Leaders Start Two Days of Ukraine Diplomacy With Putin

(Bloomberg – bloomberg.com – James G. Neuger, Thomas Penny, Kateryna Choursina – June 5, 2014)

The U.S. and its allies embarked on two days of contacts with Russian leaders in a bid to resolve the crisis in Ukraine, giving the Kremlin another chance to cut support to pro-Moscow rebels seeking to break up the country.

U.K. Prime Minister David Cameron will meet Vladimir Putin in Paris this evening, before the Russian president has dinner with French President Francois Hollande. U.S. Secretary of State John Kerry also holds talks with Russian Foreign Minister Sergei Lavrov in Paris today.

The discussions, as the Russians join events in northern France to mark the 70th anniversary of the D-Day allied landings during World War II, come after Group of Seven leaders last night spared Russia more sanctions over Ukraine, while urging it to complete the pullback of its troops from the country’s border. Ukraine’s newly elected president, Petro Poroshenko, will be sworn in June 7, and the authorities in Kiev say they’re making headway in their armed operation against the separatists.

Cameron will be “urging President Putin and the Russian government to talk directly with the newly elected Ukrainian authorities,” the prime minister’s spokesman, Jean-Christophe Gray, told reporters in London. Poroshenko’s election was “a strong, clear expression of the will of the Ukrainian people. We want the Russian authorities to recognize that fact and will make that point to them very strongly.”

Russia’s benchmark Micex stock index fell 0.1 percent at 4:44 p.m. in Moscow, following three days of gains.

‘Targeted Sanctions’

The G-7 leaders, meeting in Brussels, warned Russia that “we stand ready to intensify targeted sanctions and to implement significant additional restrictive measures” in the absence of a peaceful settlement, according to a statement issued late yesterday.

Russia’s seizure of Crimea and menace to eastern Ukraine led the U.S. and the European Union to impose asset freezes and travel bans on 98 people and 20 companies, while stopping short of broader curbs on investment and trade that might also damage their economies.

“With our good balance of diplomatic efforts but also the repeated threat of sanctions we managed to achieve quite a bit for Ukraine, though not enough,” German Chancellor Angela Merkel told reporters after a working dinner. “We want to pursue this path and not any other.”

The German chancellor is due to hold talks with Putin tomorrow.

Gas Reliance

Debate over further penalties is seething in the 28-nation EU, which relies on Russia for 30 percent of its natural gas. Germany’s government has faced down business leaders who objected to sanctions, while gas customers such as Slovakia have opposed a tougher line. Hollande reaffirmed plans to go ahead with the sale of two Mistral helicopter carriers to the Russian navy.

G-7 leaders warned Russia against using energy to force compliance with its political goals, according to a draft of the conclusions from the summit. Russia has set a deadline of June 10 for Ukraine to start paying for gas in advance.

“The use of energy supplies as a means of political coercion or as a threat to security is unacceptable,” the draft statement obtained by Bloomberg News reads. “The crisis in Ukraine makes plain that energy security must be at the center of our collective agenda.”

In Ukraine, the authorities said their operation against the separatists in the mainly Russian-speaking Donetsk and Luhansk regions was continuing to make progress.

Town Retaken

Krasny Lyman, a town about 25 kilometers (15 miles) northeast of Slovyansk in the north of Donetsk, was retaken by government forces, Serhiy Pashynskyi, the acting chief of the presidential staff, said in comments on the presidential website. Nine districts in the north of Luhansk, out of 18 in total, are under government control, he said.

Pashynskyi said that while he’s not expecting the operation to conclude quickly, “I am absolutely confident that if we move on consistently and if the cabinet, parliament and president and Ukrainian society act in sync, we will resolve this.”

Russia is “very worried” about the Ukrainian offensive, Foreign Ministry spokesman Alexander Lukashevich said at a briefing in Moscow. Russia is seeing an influx of refugees from Donetsk and Luhansk, he said.

‘Renounce Violence’

The G-7 statement faulted Putin for stirring up the insurrection in eastern Ukraine, calling on the Kremlin “to exercise its influence among armed separatists to lay down their weapons and renounce violence.” The leaders also called on Ukraine’s authorities to “maintain a measured approach” in their operations to quell the violence.

The Brussels meeting is the second since the seven nations — the U.S., Germany, Japan, the U.K., France, Italy and Canada, joined by the EU’s top officials — disbarred Russia from what had been known as the G-8 since 1998.

Cameron’s meeting with Putin doesn’t undermine Russia’s exclusion from the G-8, Gray said. “It underlines the fact that the G-7 is meeting without Russia.”

Tomorrow’s D-Day commemorations will include a lunch where both Obama and Putin will be present. Merkel said that she would make clear the G-7 stance on Ukraine in her discussions with the Russian leader.

“I don’t plan to evade anyone,” Putin said in an interview with France’s Europe 1 and TF1 channel broadcast as the G-7 leaders met. “There will be other guests and I’m not going to avoid any of them. I’ll talk with all of them.”

Article ©2014 Bloomberg L.P. All Rights Reserved. Article also appeared at http://www.bloomberg.com/news/2014-06-04/g-7-spares-russia-new-sanctions-urging-ukraine-diplomacy.html

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