Ukraine Declares Cease-Fire After U.S. Expands Sanctions

KIEV, Ukraine -- Ukraine announced a week-long unilateral cease-fire in its easternmost regions after the U.S. imposed sanctions on people linked to the insurgency and accused Russia of providing new military aid to separatists.

Armed pro-Russian separatists stand guard in Seversk, located near the town of Krasny Liman, Donetsk region. Ukrainian troops and pro-Russian separatists were locked in fierce fighting in the east of Ukraine after rebels rejected a call to lay down their arms in line with a peace plan proposed by President Petro Poroshenko, government forces said.

Ukraine called on all fighters to lay down arms, halting the government offensive against rebels until June 27, the Interior Ministry in Kiev said on its website, citing President Petro Poroshenko.

While the Kremlin criticized the proposal, pro-Russian militants indicated they’d consider the plan.

The U.S. Treasury Department sanctioned seven individuals, including the acting governor of Sevastopol in Crimea and separatist leaders in the Luhansk and Donetsk regions, according to a statement issued today in Washington.

Further industry wide measures are being readied against companies in finance, defense and technology, a U.S. official said.

“The United States will continue to take action to hold accountable those persons engaged in efforts to destabilize Crimea and eastern Ukraine,” Undersecretary for Terrorism and Financial Intelligence David Cohen said in the statement.

“These individuals have all contributed to attempts to illegally undermine the legitimate government.”

Russia Targeted 

The U.S. is levying penalties for the first time since April 28, when it sanctioned people and companies linked to Russian President Vladimir Putin’s inner circle.

Russia risks further measures when European Union leaders meet next week unless it helps end the unrest to support an emerging peace plan, German Chancellor Angela Merkel said today.

Poroshenko’s proposal is more akin to an ultimatum than a peace offer to insurgents and shows no willingness to negotiate with the opposing side, the Kremlin was cited as saying by the Interfax news service.

Putin’s spokesman, Dmitry Peskov, didn’t respond to a request for comment when called by phone.

The separatists are willing to consider the plan, according to Andrei Purgin, a deputy premier of the self-declared Donetsk People’s Republic.

“If we see a true cease-fire, we may stop our actions as well,” he said by phone.

“But I think there will be no cease-fire. In practice these statements are only political.”

‘Days Ahead’ 

“The days ahead will be very decisive for what we can decide” at the summit on June 26-27, Merkel told reporters in Berlin.

“We expect Russia to respond in a positive and constructive way.”

While Germany wants to see a cease-fire, “there is planning” for other outcomes as well, she said.

Merkel’s comments reflect an effort by EU powers to gain leverage over Putin by using Poroshenko’s cease-fire as a trigger for expanded sanctions if Putin doesn’t cooperate.

The U.S. and the EU have imposed sanctions on people and companies close to Putin, while threatening the government in Moscow with unspecified economic sanctions as pro-Russian separatists clash with Ukrainian forces.

EU leaders “will review where we stand” at the talks in Belgium, Merkel said.

U.S. companies are prohibited from doing business with individuals and entities on the sanctions list, and all assets of those designated that are within U.S. jurisdiction must be frozen, according to the Treasury.

New Buildup 

Russia has redeployed troops close to the Ukrainian border and sent tanks and other equipment to separatists in recent days, the American official said today in Washington.

Russian special forces are maintaining positions at border sites to support Ukrainian separatists and more troops are headed to the region, the official said.

As a result, the U.S. and the EU are intensifying discussions about imposing sanctions on Russia’s finance, defense and high-tech industries, said the official, who spoke with reporters on condition of anonymity to discuss diplomatic matters.

Group of Seven leaders refrained on June 4 from imposing additional sanctions on Russia, instead pushing for diplomatic efforts to resolve the crisis.

Leaders including Merkel, U.K. Prime Minister David Cameron and President Barack Obama warned then that “we stand ready to intensify targeted sanctions and to implement significant additional restrictive measures” in the absence of a peaceful settlement.

Clashes Erupt 

Fighting continued to flare this week between Ukrainian troops and insurgents, casting a pall over government efforts to declare a cease-fire.

Separatists with armored vehicles attacked a tank base in the Donetsk region city of Artemivsk overnight, with explosions heard and one soldier wounded.

Clashes yesterday left seven servicemen dead and 30 wounded, with almost 300 militants killed in a firefight near Slavyansk in the Donetsk region, according to the Defense Ministry.

Clashes erupted yesterday near the villages of Yampil and Zakotne close to Slavyansk, according to the Defense Ministry. Government forces backed by planes eliminated checkpoints set up by insurgents.

In Kramatorsk, rebels attacked Ukrainian forces, Seleznyov said.

Poroshenko met political and business leaders from conflict-wracked regions yesterday to muster support for his peace efforts.

He presented his 14-point peace plan during closed-door meetings.

He also discussed it last night by phone with Putin.

Poroshenko’s Offer 

A key part of the plan is the cease-fire offer during which insurgents will be given a limited window to lay down their arms and those who haven’t committed any serious crimes will be offered amnesty and safe passage out of the country.

Pro-Russian separatists have indicated they’d reject a cease-fire.

Before the cease-fire can be implemented, Ukraine must reassert control over its border with Russia, across which fighters have crossed, according to Poroshenko.

Defense Minister Mykhaylo Koval told lawmakers today that the border is secured. 

Russia is increasing security because it’s concerned about the situation on the border, though it’s not building up troop levels, Yuri Ushakov, Putin’s foreign-policy aide, said today.

Poroshenko’s peace plan also includes decentralization of power through constitutional amendments, regional elections and leaving 25 percent of collected income tax at the local level.

Source: Bloomberg