Biden Pledges Support for Ukraine as Deal With Russia Frays (1)

Vice President Joe Biden expressed
U.S. support for Ukraine during a solidarity visit to Kyiv, as
an agreement with Russia to ease tensions in the former Soviet
republic’s east showed signs of collapse.

With the April 17 accord fraying, U.S. Secretary of State
John Kerry warned Russian Foreign Minister Sergei Lavrov
yesterday “there will be consequences” if Russia doesn’t act
“over the next pivotal days” to restrain separatist activists
in Ukraine, spokeswoman Jen Psaki said in Washington. Lavrov
called on the U.S. to hold Ukraine’s government accountable for
not reining in what Russia portrays as right-wing militias.

Pro-Russian forces who seized buildings in eastern
Ukrainian cities have said they are not bound by the deal
reached by Ukraine, the European Union, the U.S. and Russia in
Geneva. The government in Kyiv accuses Russian President
Vladimir Putin of stirring unrest and exploiting the situation
to possibly prepare for an invasion, while the U.S. underlined
its support for Ukrainian politicians.

“The opportunity to generate a united Ukraine, getting it
right, is within your grasp,” Biden told a group of prominent
Ukrainians including confectionery magnate Petro Poroshenko,
former Prime Minister Yulia Tymoshenko and former world boxing
champion Vitali Klitschko. “And we want to be your partner and
friend in the project. We want to assist.”

Energy Secure

The U.S. offered Ukraine $50 million in aid to help it
pursue political and economic changes to stabilize its
government, Biden’s office said in a statement. That includes
$11.4 million for a May 25 presidential election that Biden said
“may be the most important election” to date for the country
of 45 million people on the Black Sea.

The U.S. will also help Ukraine on issues ranging from non-lethal military aid to the fight against corruption, Biden’s
office said in a statement.

After meeting Ukrainian President Oleksandr Turchynov and
Prime Minister Arseniy Yatsenyuk, Biden said Barack Obama’s
administration was also there to help on energy issues “so that
Russia can no longer use energy as a political weapon against
Ukraine and Europe.”

“There’s no reason why you cannot be energy secure,” he
said. “It’s collectively within your power.”

Russia will move to a prepayment system in gas supplies to
Ukraine unless the country resumes payments, Russian PM Dmitry Medvedev says in State Duma. The move, which would cut off gas
from Ukraine unless it resumed payments to Russia, would “be a
tough but fair decision,” Medvedev said in Russia’s State Duma.

‘Terrorist Units’

The crisis has hit both Russian and Ukrainian markets.
Russia’s Micex Index (INDEXCF) index fell 0.7 percent at 11:59 a.m. in
Moscow, taking the year-to-date decline to 11 percent. The
Russian currency was 0.3 percent weaker against the central
bank’s target basket of dollars and euros to 41.8224.

Separatists abducted the chief of police in the eastern
city of Kramatorsk and took him for “talks” to Slovyansk,
where pro-Russian activists have seized government buildings and
set up road blocks, Ihor Diomin, the spokesman for Donetsk
regional police, told Ukrainian private TV 5 channel today.

“Unfortunately, Russia and its terrorist units, which are
operating in Ukraine, are not going to implement the Geneva
agreements,” Turchynov said during the meeting with Biden,
according to a statement on the parliament website. “Of course,
Ukrainian authorities will act adequately.”

Additional Sanctions

In Poland, Prime Minister Donald Tusk called for a Europe-wide energy union, including a single body charged with
purchasing gas supplies, as a means of breaking Russia’s
“stranglehold” over the region’s market. Sweden proposed
measures to buy more fighter jets and submarines amid an
increase in geopolitical tensions.

“The profile of the measures is very focused on the Baltic
Sea,” Deputy Prime Minister Jan Bjoerklund said at a news
conference. Russia “has acted ruthlessly and aggressively” in
Ukraine and “those motives could also be used in the Baltic
states.”

Widening of the EU blacklist of visa bans and asset freezes
“depends as much as anything else on the situation on the
ground,” EU spokesman Michael Mann said today.

While the U.S. won’t unveil new sanctions while Biden is on
this trip,Obama’s government hasn’t seen progress on the
accord, said an administration official who briefed reporters on
condition of anonymity. A decision will be made in a matter of
days.

Putin’s ‘Cronies’

The U.S. has threatened further penalties against Russian
interests, including measures targeting the banking and energy
industries, unless progress is made in easing the crisis sparked
by Russia’s annexation of Crimea last month.

The U.S. and EU have called for Russia to withdraw about
40,000 troops from its border with Ukraine, while officials from
NATO and the government in Kyiv say masked pro-Russian activists
in eastern Ukraine are under the influence of Putin, who said
his troops supported the takeover of Crimea last month.

“I know that the men and women who hide behind masks in
unmarked uniforms, they do not speak for you,” Biden said in
Kyiv. “The United States supports all Ukrainians.”

U.S. Ambassador to Ukraine Geoffrey Pyatt said it will take
“days, not weeks” to determine whether Russia is complying
with the Geneva agreement.

Road Killings

Russia’s Lavrov called on the U.S. to avoid threats of
sanctions, while brushing off accusations that Russian forces
are involved in attacks in Ukraine. Russia is receiving
increasing requests to intervene in eastern Ukraine to protect
the Russian-speaking population, he said yesterday in Moscow.

At least three “activists” were shot dead at a roadblock
in Slovyansk over the weekend, Ukraine’s Interior Ministry said.
The clash wounded three others, the ministry said.

Vyacheslav Ponomaryov, who leads pro-Russian forces in
Slovyansk in eastern Ukraine, told reporters yesterday that
“the things that were agreed on in Geneva were agreed on
without us taking part.”

“We don’t have any relation to the things that were said
in Geneva,” Ponomaryov said. “We are not aggressors, we are on
our own land.”

To contact the reporters on this story:
Julianna Goldman in Kyiv at
jgoldman6@bloomberg.net;
Henry Meyer in Moscow at
hmeyer4@bloomberg.net;
Daryna Krasnolutska in Kyiv at
dkrasnolutsk@bloomberg.net

To contact the editors responsible for this story:
James M. Gomez at
jagomez@bloomberg.net;
John Walcott at
jwalcott9@bloomberg.net;
Balazs Penz at
bpenz@bloomberg.net;
Steven Komarow at
skomarow1@bloomberg.net
Michael Winfrey, Andrew Langley