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Ukraine Prepares for Election as Putin Warns on Gas Flow

May 24 (Bloomberg) -- Ukraine is finishing preparations for a presidential election even as government forces continued to clash with rebels and Russian President Vladimir Putin warned that “radicals” in the country may disrupt gas transit.

Ukrainians will vote tomorrow for a new leader to replace Russian-backed Viktor Yanukovych, ousted after deadly protests in February. Billionaire businessman Petro Poroshenko leads all candidates. If he fails to garner more than 50 percent, a runoff will be held June 15. Preparations in the Donetsk and Luhansk regions are being disrupted by the fighting.

“It’s not easy to prepare and conduct elections when huge financial, political, and military resources are used to disrupt them,” Prime Minister Arseniy Yatsenyuk said today in a televised address. “It will be an expression of will of Ukrainians from the west, east, north and south. The choice will be fair and free.”

The risk of a Russian invasion is as high as at any time since the crisis began, with Kremlin agents stoking unrest in the east, Olexander Motsyk, Ukraine’s ambassador to the U.S., said in e-mailed answers to Bloomberg News. The Kremlin hasn’t taken any “practical steps” to ease tensions, he said.

“We have no reason to assume that Russia’s intentions to destabilize Ukraine have in any form shifted in favor of de-escalation,” Motsyk said.

‘Pure Foolishness’

While Russia earlier said the violence threatens to undermine the election’s legitimacy, Putin said he will work with the next Ukrainian president, even though the vote won’t meet international standards.

Today the Russian leader warned that there is a risk of “radicals” in Ukraine disrupting gas flows to Europe. Even so, plans to reduce the continent’s reliance on Russian energy are “pure foolishness” because the two sides are interdependent, he said in St. Petersburg.

Halting gas supplies to Europe would be “suicide” for Russia, Putin said at a meeting with the heads of news services broadcast by the Rossiya 24 TV channel. A long-term gas-supply contract signed with China this week has no bearing on the shipments to Europe, because it foresees the development of new fields, he said.

German Chancellor Angela Merkel evoked Europe’s 20th-century wars at a campaign rally today, saying “our current task” is to “keep talking with Russia, especially with a view to Ukraine -- to keep extending our hand, even though we don’t agree on everything.”

‘Get Together’

“It’s always better to talk with each other -- to talk about solutions, to get together -- than to wage war,” she told supporters of her Christian Democratic Union in the western German city of Worms on the eve of European Parliament elections.

In eastern Ukraine, clashes continued after five pro-Kiev volunteers were killed in a battle yesterday. Rebels seized the city council building in Artemivsk, about 80 kilometers (50 miles) north of Donetsk, installing a machine gun and blocking a polling station located on the first floor, the Unian news service reported.

Ukrainian troops fired warning shots at two Russian helicopters from Crimea, the Black Sea peninsula annexed by Russia in March, that violated the country’s airspace in the adjacent Kherson region, the Defense Ministry said on its website today.

East Voting

Government forces are continuing their operation against insurgents in the easternmost regions, Vladyslav Seleznyov, a spokesman for the Ukrainian military, told reporters in Kiev today. They clashed with separatists at several checkpoints near Slovyansk, he said.

Rebels are in control of 20 of the 34 polling stations in the Donetsk and Luhansk regions, according to Seleznyov. Pro-Russian forces took an election official hostage, the non-government organization Ukrainian Voters’ Committee said on its website today.

“I want to assure our fellow countrymen from the Donetsk and Luhansk regions, who will not be able to vote because of the war, that criminals won’t terrorize your land for long,” Yatsenyuk said today.

Putin pointed to the violence as proof that Ukraine is in a civil war and said that, “strictly speaking, under the current constitution, it’s impossible to hold an election” because Yanukovych, who fled to Russia in February, “wasn’t removed from power using constitutional methods.”

At the same time, he also said that “after the elections, we will work with the new elected institutions.”

Putin’s Game

Putin, who has a black belt in judo, has long delivered such contradictory messages to put opponents off-balance, calibrate their responses and adjust his tactics accordingly, analysts said.

Dmitri Trenin, director of the Carnegie Moscow Center, a research group, pointed to Putin’s massing of troops at the border and his repeated claims to have withdrawn them. “You threaten, and then you withdraw; it’s a game, it’s politics,” he said.

U.K. Foreign Secretary William Hague in a video message urged Ukrainians to vote in the election, offering “strong support” for the election and calling on separatists to refrain from disruptive actions and inflammatory statements.

U.S. Call

Responding to Putin’s more conciliatory comments, Ukrainian Foreign Minister Andriy Deshchytsia was cited by Interfax as saying that, “if this really happens, we will welcome not just Russia’s statement, but also its particular actions to recognize the Ukrainian government.”

The U.S. “would welcome Russian acknowledgment and acceptance of the election results” and wants Putin to use his influence with Russian separatists to halt their violent activities, State Department spokeswoman Marie Harf told reporters in Washington yesterday.

The U.S. and Ukraine have accused Putin of failing to live up to his repeated pledges to pull troops back from Ukraine’s border. Valery Gerasimov, the head of Russia’s General Staff, said yesterday that the withdrawal began May 19 and will take about 20 days, which means many of the troops will remain near Ukraine’s border when the voting takes place.

The U.S. has observed “the movement of some units away from the border region,” Pentagon spokesman Rear Admiral John Kirby said yesterday. “It’s not in great number right now.”

Russian stocks rose, with the Micex Index adding 0.6 percent to post a fourth straight weekly gain. The ruble strengthened 0.4 percent against the dollar, extending its gain since March 1 to 5 percent.

Russia has been voicing a more moderate stance on the elections as the U.S. and Europe threaten wider sanctions if Putin disrupts the vote, said Masha Lipman, an analyst at the Carnegie Moscow Center.

“Putin wants to avert more Western sanctions,” Lipman said. At the same time, “Russia wants to avoid any possibility that Ukraine will move toward normalcy and the Western orbit.”

To contact the reporters on this story: Ilya Arkhipov in St. Petersburg at iarkhipov@bloomberg.net; Daryna Krasnolutska in Kiev at dkrasnolutsk@bloomberg.net; Volodymyr Verbyany in Kiev at vverbyany1@bloomberg.net

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

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