Ukraine Talks Convene in Berlin Amid Fighting in East

Photographer: Soner Kilinc/Anadolu Agency/Getty Images

A Pro-Russian checkpoint in Donetsk, Ukraine on July 1, 2014. Close

A Pro-Russian checkpoint in Donetsk, Ukraine on July 1, 2014.

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Photographer: Soner Kilinc/Anadolu Agency/Getty Images

A Pro-Russian checkpoint in Donetsk, Ukraine on July 1, 2014.

Foreign ministers from Ukraine, Russia, Germany and France started talks in Berlin aimed at ending hostilities after President Petro Poroshenko ended a cease-fire and vowed to retake territory from separatists.

German Chancellor Angela Merkel reiterated a warning that President Vladimir Putin risks further sanctions from the European Union if it doesn’t do more to rein-in pro-Russian rebels in Ukraine’s easternmost regions.

“We won’t ease off,” Merkel told reporters after meeting with NATO Secretary General Anders Fogh Rasmussen before the foreign ministers started talks in the German capital. Rasmussen said that “Russia’s actions threaten the peace and security we have built after the fall of the Berlin Wall.”

More on the Crisis in Ukraine:

With the EU and the U.S. considering expanding sanctions against Russia, Poroshenko ended the truce early yesterday, blaming pro-Russian insurgents for more than 100 violations in 10 days. The separatists mounted 19 attacks overnight, targeting convoys, checkpoints and a military base in the Luhansk region, said Andriy Lysenko, a spokesman for Ukraine’s National Security and Defense Council.

Ukraine’s acting defense minister, Mykhaylo Koval, said there’s increasing evidence that Russia is tightening security along the frontier to prevent insurgents from crossing the border and even “liquidating” some seeking asylum.

Photographer: Sasha Mordovets/Getty Images

Russian President Vladimir Putin, addressing diplomats in Moscow yesterday, said Poroshenko spurned calls by him and other European leaders to prolong the pause, choosing the path of a military offensive. Close

Russian President Vladimir Putin, addressing diplomats in Moscow yesterday, said... Read More

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Photographer: Sasha Mordovets/Getty Images

Russian President Vladimir Putin, addressing diplomats in Moscow yesterday, said Poroshenko spurned calls by him and other European leaders to prolong the pause, choosing the path of a military offensive.

Rebel ‘Exports’

“We think this is being done to prevent exports from Ukraine of all the negative things going on in our anti-terrorist operation zone,” Koval told reporters in Kiev.

A Snapshot of Ukraine's Past and Future

Tonight’s talks will “try to reduce the tensions,” Maria Zakharova, a spokeswoman for Russia’s Foreign Ministry, said by phone. French Foreign Minister Laurent Fabius will push for a resumption of the cease-fire, a ministry spokesman, Romain Nadal, told reporters. German Foreign Minister Frank-Walter Steinmeier is due to brief reporters at 6:30 p.m. Berlin time.

“We’ve had talks before so it’s very difficult to say whether this will actually bring anything,” Otilia Dhand, an analyst at Teneo Intelligence in London who specializes in eastern Europe, said by phone. “We saw intensified fighting yesterday. I would say this is the worst fighting there has been, even before the cease-fire.”

Russian Markets

Russia’s Micex stock index gained 2.2 percent to close at 1,514.33 in Moscow, while the ruble was little changed against the dollar after three days of declines. Ukrainian dollar bonds rose, with the yield on state debt due July 2017 dropping 7 basis points to 8.86 percent, the first fall in six days.

Photographer: Dmitry Lovetsky/AP

A pro-Russian fighter stands guard at a checkpoint in the village of Karlivka near Donetsk, eastern Ukraine Tuesday, July 1, 2014. Close

A pro-Russian fighter stands guard at a checkpoint in the village of Karlivka near... Read More

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Photographer: Dmitry Lovetsky/AP

A pro-Russian fighter stands guard at a checkpoint in the village of Karlivka near Donetsk, eastern Ukraine Tuesday, July 1, 2014.

In the latest fighting, one member of the Ukrainian government forces was killed and four were wounded after mortars were fired before dawn this morning at the Novoazovsk checkpoint on the Russian frontier in the Donetsk region, the State Border Service said on its website. Four border guards were wounded by gunfire, it said.

Insurgents also opened fire on a Sukhoi Su-24 fighter-bomber over the Donetsk region, damaging the plane, according to Lysenko. No one was hurt and the plane landed safely after destroying the missile system that attacked it.

Gas Pipeline

The rebels also seized a compressor station in the Luhansk region on a pipeline pumping gas to Europe, Lysenko of the Security Council said at a televised briefing, without giving details.

Russia’s Foreign Ministry said Ukraine may have used unknown chemicals when it bombed a factory in the rebel-held town of Slovyansk, a claim Lysenko denied. One person suffered serious chemical poisoning, the Moscow-based ministry said in a statement on its website.

Poroshenko’s efforts to defuse the crisis after taking office last month have yet to end skirmishes that have left hundreds dead. The expiration of the cease-fire renews the government’s open conflict with fighters that Ukraine and its U.S. and European allies say are backed by Putin’s government. Russia denies the allegations.

“The Ukraine crisis remains on a volatile and escalatory trajectory, though additional short-lived cease-fire arrangements are possible in the coming weeks,” Alexander Kliment and other analysts at New York-based Eurasia Group said in a briefing note.

Sanctions Threat

EU sanctions were left untouched yesterday after representatives of the 28 governments deemed Russia had made some progress in meeting de-escalation targets, three officials said. The bloc will now look into expanding a list of 61 people subject to asset freezes and travel bans, the officials said in Brussels. The EU threatened Russia with deeper sanctions last week if it didn’t rein in the rebels.

The bloc’s leaders are monitoring developments and “are committed to reconvene at any time for further significant restrictive measures,” EU President Herman Van Rompuy told the European Parliament today in Strasbourg, France. He said the bloc is using existing sanctions and the threat of more to promote talks to resolve the conflict.

Objections by countries such as Italy, Austria, Slovakia, France and Greece have so far frustrated moves toward broader sanctions, which require unanimity.

“Pretty much everybody in the region is asking” whether the EU’s threat of broader sanctions is credible, Dhand of Teneo Intelligence said. “There was just way too much talk about it, and no real taste for actual action.”

Broader economic sanctions are unlikely until “the EU broadly views the diplomatic possibilities as conclusively exhausted,” Kliment and his colleagues said. “The timeframe for that is still months rather than weeks.”

To contact the reporters on this story: Volodymyr Verbyany in Kiev at vverbyany1@bloomberg.net; Daryna Krasnolutska in Kiev at dkrasnolutsk@bloomberg.net; Patrick Donahue in Berlin at pdonahue1@bloomberg.net

To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net; James M. Gomez at jagomez@bloomberg.net Brad Cook, Andrew Langley

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