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Home / World / Cameron Warns Russia With Sanctions as Truce Presented – Bloomberg
Cameron Warns Russia With Sanctions as Truce Presented – Bloomberg

Cameron Warns Russia With Sanctions as Truce Presented – Bloomberg

NATO Secretary General Anders Fogh Rasmussen called for “genuine effort” from Russia to commit to peace in Ukraine’s east, saying the alliance still sees Russian involvement in the deadly conflict.

President Vladimir Putin, who denies accusations by the U.S. and its allies that he’s fueling his neighbor’s unrest, proposed a peace plan to end more than five months of fighting. Rasmussen urged Russia to pull back troops and stop supplying weapons and manpower to the rebels in Ukraine, saying that would “have been a genuine effort to facilitate a peaceful solution to crisis in Ukraine.”

“I have to say what counts is what is happening on the ground,” Rasmussen said today before the summit in Newport, Wales. “We’re still witnessing unfortunately Russian involvement in destabilizing the situation in eastern Ukraine.”

Ukraine said shelling from Russia intensified overnight as diplomats from the European Union’s 28 nations discuss proposals to impose a second round of economic measures over Putin’s support for separatists in his neighbor’s easternmost regions. A lasting cease-fire would be the biggest breakthrough yet in a conflict that’s cost at least 2,600 lives.

The North Atlantic Treaty Organization decided to step up its cooperation with Ukraine and the summit will adopt a joint declaration that will spell out how the alliance will help the country develop its armed forces so it can better defend itself, Rasmussen said.

Tougher Penalties

U.K. Prime Minister David Cameron threatened tougher penalties against Russia if the crisis in Ukraine worsens, according to a BBC television interview before the NATO summit.

Putin unveiled a seven-point plan yesterday to stem the conflict after agreeing with Ukrainian leader Petro Poroshenko on steps toward a truce.

Putin called for an end to the rebel offensive and urged the withdrawal of the Ukrainian military from residential areas as part of the plan he presented in Ulaanbaatar, Mongolia. Putin and Poroshenko agreed on a “cease-fire regime” and steps toward peace, the Ukrainian president said.

“Caution is needed at this stage,” on Putin’s proposals, Tatiana Orlova, an economist at Royal Bank of Scotland Group Plc in London, said in an e-mailed note. “This announcement came ahead of the NATO summit” and the “EU’s decision on the new round of sanctions.”

Peace Talks

Representatives of Ukraine, Russia, the rebels and the Organization for Security and Cooperation in Europe will meet tomorrow to discuss the plan in the Belarus capital of Minsk. A final agreement is possible there, Putin said.

U.S. President Barack Obama, in Estonia yesterday to reassure eastern European NATO members of their security before heading to the alliance’s summit, expressed skepticism.

“We haven’t seen a lot of follow-up on so-called announced cease-fires,” Obama told reporters in Tallinn. If Russia “is serious about a political settlement, that is something we are hopeful for. I’ll leave it up to others to interpret Mr. Putin’s psychology on this.”

European equities retreated after closing at their highest level since July 4 yesterday. Russia’s Micex Index slipped 0.6 percent after the biggest gain in almost six months yesterday on a closing basis, and the ruble slid 0.3 percent, paring some of yesterday’s 1.6 percent rally. Ukraine’s hryvnia slid 1.9 percent while the yield on the government’s 2017 Eurobond rose two basis points to 12.56 percent.

International Oversight

Putin said his proposals include a call for “full-fledged” international oversight over the truce. He also proposed prisoner swaps without conditions and called for humanitarian corridors.

While the plan contains initial steps in the peace process, it doesn’t cover broader issues beyond ending the bloodshed and providing humanitarian aid, Dmitry Peskov, Putin’s spokesman, was cited by the Interfax news service as saying. “Everything else is a matter for further negotiations,” he said when asked about the status of Ukraine’s battle-torn regions, Interfax reported.

Poroshenko said in a statement that he’s hopeful the peace process will begin at the Minsk negotiations. Ukraine is seeking to end “constant violations of agreements, shooting of captured people and civilians, the destruction of schools and infrastructure,” he said.

If the government declares a unilateral cease-fire, the separatists “will be obliged to do the same,” Andrei Purgin, a rebel leader, was cited by Interfax as saying.

Avoid Sanctions

A truce declared by the parties at the Minsk talks would allow Russia to avoid further sanctions, according to a German government official who asked not to be named discussing internal policy matters.

Ukrainian Prime Minister Arseniy Yatsenyuk dismissed the plan as “window dressing for the international community ahead of the NATO summit” and a ploy to duck the sanctions. Putin’s “true plan is to ruin Ukraine and restore the Soviet Union,” Yatsenyuk said in an e-mailed statement.

Sanctions may involve “access to capital markets, defense, dual-use goods, and sensitive technologies,” the European Commission said in an e-mailed statement.

“It is now for member states to discuss and assess the commission’s proposals,” it said.

‘Blatant Escalation’

Donald Tusk, the next EU president, and U.S. Vice President Joe Biden agreed yesterday that more consequences must be imposed on Russia “for its blatant escalation of the conflict in Ukraine,” according to an e-mailed statement from the White House.

France suspended the delivery of the first of two Mistral warships, saying that Russia’s actions in eastern Ukraine go against the interests of European security.

Meanwhile, fighting continued in eastern Ukraine.

Government forces killed about 120 pro-Russian rebels last night and were in “active combat” with separatists, the military press center said in a Facebook posting.

Battles raged near a border crossing between Russia and Ukraine, with the flow of young people in military gear over the frontier in either direction increasing in the past week, the OSCE said in a weekly report on its observer mission in the region.

To contact the reporters on this story: Ilya Arkhipov in Ulaanbaatar, Mongolia at iarkhipov@bloomberg.net; Kateryna Choursina in Kiev at kchoursina@bloomberg.net; James G. Neuger in Brussels at jneuger@bloomberg.net

To contact the editors responsible for this story: James M. Gomez at jagomez@bloomberg.net; Balazs Penz at bpenz@bloomberg.net Andrea Dudik, Andrew Langley

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