Ukraine Slides Deeper Toward War As Russia Warns On Vote

MOSCOW, Russia -- Russia’s foreign minister said Ukraine is sliding into a civil war that could make it impossible to hold legitimate elections, as Ukrainian leaders and their international allies blamed Russia for the violence.

Russia's Sergei Lavrov

“When Ukrainians kill Ukrainians, I believe it’s as close to civil war as you can get,” Sergei Lavrov told Bloomberg Television yesterday in an interview in Moscow.

“In the east and south of Ukraine, there is a war, a real war, with heavy weaponry used, and if this is something that is conducive to free and fair elections, then I don’t understand something about freedom.”

The Kiev government and its U.S. and European Union allies blame Russia for the unrest in Ukraine’s easternmost regions.

Pro-Russian separatists there were excluded from national unity talks that began yesterday in the capital to ease tensions as a May 25 presidential vote looms.

U.S. and EU leaders say they’ll tighten sanctions on Russia if the ballot is disrupted.

Lavrov said it’s “ridiculous” to hold Russia responsible.

Rebels killed at least seven paratroopers near the city of Kramatorsk on May 13, the deadliest attack on Ukrainian forces since the secession campaign began after Russia annexed Crimea in March.

Geneva Proposal 

“Quite a number” of the rebel fighters have also been killed, Lavrov said, as the Kiev government sent troops into the eastern regions to reassert control.

Separatists in Luhansk and Donetsk, where unofficial ballots on breaking away from Kiev were held last weekend, have agreed to join forces to confront the central government.

At the roundtable talks in Kiev, Prime Minister Arseniy Yatsenyuk said ending the crisis requires an international conference in Geneva, which Ukraine, Russia, the EU and U.S. should attend.

He said the election of a president this month will help stabilize the situation.

Some of Ukraine’s richest people have weighed in with suggestions.

At the unity talks, Vadym Novinsky, a lawmaker and owner of LLC Smart Holding, said all of Ukraine’s parties and presidential candidates should commit to the country’s neutrality, “to calm down our eastern neighbor.”

Not ‘Fascist’ 

Billionaire Rinat Akhmetov said on his website that constitutional change to decentralize Ukraine is the “only proper way” out of the crisis, as alternatives such as secession for the eastern regions will lead to sanctions and economic damage. 

Another billionaire, Petro Poroshenko, is the frontrunner for Ukraine’s presidential vote.

Lavrov said Poroshenko isn’t a “fascist,” a term Russia applies for some forces in Ukraine’s interim government.

He said the emergence of a Ukrainian leader with broad support may help diplomacy because “it’s easier to have such an interlocutor than self-appointed people.”

Lavrov also said Russia has no intention of sending troops into eastern Ukraine.

Russian President Vladimir Putin last week promised to move soldiers back from the border.

Even though Ukraine and the U.S. say he hasn’t fulfilled the pledge, his more conciliatory tone has prompted a rally on Russian financial markets, which extended gains today.

The benchmark Micex (INDEXCF) Index of stocks rose for a seventh session, adding 0.6 percent, while the ruble gained 0.1 percent against the dollar.

Ukraine’s hryvnia, which has lost 31 percent in 2014, has weakened for three days. 

Bond Sale 

Ukraine’s government sold $1 billion of U.S.-backed bonds yesterday to shore up its finances.

It’s also seeking international arbitration in a natural gas dispute with Russia, asking a Stockholm court to help ensure its neighbor doesn’t cut off supplies as a payment deadline looms next month, Finance Minister Oleksandr Shlapak said yesterday. 

Ukraine’s economy may shrink 7 percent this year, the European Bank for Reconstruction and Development said yesterday.

The impact of the conflict, including sanctions imposed by the U.S. and EU, may push Russia into recession and cause growth across the region to “grind to a halt,” it said.

The U.S. and EU are backing Ukraine’s election plan.

Preparations for the vote are “on track” and Russia “ought to support that process instead of taking steps to undermine it,” White House spokesman Jay Carney said yesterday.

He described Lavrov’s warnings about the risk of civil war as “a convenient position to take when you’ve actively exacerbated and stoked tensions and instability.” 

Source: Bloomberg