Ukraine Separatists Ignore Geneva Deal on Easing Tensions

Photographer: Burak Akbulut/Anadolu Agency/Getty Images

Pro-Russia separatists stand outside a district police station, seized hours after a government deadline for the militants to surrender expired, in the Gorlivka district of Donetsk, Ukraine on April 15, 2014. Close

Pro-Russia separatists stand outside a district police station, seized hours after a... Read More

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Photographer: Burak Akbulut/Anadolu Agency/Getty Images

Pro-Russia separatists stand outside a district police station, seized hours after a government deadline for the militants to surrender expired, in the Gorlivka district of Donetsk, Ukraine on April 15, 2014.

Pro-Russian protesters in eastern Ukraine refused to give up buildings and lay down their arms as a four-nation deal negotiated in Geneva demanded, while the government in Kiev pledged to abide by the terms of the accord.

The government is committed to the agreement, according to Ukraine’s Foreign Ministry, and authorities are “ready to answer questions of people in the east to carry out comprehensive constitutional reform,” Prime Minister Arseniy Yatsenyuk said on television. A leader of the separatist self-proclaimed Donetsk People’s Republic, Denis Pushilin, dismissed the call to disarm and vacate seized property and public places.

The discord threatens to derail international efforts following yesterday’s deal among top diplomats from the U.S., the European Union, Ukraine and Russia. U.S. and EU officials expressed readiness to impose additional sanctions on Russia, which they say has massed 40,000 troops on Ukraine’s border and is fomenting unrest after annexing Crimea last month.

“We’ll leave the building only if the Kiev government that came to power after an armed and illicit takeover will leave the building,” Pushilin, whose group has seized buildings in the eastern city of Donetsk, said by phone today.

He said his group sees the Geneva talks as aimed at all parties, including acting Ukrainian President Oleksandr Turchynov, who took office after Viktor Yanukovych was ousted in February.

Differing Views

Adding to the skepticism over the deal, Russia’s Foreign Ministry said it’s “disappointed” by U.S. officials’ assessments of the talks, calling threats of new sanctions “completely unacceptable.” Russia “no doubt” has influence over Ukrainian separatists and retains the ability to implement the accord, State Department spokeswoman Jen Psaki told reporters today.

Ukraine had suspended the “active phase” of its anti-terrorist operation against militants and will hold talks on implementing constitutional changes by Oct. 1, according to the Foreign Ministry.

Russian President Vladimir Putin has said his government isn’t responsible for the unrest among Russian-speaking residents of eastern Ukraine, which Russian officials say is home-grown, and maintained that he has a right to send in troops. Activists have seized buildings in at least 10 cities in Ukraine’s south and east.

Taxes, Languages

In line with the pact, Ukraine’s cabinet is prepared to change the rules governing the budget and tax codes to benefit the regions and allow them to acknowledge the special status of their dominant languages, Yatsenyuk and Turchynov said in televised remarks.

Lawmakers failed to approve an amnesty law for protesters, with Yatsenyuk urging parliament to adopt a draft law next week for those willing to disarm.

“Ukraine’s leadership, with the support of majority in parliament, will do its best to consider changes to the constitution immediately and to conduct reforms in local self-governance that envisages power decentralization and widening of local communities’ rights,” Turchynov said.

The officials also agreed that a mission from the Organization for Security and Cooperation in Europe will help oversee events in eastern Ukraine and a new constitutional process will aim to establish “a broad national dialogue” in the former Soviet republic of 45 million people. Foreign Minister Andriy Deshchytsia met with OSCE representatives today.

‘Real Threats’

Putin yesterday rejected as “nonsense” accusations from the U.S. and Ukraine that he’d already deployed forces in the east of the country and said that Russia had taken over Ukraine’s Black Sea peninsula of Crimea last month because Russian speakers there were facing “real threats.”

“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. “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.”

U.S. Air Force General Philip Breedlove, the commander of NATO forces, wrote in a blog post yesterday that “what is happening in eastern Ukraine is a military operation that is well-planned and organized and we assess that it is being carried out at the direction of Russia.”

‘Military Training’

“The pro-Russian ‘activists’ in eastern Ukraine exhibit tell-tale military training and equipment and work together in a way that is consistent with troops who are part of a long-standing unit, not spontaneously stood up from a local militia,” he wrote.

Russian stocks rose the most in more than three weeks by the close in Moscow, while the ruble weakened after surging the most this month yesterday. Ukraine’s hryvnia depreciated 1.3 percent for the first drop in five days. With a 27 percent loss against the dollar, it’s the world’s worst performer this year among more than 100 currencies tracked by Bloomberg. The Ukrainian Equities Index rose for a second day.

U.S. President Barack Obama said he remained skeptical about yesterday’s agreement producing concrete results.

“I don’t think we can be sure of anything at this point,” Obama said at a White House news conference. “We’re not going to know whether, in fact, there’s follow-through on these statements for several days.”

Obama held out the prospect of more sanctions against Putin’s government that he said would be crippling. “Dozens of individuals” could face additional sanctions, Psaki said. U.S. Vice President Joe Biden will travel to Ukraine April 22.

U.S. Warnings

Officials from the Treasury Department and the National Security Council told mutual-fund and hedge-fund managers last week in Washington that they were planning additional sanctions against Russia over the conflict in Ukraine, according to a person who attended and asked not to be identified because the discussions weren’t public.

“If we’re not able to see progress on the immediate efforts, to be able to implement the principles of this agreement this weekend, then we will have no choice but to impose further costs on Russia,” U.S. Secretary of State John Kerry said in Geneva yesterday.

It’s now “necessary to prove that the Geneva agreements will change politics rather than just remain on paper,” German Foreign Minister Frank-Walter Steinmeier said in a statement late yesterday.

Potential Sanctions

U.K. Prime Minister David Cameron and EU President Herman Van Rompuy agreed in a phone conversation that the EU “should continue preparatory work on potential additional sanctions” so “the EU was ready if the agreement was not implemented and the situation on the ground in Ukraine deteriorated,” according to an e-mailed statement from Cameron’s office.

The European Union’s eastern members, once united in their opposition to Soviet rule, are split over how to respond to Putin’s Ukrainian incursion, in part because of some nations’ dependence on Russian energy.

The Geneva agreement was announced after talks among Kerry, Russian Foreign Minister Sergei Lavrov and their counterparts, Andriy Deshchytsia of Ukraine and Catherine Ashton, the European Union’s foreign-policy chief.

During a visit to Donetsk today for talks with local separatists, presidential candidate and Ukraine’s former Prime Minister Yulia Tymoshenko said she hoped diplomacy will “calm Russia.” Alternatively, she said, “Ukraine will defend itself with all available means.”

To contact the reporters on this story: Stepan Kravchenko in Moscow at skravchenko@bloomberg.net; Daria Marchak in Kiev at dmarchak@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; John Walcott at jwalcott9@bloomberg.net Paul Abelsky, John Walcott

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