Ukraine Leader Says Putin Seeks to Restore Soviet Union

Ukrainian Prime Minister Arseniy Yatsenyuk said Russian President Vladimir Putin seeks to restore the Soviet Union and take the entire Ukraine, while Kiev’s central bank chief predicted her country’s economy may shrink as much as 10 percent this year.

The U.S. expanded sanctions against Russia to include the country’s largest bank, OAO Sberbank, because of the fighting in eastern Ukraine. The European Union added 15 companies, including Gazprom Neft, OAO Rosneft and Transneft, and 24 people to its own list of those affected by its restrictions.

Russia is locked in a standoff with its former Cold War adversaries over the armed conflict that has claimed more than 3,000 lives. Putin has denied supporting pro-Russian rebels in war-torn eastern Ukraine, where a fragile cease-fire has been largely holding with continued fighting in some areas.

“Putin cannot cope with the idea that Ukraine will be part of the European family,” Yatsenyuk said at a conference in Kiev yesterday. “He wants to restore the Soviet Union.”

“His goal is to take the entire Ukraine,” Yatsenyuk told the Yalta European Strategy Annual Meeting. “Russia is a threat to the global order and to the security of the whole of Europe.”

‘Drastic Deterioration’

Central bank chief Valeriya Gontareva said the official support program from the International Monetary Fund envisages a 6.5 percent shrinkage in Ukraine’s gross domestic product this year. She said the “really drastic deterioration of economic conditions” will cause a revision showing an even larger economic contraction.

“I suppose that it will be minus 9 percent, or even 10 percent,” she told reporters on the sidelines of the conference. The Washington-based IMF has approved a $17 billion bailout loan to help Ukraine stay afloat.

She predicted that trade with Russia will drop 35 percent this year.

A second Russian convoy of 220 vehicles entered Ukraine, the Organization for Security and Cooperation in Europe said in an e-mailed statement yesterday. All vehicles crossed into Ukraine without being inspected by Ukrainian border guards, customs officers or the International Committee of the Red Cross, according to the OSCE. The OSCE cited Russian officials as saying the convoy is carrying only food products.

OSCE Monitors

Ukrainian President Petro Poroshenko said on his website he had reached agreement for more OSCE inspectors to monitor the cease-fire in eastern Ukraine.

The Donetsk airport was shelled from east and south, in violation of the truce that took effect on Sept. 5, Ukraine military spokesman Andriy Lysenko told reporters in Kiev yesterday. The military said on its Facebook page the rebels’ attempt to storm the airport failed.

In addition, militants of the self-proclaimed Donetsk People’s Republic were using guns and mortar to try to break through Ukrainian troop lines near Panteleymonivka north of Donetsk, the Ukrainian military press center said in a statement on its Facebook page.

Three Ukrainian border soldiers were wounded near the southern city of Mariupol when they were returning from patrol duty in a car and were shot at by guns and mortars, the Ukrainian state border service said yesterday.

Russian Foreign Minister Sergei Lavrov said his country wants Ukraine to be a “neutral, friendly” neighbor, according to the transcript of a television interview released by the ministry in Moscow.

Maximum Bargaining

“The U.S. wants to use the current situation to cut off Europe from Russia economically and give itself the maximum bargaining position in the negotiations about the creation of a trans-Atlantic trade and investment partnership,” Lavrov said.

Putin, talking to reporters in the Tajik capital of Dushanbe, said Russia has no plans to “close itself off” and will hold off on retaliation for the sanctions for now.

“We are ready to listen to Russian concerns but we will not abdicate our principles and values,” European Commission President Jose Barroso said in Kiev on Sept. 12. “We need to send a clear signal to Russia that its behavior has costs.”

President Barack Obama said the U.S. sanctions can be rolled back if Russia “fully implements its commitments” to seek peace in eastern Ukraine.

The expanded U.S. sanctions also include Russian energy companies as well as five state-owned defense and technology companies.

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