Putin warns of consequences as Ukraine steps up offensive

Bloomberg

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President Vladimir Putin warned Ukraine against continuing its anti-separatist offensive after government troops killed five rebels and prompted Russia’s military to begin new drills on the two nations’ border.
“If it’s true that the current regime in Kiev sent the army against citizens inside its country, then it is a very serious crime against its own nation,” Putin said today in St. Petersburg. “It will have consequences for the people who make such decisions, including relations between our countries. We’ll see how the situation develops and we’ll make conclusions based on the reality on the ground.”
Ukrainian Interior Ministry and army troops destroyed three road blocks as they fought pro-Russian separatists in the Donetsk region city of Slovyansk, the ministry said today on its website. Russia’s latest drills are a response to events in eastern Ukraine and involve warplanes near the border, Defense Minister Sergei Shoigu said, according to Interfax.
An agreement to disarm rebels signed last week in Geneva by Ukraine, Russia, the European Union and the U.S. is on the brink of collapse. President Barack Obama said today the U.S. and its allies have additional sanctions against Russia ready to go because Putin’s government has yet to abide by the accord.
Russia’s Micex Index (INDEXCF) fell for a fourth day, losing 2.5 percent at 5:33 p.m. in Moscow and taking its decline since Putin’s intervention in Crimea started March 1 to 10.4 percent.
IMF loan
Ukrainian bonds rallied today on the prospect of an International Monetary Fund loan. The Washington-based lender’s staff endorsed a $17 billion bailout that may get board approval next week, according to government officials. The yield on the government’s dollar-denominated note due April 2023 dropped 0.07 percentage point from the highest in a month to 9.992 percent.
First Deputy Finance Minister Anatoliy Myarkovsky told reporters in Kiev the government hopes to receive the first $3 billion tranche of the loan “in the nearest future.”
Earlier today, Ukrainian Interior Minister Arsen Avakov said security forces cleared separatists from the mayor’s office in Mariupol, less than 60 kilometers (37 miles) from the Russian border. There were no casualties, he said on his Facebook page.
Ukrainian troops also repelled an attack by about 70 gunmen on a military base in Artemivsk, north of Donetsk, during the night, Avakov said. One soldier was wounded.
‘Certainly respond’
Russia’s state-owned Rossiya 24 television reported that armored vehicles stopped on the edge of Slovyansk to remove mines as helicopters hovered overhead.
An attack on a Russian citizen “is an attack against the Russian Federation” and “if we are attacked, we would certainly respond,” Russian Foreign Minister Sergei Lavrov said in an interview yesterday with state-run broadcaster RT. Speaking to reporters in Moscow today, he called on Ukraine to pull back its army, stop “illegal actions” and disarm the nationalist Pravyi Sektor group.
The U.S. has been preparing for the prospect of further sanctions against Russia, Obama said today.
Russia has yet to act in the spirit or the letter of the Geneva agreement, and if there’s no progress in the coming days, “we will follow through,” he told a news conference in Tokyo. All that’s required is some “technical work” and coordination with allies, he said.
‘Legitimate actions’
The U.S. joined the EU in imposing sanctions after Russia annexed Crimea from Ukraine last month. “Already you’ve seen a whole lot of money and investors leave Russia,” Obama said.
French President Francois Hollande told reporters in Paris that unless the Geneva deal was implemented fully, “we would by necessity have to apply the sanctions as planned by Europe.”
The EU didn’t criticize the Slovyansk operation. While calling on “all parties” to live up to the Geneva pledges, EU spokesman Michael Mann told reporters in Brussels that the Kiev government has the “right to take legitimate actions to defend its sovereignty and territorial integrity.”
Russia increased the pressure when OAO Gazprom (OGZD), the state-controlled gas exporter, said it was billing Ukraine for $11.4 billion in gas that the country didn’t import last year under a take-or-pay clause in its contract.
Ukraine’s SBU State Security Service pledged yesterday to use “all means” to restore order in the east. As many as 1,300 separatists were involved in holding government buildings in the Donetsk region, according to the SBU.
Line ‘crossed’
With the Geneva deal crumbling, acting President Oleksandr Turchynov urged security forces on April 22 to move against the militants after the discovery of two bodies near Slovyansk, saying “terrorists” backed by Russia had “crossed the line.”
The government in Kiev accuses Putin of instigating turmoil to possibly lay the groundwork for an invasion. The separatists who took over buildings in eastern Ukrainian cities say they’re not subject to the Geneva accord.
Ukraine hasn’t fulfilled a single clause of the April 17 Geneva pact, Lavrov told RT.
Putin has parliamentary approval to deploy troops in Ukraine to protect Russian speakers and those of Russian heritage. He has about 40,000 troops massed on the border with Ukraine, according to NATO.
The U.S. has begun deploying hundreds of troops for exercises in Poland, Estonia, Latvia and Lithuania. All four of the North Atlantic Treaty Organization allies border Russia.
Obama stressed that “there’s not going to be a military solution” to the confrontation and held out the chance that diplomacy will work. “There’s always the possibility that Russia tomorrow or the next day takes a different course,” he said.

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