U.S. Blames Outsiders as Ukraine Rebel Attack Kills 14

Pro-Russian rebels downed a military helicopter in eastern Ukraine, killing a general and 13 troops, as a spokesman for U.S. President Barack Obama blamed “outside” assistance in providing weapons.

Insurgents used a shoulder-fired missile to shoot down an Mi-8 transport chopper amid heavy fighting in Slovyansk, 100 miles (160 kilometers) from the Russian border, Speaker Oleksandr Turchynov told Ukraine’s parliament yesterday.

“We are concerned that this indicates separatists continue to have access to advanced weaponry and other assistance from the outside,” White House spokesman Jay Carney told reporters in Washington.

Ukrainian forces used aviation and artillery assets to “destroy” the rebel unit that downed the helicopter, the Interior Ministry’s National Guard unit said in a statement. The surge in fighting produced a new round of finger-pointing between the U.S. and Russia.

Russia demanded that Ukraine halt its “fratricidal war” and withdraw troops from the mainly Russian-speaking region of the east after separatists, in other fighting, suffered the heaviest casualties of their campaign. The U.S. and other countries should use their influence to stop Ukraine from “sliding into a national catastrophe,” the Foreign Ministry in Moscow said on its website.

Sergei Glazyev, an economic adviser to Russian President Vladimir Putin, said the U.S. controls the new Ukrainian government and is seeking to use the conflict to start a “third world war.”

Kerry’s Call

U.S. Secretary of State John Kerry, in a phone call with Russian Foreign Minister Sergei Lavrov, raised concerns about foreign fighters crossing the border from Russia, particularly reports of the involvement of Chechens, according to the State Department. Kerry pressed Lavrov to “end all support for separatists, denounce their actions, and call on them to lay down their arms,” department spokeswoman Jen Psaki said.

Questions also were raised anew about Russia’s pledge to pull back its troops from Ukraine’s borders.

The Russian RBC news service reported that the troop withdrawal had been halted, and that a significant amount of equipment remains near border. The service cited an unidentified person in the army’s General Staff.

Dmitry Peskov, Putin’s spokesman, declined to comment when reached by phone late yesterday.

Withdrawal Halt

Earlier yesterday, the press service of Ukraine’s border guards said Russia had reduced the number of soldiers stationed on its border with Ukraine to about 20,000 from about 50,000. The Russian troops were leaving behind military assets, suggesting they may return, the service said, without being more specific.

A “majority of the Russian forces” have been withdrawn from the Ukrainian border, Rear Admiral John Kirby, a Pentagon spokesman, told reporters traveling to Singapore with U.S. Defense Secretary Chuck Hagel. About seven battalions of Russian forces, or “several thousands” of troops, remain, Kirby said.

Ukrainian President-elect Petro Poroshenko has vowed to wipe out the insurgents and re-establish order after winning office on May 25 with 54.7 percent of the vote. He’s faced with trying to stabilize an economy that the European Bank for Reconstruction and Development expects will shrink 7 percent this year while reclaiming swaths of territory captured by pro-Russian militias.

Putin’s Power

“Russia’s goal was and is to keep Ukraine so unstable that we accept everything that the Russians want,” Poroshenko said in an interview with German paper Bild. “I have no doubt that Putin can end the fighting with his direct influence.”

Obama plans to meet with Poroshenko during a trip to Europe next week, the U.S. leader told NPR News in an interview. Obama told the radio network he expects to discuss Russia’s seizure of Crimea with Poroshenko during their meeting.

Putin flew to Astana, the capital of Kazakhstan, to sign a treaty yesterday with his counterparts from Kazakhstan and Belarus creating a trading bloc of more than 170 million people to challenge the U.S. and the European Union. Two other former Soviet states, Kyrgyzstan and Armenia, plan to join the Eurasian Economic Union this year.

Russia and Ukraine remained at loggerheads over payments for natural gas as a compromise proposal from the EU to try to prevent a disruption in fuel supply to the continent as soon as next month failed to elicit support.

EU Talks

Talks between the two sides and European officials today in Berlin aren’t expected to lead to progress, Ukrainian First Deputy Energy Minister Yuri Zyukov told reporters yesterday in Kiev.

Russia is unfortunately now an “enemy,” Zyukov said in the capital. It “speaks in ultimatums,” he said, and the only solution is likely to be arbitration in court.

The battle over billions of dollars of payments for Russian gas from its former Soviet ally threatens deliveries of the fuel bound for the EU, about half of which transits through Ukraine. Similar rows over prices and debt between the two sides held up European supplies during freezing weather in 2006 and 2009.

Under the EU plan announced May 26 after earlier trilateral talks, Ukraine was to pay $2 billion of its gas debt by May 30 and $500 million more by June 7. When OAO Gazprom got the first tranche, Russia’s gas exporter would then maintain deliveries without demanding payment in advance and begin talks on prices.

Before it's here, it's on the Bloomberg Terminal.