Ukraine Clash Kills Three as Powers Meet for Crisis Talks

Photographer: Nikolai Ryabchenko/AP

A pro-Russian militant holds a molotov cocktail at the gates to a National Guard base, blocked by trucks in Mariupol. Close

A pro-Russian militant holds a molotov cocktail at the gates to a National Guard base,... Read More

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Photographer: Nikolai Ryabchenko/AP

A pro-Russian militant holds a molotov cocktail at the gates to a National Guard base, blocked by trucks in Mariupol.

Ukrainian forces killed three pro-Russian militants after an attack on a national guard base in the country’s east as the U.S. and its European allies sat down with Ukraine and Russia to discuss the crisis.

Police also wounded 13 fighters after about 300 fired on guards and threw Molotov cocktails in the southeast Ukrainian city of Mariupol overnight, Interior Minister Arsen Avakov said on Facebook. Russian President Vladimir Putin rejected claims from Ukraine that he’d deployed troops there and said he would fight to defend compatriots in other countries.

“We definitely know that we should do everything to help these people defend their rights and define their destiny,” Putin said in a televised question-and-answer session in Moscow today. “We will fight for this. The Federation Council gave the president the right to use military force in Ukraine. I hope very much, that I don’t have to use this right.”

The violence preceded a meeting of top diplomats from the U.S. the European Union, Ukraine and Russia in Geneva today. The U.S. and its European allies accuse Putin of stoking the unrest and have threatened to ratchet up sanctions on their former Cold War enemy if his government doesn’t take steps to calm the situation and withdraw what NATO estimates are 40,000 Russian troops massed on Ukraine’s border.

Sanctions Threat

Ukraine deployed special forces and helicopters in the Mariupol operation. They detained 63 people and captured weapons and phones serviced by Russian mobile providers, Avakov said. No police were injured.

The Geneva meeting will allow the U.S. to test whether Russia is serious about a diplomatic resolution to the crisis, said a State Department official, who spoke on condition of anonymity in advance of the talks. If not, U.S. officials have said they may deepen measures against Putin’s inner circle and possibly Russian industries ranging from energy to banking.

U.S. President Barack Obama said Putin’s government was supporting “at minimum, non-state militias” in its neighbor.

“Putin’s decisions are not just bad for Ukraine, over the long term they’re going to be bad for Russia,” Obama said in an interview with CBS News aired last night.

Visa bans and asset freezes imposed on individuals by the U.S. and EU already have had an impact. Russia’s Micex Index (INDEXCF) of equities has lost 12 percent this year.

Putin Speech

The unrest also has hurt Ukrainian asset prices. The hryvnia is the world’s worst performer against the dollar this year among more than 100 currencies tracked by Bloomberg, with a 27 percent loss. It surged for a second day yesterday after an emergency interest-rate increase, gaining 5.3 percent to 11.3 per dollar.

Putin said allegations that Russian forces were operating in Ukraine were “nonsense” and he annexed the Black Sea province Crimea last month because Russian speakers were facing “real threats.” The east and south of Ukraine were historically parts of Russia, and the former Soviet republic has suffered an anti-constitutional revolution, Putin said, adding that Russia was obliged to respond when its former Soviet-era enemy NATO moved closer to its borders.

Stalled Advance

Ukraine’s government in Kiev sent troops to regain control of buildings that the government said are occupied by armed “extremists” operating under Russian orders in its eastern Donetsk region this week. They retook an airfield near Kramatorsk two days ago in an offensive that stalled yesterday when pro-Russian activists seized armored vehicles and disarmed a number of soldiers.

“The guys don’t want any escalation,” one of the activist leaders, Vadim Chernyakov, told reporters. “They had an order to come to Kramatorsk. They should be praised for the fact that they didn’t use weapons against the people.”

Ukrainian authorities also started criminal proceedings against Russian lender OAO Sberbank, “which is suspected of financing terrorism,” Ukraine’s acting Prosecutor-General Oleh Makhnitskyi said on Channel 5 television late yesterday.

Sberbank spokesman Alexander Baziyan didn’t answer his phone, and the press service didn’t immediately respond to an e-mailed request for comment. Fourteen banks are being investigated for supporting separatism, and 300 criminal cases have been transferred to courts, Makhnitskyi said.

NATO Defense

With tensions rising and nearby countries such as the Baltic nations worrying about security, the North Atlantic Treaty Organization vowed to beef up defenses and upgrade contingency plans.

“We will have more planes in the air, more ships on the water and more readiness on the land,” Secretary General Anders Fogh Rasmussen said yesterday in Brussels after the 28 NATO allies approved the changes.

Obama said NATO will stand by its member countries and that Putin knows that U.S. and allied forces are “significantly superior” to Russia’s.

“They’re not interested in any kind of military confrontation with us,” he said in the CBS interview.

The Geneva meeting of foreign ministers will bring together Ukraine’s Andriy Deshchytsia and Russia’s Sergei Lavrov as well as John Kerry of the U.S. and Catherine Ashton, the EU’s foreign policy chief.

The outcome depends on “whether the Russians come prepared to try to defuse the crisis,” said Steven Pifer, a former U.S. ambassador to Ukraine.

Crisis Culmination

Fyodor Lukyanov, head of the Council on Foreign and Defense Policy in Moscow, said “the Ukrainian crisis is getting closer to its culmination, when the last chance to rescue the situation is highly professional diplomacy.”

The deal needs to include rights for all Ukrainians, guarantees on Russian gas prices for Ukraine and gas transit to Europe, a nonaligned status for the country and Russia’s recognition of the May 25 presidential elections, Lukyanov said in a commentary in the government daily Rossiiskaya Gazeta.

Ukraine, the U.S. and the EU will make the case that Russian calls for decentralization and the rights of Russian speakers inside Ukraine can be resolved constitutionally, the U.S. State Department official said.

While the other parties to the talks won’t accept Russia’s contention that Ukraine’s regions have the right to secede -- and even be annexed by Russia, as Crimea was last month -- the Ukrainians have conceded that their political structure is “too centralized,” said Pifer, a senior fellow at the Brookings Institution, a research organization in Washington.

Putin says Russia has the right to protect Russian speakers in Ukraine who are at risk of attack by “anti-Semites and neo-Nazis.” The Kiev government says Ukraine’s Russian-speaking population isn’t at risk, and the United Nations human rights office said on April 15 that it found no evidence of “widespread nor systemic” persecution of Ukraine’s ethnic Russians.

To contact the reporters on this story: Stepan Kravchenko in Kramatorsk, Ukraine at skravchenko@bloomberg.net; Kateryna Choursina in Kiev at kchoursina@bloomberg.net; Olga Tanas in Moscow at otanas@bloomberg.net

To contact the editors responsible for this story: James M. Gomez at jagomez@bloomberg.net; John Walcott at jwalcott9@bloomberg.net; Balazs Penz at bpenz@bloomberg.net Michael Winfrey

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