Merkel Says Ukraine Election Must Take Place as Sanctions Loom

Chancellor Angela Merkel said all efforts must be undertaken to ensure Ukraine’s May 25 election takes place, as a French government official said sanctions against Russia will be intensified if the vote is hampered.

Russia will be targeted with the next level of sanctions if the presidential election doesn’t take place or if President Vladimir Putin’s government doesn’t recognize the result, according an official from the French president’s office who asked not to be named because the deliberations are private.

Group of Seven leaders would take such a decision at their June 4-5 summit in Brussels, the official told reporters traveling with President Francois Hollande in Georgia.

“Everybody is called on to contribute to this, also Russia,” Merkel said of the vote today after a meeting with chiefs of international organizations, including International Monetary Fund Managing Director Christine Lagarde, who warned of further pressure on the Russian economy amid the tensions.

The Ukraine conflict deteriorated today as insurgents killed seven Ukrainian soldiers and wounded eight others in an ambush near an eastern rebel-held stronghold. German Foreign Minister Frank-Walter Steinmeier took the initiative on diplomatic efforts, visiting Kiev and Odessa in an attempt to broker talks between the government and separatists.

Sovereign States

A day after two eastern Ukrainian regions declared themselves sovereign states, Merkel dismissed the referendums as illegal and invoked her push to hold round-table meetings between authorities and civil society groups in Ukraine.

“The referendum is illegal, so the result doesn’t interest me very much,” Merkel said.

After the IMF lowered its forecasts for Russian growth to 0.2 percent this year and 1 percent in 2015, Lagarde said that the outlook could “clearly deteriorate,” since the current assessment assumes the conflict will be resolved.

The IMF chief said the $17 billion pledged to Ukraine is “clearly not enough,” and the country will need the $15 billion in loans pledged by other international organizations.

“We very much hope that every party concerned, including Russia, will participate in supporting this economic stabilization,” Lagarde told reporters in Berlin.

Hollande plans to discuss the situation in Ukraine by phone with U.S. President Barack Obama and Merkel tomorrow, the official said. The French leader is certain that Russian President Vladimir Putin will attend the World War II commemoration of D-Day on June 6 in Normandy, France, the official said.

To contact the reporters on this story: Patrick Donahue in Berlin at pdonahue1@bloomberg.net; Helene Fouquet in Tbilisi at hfouquet1@bloomberg.net

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net Kevin Costelloe

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