Ukraine Cites 15000 Russian Troops and Rebels Amid Putin’s ‘Take Kyiv’ Remark

President Barack Obama arrived in eastern Europe to reassure NATO members of their security as Russia stepped up its criticism of the U.S. over Ukraine.

Russian President Vladimir Putin spoke with his Ukrainian counterpart Petro Poroshenko by phone on how to stop the five-month bloodshed in Ukraine and the two leaders had a “significant degree” of agreement on ways to exit the crisis, RIA Novosti reported today, citing Kremlin spokesman Dmitry Peskov.

Ukraine, the U.S. and Europe accuse Russia of dispatching soldiers and backing pro-Russian rebels in a conflict the United Nations estimates has cost at least 2,600 lives. Russia, which is facing further sanctions as early as this week over the unrest, has repeatedly denied involvement. Obama arrived in Tallinn, Estonia, today before heading to this week’s North Atlantic Treaty Organization summit in the U.K.

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“Unfortunately, the rise of the ‘party of war’ in Ukraine is being actively encouraged by Washington and some European capitals and more and more frequently from NATO headquarters in Brussels,” Russian Foreign Minister Sergei Lavrov told reporters yesterday in Moscow.

Stay Afloat

The Washington-based International Monetary Fund approved a $17 billion bailout loan four months ago to help Ukraine stay afloat.

“Should the conflict not begin to subside soon, the program strategy would need to be reconsidered and viability would depend critically on the availability of significantly larger assistance from Ukraine’s international partners,” IMF staff members wrote in a report released yesterday.

Standoff in Ukraine

The ruble gained against dollar 0.4 percent today, snapping six days of declines, at 10:18 a.m. in Moscow. The yield on 10-year local-currency bonds was steady at 9.84 percent, the highest since Aug. 8. The Micex index advanced 0.4 percent to 1,405.59.

Putin is in the process of a three-step dismantling of Ukraine, Jan Krzysztof Bielecki, chief economic adviser to Prime Minister Donald Tusk, said yesterday in a television interview.

Crimea Corridor

Bielecki said the first step was the annexation of Crimea in March followed by Russian military action in eastern Ukraine and the third step may be “carving out a land corridor to Crimea” through southeast Ukraine.

Fighting in eastern Ukraine has more than doubled the number of internally displaced people in the country to 260,000 on Sept. 1 from 117,000 in the first week of August, the United Nations High Commissioner for Refugees said in a website statement.

Ukrainian army forces blew up a Luhansk airport runway while they were retreating amid an advance by pro-Russian rebels, Ukrainian National Security Council spokesman Andriy Lysenko told reporters in Kyiv.

Lavrov, the Russian foreign minister, said any move by Ukraine to join NATO would upset peace talks that are due to continue Sept. 5 in Minsk, Belarus. He was responding to comments by Ukrainian Prime Minister Arseniy Yatsenyuk last week that lawmakers should vote on abandoning the nation’s non-aligned status to join the alliance.

NATO Meeting

Obama is scheduled to meet the leaders of Estonia, Latvia and Lithuania, three former Soviet republics that are now part of the military alliance. He’ll then head on to Cardiff, Wales, where NATO is gathering amid the Ukrainian conflict and an escalating threat from Islamic extremists in Iraq and Syria.

In Brussels, the European Commission pledged to propose a second round of economic penalties within the week to punish Russia over Ukraine. The bloc stayed united on previous measures against Russia and “will do so again with a new wave of sanctions,” EU President Herman Van Rompuy said yesterday.

German Chancellor Angela Merkel hinted that the EU is working on tightening existing sanctions on Russia.

European Commission proposals for possible further sanctions on Russia will be “in all those areas that we’ve already had” in previous sanctions decisions, Merkel said yesterday. She did not provide details.

Regular Russian troops are replacing insurgent forces, with about 1,600 soldiers advancing into the region, according to the government in Kyiv.

To contact the reporters on this story: Daryna Krasnolutska in Kyiv at dkrasnolutsk@bloomberg.net; Ott Ummelas in Tallinn at oummelas@bloomberg.net

To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net Andrea Dudik, Scott Rose

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