Kerry Warns Putin on Ukraine Deal as Russia Begins Troops Drills
U.S. Secretary of State John Kerry
warned that President Vladimir Putin is running out of time to
comply with an accord to ease tensions in Ukraine, as Russian
forces began new military exercises on the countries’ border.
Kerry accused Russia of using the “barrel of a gun and the
force of a mob” to impose its will on Ukraine. He said Russia
has failed to live up to commitments it made a week ago in
Geneva to de-escalate the situation and said continued lack of
cooperation would bring consequences. President Barack Obama
plans to call European leaders to discuss sanctions today.
“If Russia continues in this direction, it will not just
be a grave mistake, it will be an expensive mistake,” Kerry
said at the State Department in Washington yesterday.
Kerry spoke hours after Putin warned Ukraine against
continuing an anti-separatist offensive that killed five rebels.
The accord on disarming rebels signed April 17 by Ukraine,
Russia, the European Union and the U.S. is on the brink of
collapse. As the conflict escalated, Standard Poor’s cut
Russia’s credit rating, while the country’s third-largest
lender, OAO Gazprombank, was preparing for possible sanctions,
according to two people with knowledge of the deliberations.
‘Significant Outflows’
SP lowered Russia’s sovereign rating to BBB-, the lowest
investment grade, from BBB.
“The tense geopolitical situation between Russia and
Ukraine could see additional significant outflows of both
foreign and domestic capital from the Russian economy and hence
further undermine already weakening growth prospects,” it said
in a statement today.
Russia’s Micex Index (INDEXCF) fell for a fifth day following the SP
announcement, declining 1.5 percent at 10:21 a.m. in Moscow and
taking its decline since Putin’s intervention in Crimea started
March 1 to 11.3 percent.
Gazprombank is a potential target for sanctions, according
to a U.S. official who asked not to be identified because the
information is confidential. Another Russian-state controlled
financial institution, development lender Vnesheconombank, is
taking precautionary measures against possible sanctions,
according to one person familiar with talks at that bank.
The U.S. joined the EU in imposing sanctions after Russia
annexed Crimea from Ukraine last month. Obama, who is visiting
Asia, plans to discuss further moves with EU heads of government
by phone today, according to a U.S. administration official who
spoke on condition of anonymity ahead of an official statement.
Corbat Withdraws
Meanwhile, Citigroup Inc. Chief Executive Officer Michael Corbat withdrew from an economic forum that Putin is hosting
next month. Other bank executives will be sent to the St.
Petersburg International Economic Forum in Corbat’s place, New
York-based Citigroup said yesterday in an e-mailed statement.
In Ukraine yesterday, Interior Ministry and army troops
destroyed three road blocks as they fought pro-Russian
separatists in the Donetsk region city of Slovyansk, the
ministry said. Russia’s latest military maneuvers are a response
to events in eastern Ukraine and involve warplanes near the
border, Defense Minister Sergei Shoigu said, according to the
Interfax news service.
“If it’s true that the current regime in Kyiv sent the
army against citizens inside its country, then it is a very
serious crime against its own nation,” Putin said yesterday in
St. Petersburg.
Peacekeeper Call
Russian Senator Valeri Shnyakin, a member of the defense
and security committee, called on the government to send
peacekeepers to southeast Ukraine and said lawmakers were
working on a proposal to be voted on April 29. In an interview
with the newspaper Izvestia, he said they may submit their plan
sooner “if the situation deteriorates further.”
While Kerry said Russia has “refused to take a single
concrete step” toward implementing the Geneva agreement, his
failure to announce specific measures in response reflected the
limited U.S. ability to influence Putin’s actions in a region
that’s long been under Russia’s economic and political sway.
“This is not much of a response,” Angela Stent, director
of the Center for Eurasian, Russian and East European Studies at
Georgetown University in Washington, said in a telephone
interview. “There seems to be no strategy here.”
Putin’s ‘Fantasy’
Kerry reiterated U.S. contentions that Russia is using its
special forces and intelligence service, saying evidence
contradicts Putin’s “fantasy” about who’s responsible for the
violence in eastern Ukraine ahead of presidential elections
planned for May 25.
“Our intelligence community tells me that Russia’s
intelligence and military intelligence services and special
operators are playing an active role in destabilizing eastern
Ukraine with personnel, weapons, money, operational planning and
coordination,” Kerry said. “This is a full-throated effort to
actively sabotage the democratic process through gross external
intimidation.”
“Russia has switched from public threats to concentrating
its forces on our eastern border,” acting Ukrainian president
Oleksandr Turchynov said yesterday. “There’s an increasing
number of troops, who’ve been threatening our country for some
time.”
To contact the reporters on this story:
Terry Atlas in Washington at
tatlas@bloomberg.net;
Daryna Krasnolutska in Kyiv at
dkrasnolutsk@bloomberg.net;
Ilya Arkhipov in Moscow at
iarkhipov@bloomberg.net
To contact the editors responsible for this story:
Balazs Penz at
bpenz@bloomberg.net;
John Walcott at
jwalcott9@bloomberg.net
Eddie Buckle, Paul Abelsky