Russia Puts Troops on Alert as US Broadens Sanctions – Businessweek

Russia put more than 65,000 troops
on combat alert and ordered them to take part in a drill a day
after Ukraine called a week-long cease-fire to quell violence in
the eastern part of the country.

The Russian drill is the biggest since the country annexed
the Black Sea Crimean peninsula in March. The U.S. has accused
the government in Moscow of aiding the separatists and this week
imposed sanctions on people linked to the insurgency.

The dispute is flaring as American and European officials
warn that more painful penalties affecting Russia’s access to
financial markets, technology and military hardware may come as
early as next week if President Vladimir Putin refuses to curb
tensions. North Atlantic Treaty Organization and U.S. officials
have said this week that Russia was renewing its military
buildup near the Ukrainian border.

“The fact remains that Kiev and Moscow are at daggers
drawn,” Nicholas Spiro, managing director of Spiro Sovereign
Strategy in London, said by e-mail. “Russia’s latest military
maneuvers throw the extent of the distrust and suspicion between
both sides into sharp relief.”

Russia dismissed Ukraine’s declaration of the cease-fire as
an “ultimatum,” spurring officials from the European Union and
Germany today to call again on Putin to support the peace plan.

Alert and Drill

Putin put troops in Russia’s central military region on
full combat alert and ordered them to take part in a test of
military readiness that is to last through June 28 and will also
involve 5,500 pieces of military equipment, Vladimir Anikin, a
spokesman for Russia’s Defense Ministry, said by phone.

In Kiev, the Foreign Ministry denounced Russia’s latest
military activity, saying it “does not help to normalize the
situation in Ukraine and to implement peaceful initiatives by
the Ukrainian authorities,” according to an e-mailed statement.

Russia on the other hand said it was concerned that Ukraine
was boosting its military operation, Interfax reported, citing
Foreign Minister Sergei Lavrov as saying.

Ukraine called on all fighters to lay down arms, halting
the offensive against rebels from 10 p.m. yesterday until 10
a.m. on June 27, President Petro Poroshenko said on his website.

Lacking Proposal

The proposal lacks “the main ingredient — an offer to
start negotiations,” the Kremlin said in a statement. Pro-Russian militants expressed skepticism the truce will be
implemented.

Militants stirred fighting in at least seven different
places overnight, which left nine border troops and one Russian
customs official wounded, and an unspecified number of militants
killed, Ukrainian authorities said today.

U.S. President Barack Obama yesterday spoke by phone with
French President Francois Hollande and German Chancellor Angela Merkel, agreeing in separate conversations that the U.S. and
European Union would “impose costs” on Russia if it doesn’t
work to deescalate the situation, the White House said in an e-mailed statement.

The U.S. “will continue to take action to hold accountable
those persons engaged in efforts to destabilize Crimea and
eastern Ukraine,” Undersecretary for Terrorism and Financial
Intelligence David Cohen said in a statement. “These
individuals have all contributed to attempts to illegally
undermine the legitimate government.”

New Sanctions

The U.S. Treasury Department sanctioned seven individuals,
including the acting governor of Sevastopol in Crimea and
separatist leaders in the Luhansk and Donetsk regions. Broader
measures are being readied against the finance, defense and
technology industries, two U.S. officials said.

The U.S. is levying penalties for the first time since
April 28, when it sanctioned people and companies linked to
Putin’s inner circle. Russia risks further measures when EU
leaders meet next week unless it helps end the unrest to support
an emerging peace plan, Merkel said yesterday.

European diplomats, speaking on condition of anonymity to
discuss internal deliberations, said consensus has emerged
within the 28-member group during the last week that tougher
sanctions may be warranted when EU leaders meet June 26-27 in
Brussels if Putin fails to abide by earlier pledges.

“All parties” will need to “actively promote” the
implementation of the peace plan, European Commission President
Jose Manuel Barroso said at a news conference in Tallinn today.
“We in particular call on the Russian Federation to use all its
influence to this end and to support this plan publicly and
through concrete actions.”

Merkel’s comments reflect an effort by EU powers to gain
leverage over Putin by using Poroshenko’s cease-fire as a
trigger for expanded sanctions if Putin doesn’t cooperate.

Separatists Clash

The U.S. and the EU have imposed sanctions on people and
companies close to Putin, while threatening the government in
Moscow with unspecified economic penalties as pro-Russian
separatists clash with Ukrainian forces.

Fighting continued as the cease-fire call came into effect
when six Ukrainian border guards and one Russian customs officer
were wounded as militants opened fire at the Izvaryne check
point, Ukrainian State Border Service said in a statement on its
website today. Militants also shot at troop base near Vyselky
village in the Donetsk region, stirring fighting and leaving two
border troops injured, according to the service.

A Ukrainian road block was shot at near Slovyansk this
morning, Defense Ministry spokesman Vladyslav Seleznyov said on
his Facebook account.

Peace Efforts

Poroshenko met political and business leaders from
conflict-wracked regions two days ago to muster support for his
peace efforts. His 15-point peace includes early parliamentary
and local elections, job creation in the Donetsk and Luhansk
regions and freeing all seized buildings and abducted people,
according to the statement.

Before the cease-fire can be implemented, Ukraine must
reassert control over its border with Russia, across which
fighters have crossed, according to Poroshenko.

Russia is increasing security because it’s concerned about
the situation on the border, though it’s not building up troop
levels, Yuri Ushakov, Putin’s foreign-policy aide, said
yesterday.

The separatists are willing to consider the plan, according
to Andrei Purgin, a deputy premier of the self-declared Donetsk
People’s Republic.

“If we see a true cease-fire, we may stop our actions as
well,” he said by phone. “But I think there will be no cease-fire. In practice these statements are only political.”

Russia Puts Troops on Alert as US Broadens Sanctions – Businessweek

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