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Business News/ News / World/  Ukraine declares Russian invasion as sanctions threat raised
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Ukraine declares Russian invasion as sanctions threat raised

Ukraine issues a plea for international help in defending against Russia's army, which it says is armed to the teeth

A file photo of Ukrainian troops in a field on the outskirts of Izyum, Eastern Ukraine in April 2014. Photo: APPremium
A file photo of Ukrainian troops in a field on the outskirts of Izyum, Eastern Ukraine in April 2014. Photo: AP

Kiev: Ukrainian President Petro Poroshenko called an emergency security meeting to defend against what he called a Russian invasion after separatists gained ground in intensified fighting in eastern regions.

Poroshenko canceled a state visit to Turkey to coordinate Ukraine’s military response to the sharp deterioration of events in rebel-held territory, he said on his website on Thursday. Stocks and futures from Moscow to New York extended declines.

France and Germany threatened President Vladimir Putin’s government with further sanctions after pro-Russian insurgents widened their attacks on government forces, taking several towns outside their strongholds of Donetsk and Luhansk, including near the Sea of Azov. That opened a new front and a seaborne supply channel, said Anton Herashchenko, an adviser to Ukrainian interior minister Arsen Avakov. The US said Russia may be directing the attacks, falling short of calling it an invasion.

The invasion by Putin of the regular Russian army is a fait accompli, Herashchenko said on his Facebook page on Thursday. The foreign ministry in Lithuania, a former Soviet satellite state now in the European Union, said it strongly condemns the invasion of Ukrainian territory by Russian Federation military forces, which has obviously begun.

Help plea

The five months of unrest have sparked the worst standoff between Russia and its former Cold War foes in two decades and unleashed sanctions on both sides. Violence surged a day after Putin and Poroshenko met in Minsk, Belarus. Putin hailed the talks as a step toward peace, though he said cease-fire terms weren’t discussed because Russia isn’t a party to the conflict.

Ukrainian Prime Minister Arseniy Yatsenyuk issued a plea for international help in defending against Russia’s army, which he said is armed to the teeth. Sanctions by the US and the EU aren’t working, Yatsenyuk told reporters in Kiev, urging a global freeze on Russian assets and financial transactions until Putin withdraws all his troops.

Russia, which denies involvement in a conflict that’s claimed more than 2,000 lives, faces more sanctions if the escalation of fighting continues, according to French President Francois Hollande and German Chancellor Angela Merkel.

Russia can’t at the same time aspire to be an accepted power of the 21st century and not respect the rules, Hollande said at an annual meeting of French ambassadors in Paris on Thursday. Merkel said on Wednesday that further penalties may be needed to give added political weight to our demands.

‘Reality’ check

Jen Psaki, the US state department spokeswoman, cited the reports of fresh fighting, telling reporters in Washington that these incursions indicate a Russian-directed counteroffensive is likely under way in Donetsk and Luhansk.

Putin’s spokesman, Dmitry Peskov, said this information doesn’t correspond with reality.

The prime minister of the self-proclaimed Donetsk People’s Republic, Alexander Zakharchenko, said many retired Russian military personnel are in the region to fight alongside rebel forces, seeing it as their duty. There are also many active-duty Russian soldiers who choose to join the fight when they are on leave, he said on Russian state television.

We have never concealed the fact that there are many Russians among us and without them it would be very hard and difficult to fight today, Zakharchenko said.

Markets fall

Ukraine’s dollar bonds due July 2017 fell for a seventh straight day, pushing the yield up 62 basis points to 11.54%, the highest in more than three months. Investors holding the debt have lost 3.8% this month, the most after Argentina, Venezuela among all nations tracked by the Bloomberg Dollar Emerging Market Sovereign Bond Index.

Russia’s Micex Index of 50 stocks lost 2.2% to 1,415.72 as of 2:01 pm in Moscow, the biggest intraday slide in a month. The ruble weakened 1.2% to 36.604 per dollar, set for the weakest level since 14 March.

The Russians are all about process and are clearly playing for time to reinforce separatist positions or put in more troops and arms, Joerg Forbrig, senior programme officer for central and eastern Europe at the Berlin bureau of the German Marshall Fund of the US, said by phone.

Death toll

Ukraine’s military said on Wednesday that its forces killed 225 rebels and destroyed three tanks in the previous 24 hours. Thirteen government soldiers were killed and 36 wounded, a military spokesman, Andriy Lysenko, said at a briefing in Kiev.

Ukrainian troops are also fighting to maintain control of Ilovaysk, east of Donetsk, and two other towns, the military press service said on Facebook. There was no independent confirmation of the military figures for separatist deaths.

There’s little reason to be hopeful about ending this war, said Vladimir Pribylovsky, head of the Moscow-based Panorama research group. Given that the two sides couldn’t even agree in Minsk on basic facts such as Russia’s involvement, there’s not much to discuss, he said.

Putin is leaning on the old good cop-bad cop trick, Pribylovsky said by phone. While reality points to an aggressive Russia, Putin is trying to show he’s a reasonable partner. BLOOMBERG

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Published: 28 Aug 2014, 03:33 PM IST
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