Ukraine Talks in Berlin Seek to Ease Tension as Aid Stuck

Photographer: Anatolii Stepanov/AFP via Getty Images

A Ukrainian soldier looks through binoculars at a checkpoint near Debaltseve, in the Donetsk region, on August 16, 2014. Close

A Ukrainian soldier looks through binoculars at a checkpoint near Debaltseve, in the... Read More

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Photographer: Anatolii Stepanov/AFP via Getty Images

A Ukrainian soldier looks through binoculars at a checkpoint near Debaltseve, in the Donetsk region, on August 16, 2014.

Foreign ministers from Ukraine and Russia will meet tomorrow in Berlin after officials in Kiev said troops destroyed part of a military column from Russia, sparking denials in Moscow and a rush by investors into government bonds.

Ukraine’s Pavlo Klimkin and Russia’s Sergei Lavrov will hold talks with their German and French counterparts to ease the standoff. The former Soviet neighbors are also trading accusations over a stalled humanitarian convoy from Moscow amid fighting in Ukraine’s eastern Donetsk and Luhansk regions.

Any breakthrough on the humanitarian convoy of about 275 trucks, now waiting about 40 kilometers (25 miles) from the border in the Rostov region, might help ease tension over the separatist conflict, which Ukraine says is being fueled by Russia. Talks between the two sides and the international Red Cross, which has been asked to oversee the delivery, will continue today, spokeswoman Galina Balzamova said by phone.

“A quick resolution of the crisis remains unlikely,” Otilia Dhand, an analyst at Teneo Intelligence in London, who specializes in eastern Europe, said by e-mail. “The new round of talks in Berlin might at best bring a slight detente and potentially avert a further escalation over the next days.”

Clashes Continue

Fighting continued along the border today, prompting 17 Ukrainian servicemen to flee into Russia unarmed to avoid being killed, state-run news service RIA Novosti reported, citing a spokesman for the Federal Security Service’s border guard.

Separatists said at least five people were killed because of fighting in Donetsk and nearby towns today, RIA Novosti reported. Three Ukrainian troops have been killed in the past 24 hours and 13 wounded, Andriy Lysenko, a military spokesman, told reporters in Kiev.

“The situation on the Ukrainian-Russian border in the Luhansk and Donetsk regions remains difficult,” Lysenko said. He repeated Ukraine’s assertion that it destroyed a significant part of a military convoy that entered from Russia.

No military column from Russia entered Ukraine, said Major General Igor Konashenkov, a spokesman for the Russian Defense Ministry, according to RIA Novosti. Ukraine’s comments are based on “fantasies” and shouldn’t be the “subject of serious discussion,” he was cited as saying yesterday.

Ukraine’s statements on the armed convoy amount to “provocation” and are part of an “information war,” Maria Zakharova, a spokeswoman for the Russian Foreign Ministry, said by phone. The government in Kiev is seeking to aggravate the conflict and drag Russia into it, she said.

Stocks, Treasuries

Global stocks fell and Treasuries extended gains as escalating tensions in Ukraine outweighed optimism on central bank stimulus. Gold trimmed losses and the yen rose amid increased demand for haven assets.

The MSCI All-Country World Index fell less than 0.1 percent in New York yesterday, reversing an earlier rally of 0.5 percent while paring a drop of as much as 0.4 percent. The Standard & Poor’s 500 Index (SPX) closed little changed. The yield on 10-year Treasuries slid 6 basis points to 2.34 percent. Gold for immediate delivery fell 0.7 percent, paring an earlier drop of 1.6 percent.

The conflict is coming to a head as Ukrainian government forces push to dislodge pro-Russian insurgents from their strongholds of Luhansk and Donetsk. Ukraine has information that the insurgents may be trying to leave the conflict zone by Aug. 18, according to Lysenko, the military spokesman. He declined to elaborate.

Russian Support

The government in Kiev has for months said that rebels in its easternmost regions are getting support from Russia, including artillery fire. Russia said yesterday Ukraine intensified military activity to hinder deliver of the aid.

NATO Secretary General Anders Fogh Rasmussen told reporters in Copenhagen yesterday that Russia made an “incursion” into Ukraine and that the military alliance sees a continuous flow of Russian weapons into the country.

European Union governments warned President Vladimir Putin they’re ready to expand sanctions if the conflict worsens. Putin told his Finnish counterpart Sauli Niinistoe yesterday that Russia doesn’t want to see an escalating war of sanctions, which has his country’s damaged trade and investment ties.

Message Delivered

Niinistoe met Ukrainian President Petro Poroshenko for about three hours of talks in Kiev today and delivered a message from his talk with Putin yesterday, he told reporters after arriving at Helsinki-Vantaa airport. He didn’t elaborate.

“A cease-fire is the primary goal,” he said. “That requires Russia to stop transporting armaments to Ukraine.”

Putin, under increasing international pressure for allegedly supporting the separatists, pledged during a visit to Crimea this week that he would work to halt the conflict.

The International Committee of the Red Cross said it’s deploying additional staff to Russia and Ukraine in preparation for aid delivery. Both sides asked the Geneva-based organization to assist.

“We still need assurances from all parties to the conflict staff will be allowed to perform tasks safely, with due respect for humanitarian principles,” Laurent Corbaz, the Red Cross’s head of operations for Europe, said in an e-mailed statement. “Given complex logistics, security challenges involved, this aid operation will take some time, we call on authorities of both countries to do all they can to resolve outstanding issues quickly.”

An aid shipment sent by the Ukrainian government was handed to the Red Cross, said Iryna Herashchenko, Poroshenko’s envoy to eastern Ukraine.

To contact the reporters on this story: Daryna Krasnolutska in Kiev at dkrasnolutsk@bloomberg.net; Anton Doroshev in Rostov region, Russia at adoroshev@bloomberg.net

To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net Scott Rose, Michael Shanahan

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