilateral exercises this week, Rear Admiral John Kirby, a Pentagon spokesman, said yesterday.
A company-sized force of 150 troops each from the brigade based in Vicenza, Italy, will arrive in Poland, Lithuania, Latvia, and Estonia -- all members of the North Atlantic Treaty Organization -- by the end of this week for a month of training, Kirby said.
“This is a tangible representation of our commitment to security obligations in Europe and to the alliance” and are in response to the crisis in Ukraine, he said.
To contact the reporters on this story: Julianna Goldman in Kiev at jgoldman6@bloomberg.net; Daryna Krasnolutska in Kiev atdkrasnolutsk@bloomberg.net; Volodymyr Verbyany in Kiev at vverbyany1@bloomberg.net
To contact the editors responsible for this story: James M. Gomez at jagomez@bloomberg.net; Balazs Penz at bpenz@bloomberg.net; Steven Komarow at skomarow1@bloomberg.net Michael Shepard, Don Frederick
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