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Ukraine Ends Truce With Rebels as Peace Efforts Falter

Ukrainian President Petro Poroshenko
Ukrainian President Petro Poroshenko said on his website today, “A unique chance for a peace plan failed because of the criminal acts of militants. We will attack and we will free our land. The protection of Ukraine’s territorial integrity and the safety of its people require not only defense, but also attack.” Photographer: Georges Gobet/AFP via Getty Images

July 1 (Bloomberg) -- Ukrainian President Petro Poroshenko ended a cease-fire with pro-Russian rebels and vowed to retake the country’s easternmost regions after peace efforts faltered.

Poroshenko refused to extend the truce he called on June 20 a second time, citing more than 100 violations by the separatists. Rebels killed 27 Ukrainian soldiers and wounded 69 during the cease-fire, the Foreign Ministry said yesterday.

“A unique chance for a peace plan failed because of the criminal acts of militants,” Poroshenko said in a statement on his website today. “We will attack and we will free our land. The protection of Ukraine’s territorial integrity and the safety of its people require not only defense, but also attack.”

The end of the cease-fire imperils a peace plan Poroshenko created to defuse the crisis after taking office last month and marks a renewed potential for escalation with fighters that Ukraine and its U.S. and European Union allies say are being supported by Russian President Vladimir Putin’s government.

Poroshenko spoke with Putin, German Chancellor Angela Merkel and French President Francois Hollande by phone yesterday, the second such call in as many days seeking a solution to the deepest rift in Russia’s relations with the U.S. and the EU since the Cold War.

“This will be a key test for the Ukrainian armed forces, and the first real test of the Poroshenko presidency,” Timothy Ash, an emerging-market economist at Standard Bank Plc in London, said by e-mail. “Suffice to say that this crisis is now moving to a new and still very serious, high-risk phase.”

Putin Meeting

Putin will discuss the “priority tasks” of Russian diplomacy such as how to maintain global and regional stability and advance Russian interests at a meeting with the country’s ambassadors today, RIA Novosti reported, citing the Kremlin.

Putin declared his readiness to allow Ukrainian border guards onto Russian soil to hold joint patrols in areas where separatists have seized three frontier posts, German government spokesman Steffen Seibert said. The president also agreed to extend a mission on the Russian side of the border by observers from the Vienna-based Organization for Security and Cooperation in Europe, according to the German statement.

“They agreed that negotiations should be restarted as soon as possible between the contact group consisting of representatives of Ukraine, Russia and the OSCE and representatives of the separatists,” Seibert said in an e-mailed statement. “The primary aim should be agreement on a bilateral cease-fire.”

‘Positive, Symbolic’

The Russian measures were intended to counter Ukrainian concerns that insurgent fighters, supplies and equipment are being brought across the border and help lead to a prolongation of the cease-fire, Russian Foreign Minister Sergei Lavrov said.

At the same time, Russia said it may revise a free-trade regime with Ukraine by raising import duties without breaking World Trade Organization regulations, news service Interfax reported today, citing Deputy Foreign Minister Vasily Nebenzya.

That announcement follows Poroshenko’s signing last week of a free-trade pact with the 28-member EU to bolster solidarity with the richer nations to Ukraine’s west. The agreement undermines Putin’s plan to create a free-trade bloc among former Soviet states to rival the EU, and the Russian leader has said Ukraine may face consequences for signing it.

Potential Sanctions

For their part, the U.S. is preparing sanctions against Russia on technology aimed at exploiting and producing oil and gas products, a major part of that country’s economy. The EU also threatened Russia with deeper sanctions last week if it didn’t rein in the rebels in the mainly Russian-speaking Donetsk and Luhansk regions by yesterday. Statements from Germany and Hollande’s office yesterday made no mention of possible punitive measures.

Poroshenko reiterated an offer to amnesty rebels who lay down their weapons and said his peace plan remains in force, including a call for disarmament and the free use of the Russian language. He said Russian lawmakers’ cancellation last week of authorization they’d given Putin to use force in Ukraine was “a positive, but symbolic move.”

Putin and Poroshenko also agreed to continue contacts on releasing prisoners and hostages taken by the two sides, according to the French statement.

There were 108 violations of the truce since June 20, the Foreign Ministry said yesterday in Kiev. One Ukrainian soldier was killed yesterday during attacks by militants and eight were wounded, a military spokesman, Oleksiy Dmytrashkovskyi, told Ukrainian Channel 5 television.

To contact the reporters on this story: Patrick Donahue in Berlin at pdonahue1@bloomberg.net; Kateryna Choursina in Kiev at kchoursina@bloomberg.net

To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net; James M. Gomez at jagomez@bloomberg.net Michael Winfrey, Pawel Kozlowski

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