Ukraine Truce Teeters as Merkel Warns on Russia Sanctions

Ukraine’s two-month-old truce is in peril amid new fighting as insurgents raised doubts about a cease-fire and the U.S. and Germany sounded warnings that Russia risked more sanctions over the conflict.

A move by Ukrainian President Petro Poroshenko to revoke the special status of the rebel-held areas will scuttle the truce struck in Minsk, the breakaway regions said in a joint statement today. German Chancellor Angela Merkel urged the European Union to consider more sanctions, while U.S. Secretary of State John Kerry warned “pressure will increase” if the Sept. 5 agreement isn’t implemented.

The standoff is coming to a head after the Nov. 2 elections held by separatists in the regions of Donetsk and Luhansk prompted condemnation from Ukraine and its allies in the U.S. and Europe for undermining peace efforts. Russian President Vladimir Putin today said Ukraine’s “civil war” isn’t subsiding as cities continue to come under shelling and the civilian death toll is rising.

Standoff in Ukraine

“Quite clearly, the de-escalation process has been overturned and we are now seeing escalation,” said Samuel Charap, a senior fellow for Russia and Eurasia at the International Institute for Strategic Studies in Washington D.C. “Tensions are rising.”

Conflicting Views

Russia says the ballots can pave the way to new talks, even as Ukraine accuses Putin’s government of massing troops and military vehicles on the border and says the rebels are attacking Ukrainian positions.

The votes amounted to “blatant violation” of the law, Kerry told reporters in Paris today. Merkel said the EU should consider expanding the list of Russian-linked individuals under sanctions to punish those responsible for “illegitimate” elections in eastern Ukraine.

Poroshenko said yesterday he’ll ask parliament to annul a law granting more autonomy to the eastern regions that was at the center of the cease-fire negotiated by Ukraine, the rebels, Russia and the Organization for Security and Cooperation in Europe. Ukraine says the truce has been broken almost every day since it was signed.

The Minsk agreement has to be revised, the separatists said in the statement.

No Deal

“The law on the special status and the law on amnesty agreed with the Donetsk People’s Republic and the Luhansk People’s Republic were an obligation for Kyiv,” they said. Canceling the laws will “in fact cancel the Minsk Protocol.”

They also said rebel forces are “meticulously” adhering to the cease-fire and supporting the peace process. That contrasts with statements from the government in Kyiv, whose Foreign Ministry said yesterday that more than 100 servicemen have been killed and 600 wounded in eastern Ukraine since the truce was signed.

“There is a significant likelihood of an intensification of fighting between Ukrainian and Russian and separatist forces in the next six months prior to the ‘freezing’ of the conflict,” Bath, U.K.-based security consultancy Maplecroft said in a report issued yesterday.

Rebels carried out 17 artillery attacks against government troops today, according to the Defense Ministry in Kyiv. Two teenagers were killed and three wounded when a shell struck near a school in Donetsk, the city council said.

‘Peaceful Means’

Ukraine will stick to the cease-fire and seek to solve the conflict “exclusively by peaceful means,” Poroshenko said yesterday, adding that Ukraine has set up new military units to protect the cities of Kharkiv, Dnipropetrovsk and Mariupol.

Two Ukrainian soldiers died and nine were wounded in the last 24 hours, military spokesman Andriy Lysenko said in Kyiv. Poroshenko ordered the army to bolster road blocks as rebels stepped up attacks on the main highway between Donetsk and Mariupol, he said.

The risk of an invasion is growing, particularly near the Sea of Azov port Mariupol, and Russia has sent agents and instructors to rebel-held areas, Markiyan Lubkivsky, an adviser to Ukrainian Security Service head Valentyn Nalyvaychenko, told RBK-Ukraine news service today.

Illegal, Illegitimate

EU foreign policy Chief Federica Mogherini condemned the separatist ballots yesterday as “illegal and illegitimate” and said they won’t be recognized. Mogherini said the 28-member bloc was continuing to evaluate sanctions it has imposed on Russian individuals, businesses and industries after Putin’s annexation of Crimea in March. EU foreign ministers are next set to meet on Nov. 17.

Speaking at a news conference in Berlin, Merkel called on all parties to “return to the Minsk plan and achieve a true cease-fire as quickly as possible.”

There’s “no possibility” of easing or lifting current sanctions, she said. The penalties can be “rolled back” if the Minsk agreement is implemented, according to Kerry.

“Based on these illegitimate elections, we should look again at the list of particular individuals who bear responsibility in eastern Ukraine,” Merkel said. “Beyond that, I think we should simply stick with what we have so far in terms of sanctions. We would certainly like to talk about possibly lifting them, but I don’t see such a situation.”

To contact the reporters on this story: Kateryna Choursina in Kyiv at kchoursina@bloomberg.net; Patrick Donahue in Berlin at pdonahue1@bloomberg.net; Gregory Viscusi in Paris at gviscusi@bloomberg.net

To contact the editors responsible for this story: James M. Gomez at jagomez@bloomberg.net; Alan Crawford at acrawford6@bloomberg.net Paul Abelsky, Tony Halpin