Putin Pressing Ukraine Gambit After Malaysia Air Hit

July 25 (Bloomberg) -- Bloomberg’s Ryan Chilcote reports on what comes next for Ukraine as Prime Minister Arseniy Yatsenyuk announces his resignation after the collapse of his coalition. He speaks on “Bloomberg Surveillance.”

President Vladimir Putin will resist mounting pressure to abandon pro-Russian rebels immediately while seeking to convince the world that Ukraine, not the insurgents, shot down Malaysian Air Flight MH17, according to three people familiar with Kremlin discussions.

Putin and his inner circle are nervous that the intensifying standoff with the U.S. and its allies over the insurgency in Ukraine may cripple Russia’s economy, the people said. Still, Putin won’t back down because he refuses to be seen as weak, one of the people said.

The international outrage over the attack on the Boeing Co. 777, which killed 298 people, and the sanctions imposed and threatened by the U.S. and the European Union over Russia’s policies in Ukraine have created a new reality that the leadership is struggling to adapt to, one Putin adviser said. The U.S. says the jet was probably downed by separatists using a Russian-supplied missile and launcher, which they deny.

“Abandoning the rebels would mean Putin accepting that his gamble to support the creation of a separatist army that can be permanently relied upon to do Russia’s bidding inside Ukraine has failed,” Jonathan Eyal, international director at the Royal United Services Institute in London, said by e-mail. “It’s much more likely that he will just decide to brazen out this crisis by pretending that it has nothing to do with him.”

Photographer: Mikhail Klimentyev/AFP via Getty Images

President Vladimir Putin has accused the Obama administration and European leaders of seeking to exploit the July 17 crash to destabilize Russia and force it to renounce support for Russian-speakers in eastern Ukraine, where clashes have claimed hundreds of lives. Close

President Vladimir Putin has accused the Obama administration and European leaders of... Read More

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Photographer: Mikhail Klimentyev/AFP via Getty Images

President Vladimir Putin has accused the Obama administration and European leaders of seeking to exploit the July 17 crash to destabilize Russia and force it to renounce support for Russian-speakers in eastern Ukraine, where clashes have claimed hundreds of lives.

‘Maneuvering, Playing’

Russia is firing artillery across the border into Ukraine, U.S. State Department spokeswoman Marie Harf told reporters yesterday in Washington, citing information “from our intelligence friends.” Russia may respond with pinpoint strikes if Ukraine continues intentionally shelling its territory, Foreign Minister Sergei Lavrov said last week.

Putin has accused the Obama administration and European leaders of seeking to exploit the July 17 crash to destabilize Russia and force it to renounce support for Russian-speakers in eastern Ukraine, where clashes have claimed hundreds of lives. The threat of more severe penalties is inflaming the worst geopolitical confrontation since the Cold War.

The Kremlin’s press service declined to comment on Flight MH17 or Putin’s policies in Ukraine.

“Putin is ready to resist Western pressure, but he gets no pleasure from it,” Fyodor Lukyanov, head of the Council on Foreign and Defense Policy research group in Moscow, said by phone. “He’s maneuvering, he’s playing for time.”

Russia’s Evidence

Russia’s Defense Ministry this week released what it said was evidence of possible Ukrainian military involvement in the downing of the Malaysian Air jet.

Senior military and air force commanders made a special presentation to reporters on July 21 at the ministry’s headquarters where they produced satellite images and photographs they said showed Ukrainian forces moving Buk M1 missiles near the crash site before the plane went down. They also said a Ukrainian SU-25 fighter jet came within 3 kilometers (2 miles) of the Boeing just before it exploded.

U.S. officials countered that its technical intelligence and overhead satellite images bolster the case that a Buk surface-to-air missile was fired from rebel-held territory.

The U.S. has ruled out involvement by Ukraine’s military because its missiles weren’t within range of the plane, according to three American intelligence officials who briefed reporters on the condition of anonymity July 22. While stopping short of claiming direct involvement by Russia, none of the officials ruled it out.

WMD Claims

Igor Korotchenko, a member of the Russian Defense Ministry’s advisory council, likened the intelligence dispute to U.S. claims, later proved false, that Saddam Hussein had stockpiles of chemical and biological weapons, which were used to justify its invasion of Iraq in 2003.

The U.S. refusal to release any of the evidence it says it has about Flight MH17 is part of a disinformation campaign to sway European countries against Russia, Korotchenko said on state television on July 22.

“Ukrainian footprints are clearly visible here,” Korotchenko said.

While it’s legitimate to question U.S. reluctance to make its evidence public, Russia’s strategy is to “lie, obfuscate and bluster about their role,” said Andy Kuchins, director of the Russia and Eurasia Program at the Center for Strategic and International Studies, a Washington policy group.

Blurred Culpability

The Russians may use the investigation process itself to further blur the question of culpability, according to Eugene Rumer, a former intelligence officer for Russia and Eurasia at the U.S. National Intelligence Council.

Russia will dispute all the evidence that’s not directly reported from the field as it seeks to influence the outcome of the official investigation, in which it will play a role, said Rumer, director of the Russia and Eurasia Program at the Carnegie Endowment in Washington.

The insurgents’ delay of several days in granting international investigators access to the crash site has fueled suspicion that they tampered with evidence, said Masha Lipman, an independent political analyst in Moscow.

Data from the black boxes, which finally ended up in the hands of experts in the U.K. two days ago, shows no signs of corruption so far, according to the Royal United Services Institute. The Dutch Safety Board said there was no indication of manipulation of the cockpit voice recorder.

Fragmentation Wounds

Bodies with fragmentation wounds, which can provide information about the nature of the explosion, may also have been removed for the crash area, according to the Royal United Services Institute in London.

Two planes carrying bodies from Flight MH17 arrived in the Netherlands from eastern Ukraine for identification on July 23, as officials there raised questions over whether all the victims’ remains had been recovered. Most of the victims on the Amsterdam-to-Kuala Lumpur route were Dutch.

Separatist leaders said July 23 that the jet was downed by a land-based Buk system, and that it wasn’t theirs. Alexander Borodai, prime minister of the self-declared Donetsk People’s Republic, said in an interview yesterday that the heaviest weapon in his arsenal is a Soviet-made Strela-10 mobile missile complex cobbled together from spare parts in the past few days.

The air war continued this week, with rebels shooting down two Ukrainian fighter jets on July 23 in the same region where the Boeing was torn apart. Government troops shot down a Russian drone in the same region on the same day, according to the Defense Ministry in Kiev. Russia is continuing to amass troops on the border, Ukraine’s Defense Ministry said yesterday.

Public Support

Putin, whose approval rating has reached 86 percent in the latest polls by the independent Levada Center and state-run VTsIOM, won’t “dump” the rebels because he’s determined to avoid being branded “weak,” Lipman said. At the same time, he’s keenly aware of the economic and geopolitical risks of continuing to support the rebellion, she said.

Putin’s overriding goal is to maintain influence over Russia’s former vassal state, which was in jeopardy after the overthrow of Kremlin-backed President Viktor Yanukovych in February, according to Lipman.

Putin has said he annexed Crimea in part because of Ukrainian efforts to integrate with the U.S. and Europe by joining the North Atlantic Treaty Organization.

In the longer-term, Putin may choose to slowly wind down support for the rebels, according to Mikhail Vinogradov, head of the St. Petersburg Politics Foundation.

“It’s likely he’ll give up the separatists eventually, but the reduction in support will happen slowly and as unnoticeably as possible,” Vinogradov said.

To contact the reporters on this story: Ilya Arkhipov in Moscow at iarkhipov@bloomberg.net; Henry Meyer in Moscow at hmeyer4@bloomberg.net

To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net; Hellmuth Tromm at htromm@bloomberg.net Scott Rose, Paul Abelsky

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