Ukraine Truce Breaches Linger as Germany Sees Risk to Accord

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Ukraine Conflict
Armed pro-Russian rebels sit on top of an armoured personnel carrier as they take part in a military drill near the eastern Ukrainian city of Donetsk on April 10, 2015. Photographer: Dimitar Dilkoff/AFP/Getty Images

Fighting in Ukraine’s easternmost regions claimed the most lives among government troops in at least two months, undermining a February truce after Germany warned that the peace process was at risk.

Six soldiers were killed and 12 wounded in the past 24 hours as pro-Russian rebels continued “provocations,” military spokesman Andriy Lysenko said in Kiev. He accused the insurgents of using weapons that were supposed to be pulled back from the front line as part of the cease-fire accord signed in the Belarusian capital, Minsk. The rebels countered by saying Ukrainian army was readying an offensive near the city of Donetsk.

“Rebels seek to expand their territory to ensure long-term sustainability of their rule and the government tries to prevent it,” Otilia Dhand, an analyst at political-risk advisory Teneo Intelligence, said by e-mail Tuesday. “Lack of prospect for political settlement disincentivizes weapons withdrawal in expectation of further clashes. Frozen conflict remains the most likely scenario.”

Clashes escalated this week as diplomats sought to push forward the peace process and end the violence that has killed more than 6,000 people. Ukraine and its allies in the U.S. and the European Union accuse Russia of supplying the insurgents with weapons, cash and fighters. Leaders in Moscow deny involvement in the conflict that has brought relations between Russia and the U.S. to the lowest since the end of the Cold War.

Debt Restructuring

Apart from trying to suppress the insurgency, Ukraine is struggling to repair its economy that the government and the International Monetary Fund forecast will shrink 5.5 percent this year.

The cabinet is focusing on restructuring talks with creditors as it seeks to save about $15 billion dollars on debt payments to complement an IMF-led rescue package.

State bond maturing in 2017 was little changed at 43.4 cents on the dollar as of 3:03 p.m. in Kiev, compared with a record low of 37.8 cents reached on March 25.

The government may delay a cut in its debt principal to accelerate the restructuring negotiations, Nicolaie Alexandru, a JPMorgan Chase & Co. analyst, said in an e-mail on Tuesday.

All parties in the conflict need to end hostilities and withdraw heavy weapons, foreign ministers from Germany, France, Ukraine and Russia said in a joint statement after a meeting in Berlin late Monday, the fifth such session since the crisis escalated last year into fighting between government forces and pro-Russian rebels. They cited agreement on the need to speed up work on a political settlement alongside efforts to implement the cease-fire.

‘No Alternative’

“There’s no alternative to trying to continue with the Minsk agreement,” Germany’s Frank-Walter Steinmeier told reporters after the meeting that lasted more than four hours. “If this process stalls, then there is a threat that the implementation of the Minsk accord could derail. Nobody here wants that.”

Rebels violated the cease-fire 26 times overnight, using mortars, tanks, anti-aircraft guns and small arms to attack Ukrainian positions, mostly in the Donetsk region, military spokesman Serhiy Danylenko said earlier on Tuesday.

Alexander Zakharchenko, leader of the self-proclaimed Donetsk People’s Republic, said the government forces were re-deploying military vehicles closer to Donetsk in what the rebels considered to be preparations for an offensive in the area, the separatist-run DAN news service reported.

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