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UPDATE 3-Ukraine’s Poroshenko says rebel elections threaten peace deal …

(Adds comment from rebel official, background)

By Alessandra Prentice

KYIV, Sept 16 (Reuters) – Ukrainian President Petro
Poroshenko signed a decree on Wednesday to extend sanctions on
over 400 individuals and 90 legal entities in response to a
decision by separatist rebels to set a date for what Kyiv sees
as “illegal elections”.

Violence is at its lowest ebb since the Minsk ceasefire
agreement was signed seven months ago, but the latest
altercation highlights how far the two sides are from finding
common ground and a diplomatic solution to the crisis.

Under terms of the much-violated peace deal, local elections
were meant to be held in the separatist regions in tandem with
the rest of the country, but Kyiv has said they cannot take
place due to security and monitoring concerns.

The separatists, who have unilaterally set up their own
mini-republics, have instead scheduled their own ballot, the
results of which Kyiv is unlikely to recognise.

Rebel leader Alexander Zakharchenko signed a decree to hold
the elections starting on Oct. 18, separatist press service DAN
reported.

Ukrainian authorities will hold their local elections in
most regions on Oct. 25, but will not conduct voting in some
regions bordering separatist territory or in the rebel regions.

Poroshenko swiftly denounced the rebels’ move in a meeting
with foreign ambassadors.

“The leaders of the so-called DNR (Donetsk People’s
Republic) and LNR (Luhansk People’s Republic) have announced a
decision, which they have taken in coordination with the Russian
Federation, to hold fake illegal elections, which contradict the
Minsk agreements,” he said.

“This risky and irresponsible decision requires our firm and
coordinated reaction to the threat created to the Minsk
agreements, such as prolongation and widening of sanctions.”

The so-called LNR has previously said it would hold
elections on Nov. 2.

Poroshenko later signed a decree to apply or extend
restrictive measures on people and entities “of Russia and other
countries related to the annexation of Crimea and aggression in
Donbass (east Ukraine),” according to a statement on the
presidential website.

The list of sanctioned individuals posted on the
presidential website mentions members of Russia’s parliament and
senior rebel figures.

Companies affected include Russian airline Aeroflot
, security company Kaspersky Lab and banks Gazprombank
and Bank of Moscow.

The list includes a number of journalists, including three
BBC employees based in Moscow and reporters for Germany’s Die
Zeit newspaper and several Spanish outlets, as well as some
Israeli correspondents.

Senior rebel official Denis Pushilin, who is the
separatists’ envoy to the Minsk peace process and also was named
on the published sanctions list, condemned the action by
Ukrainian authorities.

“Sanctions essentially undermine the foundations of the
Minsk agreements,” DAN quoted him as saying.

Fighting has frequently punctured the ceasefire over the
past seven months, but violence has died down noticeably in the
past week with the Ukrainian military reporting not one
violation from the rebel side on Wednesday.

Close to 8,000 people have been killed since fighting
erupted in April last year. Ukraine and NATO have accused Russia
of supporting rebels with troops and weapons, a charge the
Kremlin has denied.

(Additional reporting by Jack Stubbs in Moscow; Editing by
Alison Williams, Toni Reinhold)