Ukraine Rebuffs Rebels’ Call for Cease-Fire as Sanctions Weighed

Aug 10, 2014 5:39 pm ET

(For more on Ukraine and Russia, see EXT2.)

Aug. 11 (Bloomberg) -- Ukraine’s military demanded that pro-Russian rebels surrender and dismissed their offer of a cease-fire, as lawmakers prepared to consider new sanctions that may cut Russian shipments of natural gas to Europe.

“If there is an initiative, it should be implemented by practical means, not only with words -- by raising white flags and putting down weapons,” Andriy Lysenko, a spokesman for the country’s military, told reporters in Kiev yesterday. “In that case no one will shoot at them.”

Ukraine is trying to dislodge separatists from strongholds in Donetsk and Luhansk as Russia raises the pressure on its western neighbor to halt the campaign and allow immediate assistance. President Vladimir Putin, who has been blamed by Ukraine and its U.S. and European allies of stoking the conflict, has said the fighting is creating a humanitarian disaster and offered to provide aid.

As Ukraine wrestled with Russia over a military standoff, the nation’s lawmakers prepared to vote tomorrow on a sanctions bill that could block the transit of Russian oil and gas supplies to Europe. The cabinet has approved the measure.

Ukraine no longer receives gas from Russia though acts as a conduit for its neighbor’s European shipments, and a ban could be “complete or partial,” Prime Minister Arseniy Yatsenuyuk said last week. It also may ban Russian planes from its airspace and cut defense-industry cooperation.

‘Will Retaliate’

Russia has responded to sanctions by banning food imports from Ukraine, the U.S., the European Union and other countries.

If new sanctions against Russia are approved, “we will retaliate,” Putin spokesman Peskov said.

As the army pushed toward Donetsk, Ukraine’s military reported more desertions among militants, and said the town of Panteleymonivka was cleared of rebels, according to a posting on its Facebook page.

Government troops cut off regions of Donetsk and Luhansk from one another, threatening resupply routes. Insurgents dug in near the town of Illovaysk, armed with tanks, Grad missiles and armored vehicles, and the military is preparing to storm the area, according to the military.

A rebel leader had broached the possibility of a truce during the weekend, saying in a statement that militants will continue fighting if the government doesn’t end its offensive. The Defense Ministry in Kiev said the army continued to tighten its encirclement of Donetsk, biggest city in the conflict zone.

‘Urgently Needed’

“A cease-fire isn’t only possible; it’s urgently needed,” Russian Foreign Minister Sergei Lavrov told reporters in Sochi yesterday. “Hospitals can’t function, there’s not enough medications. That amounts to the most severe humanitarian situation.”

As of noon local time yesterday, the atmosphere was “extremely tense” in Donetsk, a city of 1 million people before the conflict flared in mid-April, the council said in a statement, adding that shells were heard hitting most areas. More than 10,000 residents had no electricity late yesterday after 40 substations were damaged by artillery, it said.

Luhansk hasn’t had power, water or phone service for more than a week, according to local authorities.

Red Cross

Russia is negotiating with Ukraine, the Red Cross and humanitarian groups run by the United Nations about providing urgent assistance, Lavrov said. “I’m certain we’ll be able to agree on delivering this aid as soon as possible to those who need it most,” he said.

Valeriy Chaly, deputy chief of Ukrainian President Petro Poroshenko’s administration, said a column of Russian soldiers and army equipment stopped before crossing the border after leaders asked the U.S., Russia and the Red Cross to intervene. Chaly, in a statement Aug. 9 on Poroshenko’s website, called the dispatching of the convoy a “very serious provocation.”

The Kremlin denied the claim.

Ukrainian officials and their allies had predicted Putin would cloak an incursion of Russian troops into those areas as a peacekeeping effort.

“There were no attempts made to penetrate” Ukrainian territory “by Russian forces,” said Putin’s spokesman, Dmitry Peskov. “That’s why we find it difficult to understand what was meant by the Ukrainian side.”

Leaders Talk

The prospect of a Kremlin intervention spurred talks among world leaders who have imposed economic sanctions in a bid to force Putin to de-escalate tensions.

U.S. President Barack Obama and German Chancellor Angela Merkel “agreed that any Russian intervention in Ukraine, even under purported ‘humanitarian’ auspices, without the formal, express consent and authorization of the government of Ukraine is unacceptable, violates international law, and will provoke additional consequences,” according to an Aug. 9 White House statement.

The militants are “in panic” as government troops tighten their encirclement of insurgents around Donetsk, Leonid Matyukhin, a spokesman for the Ukrainian Defense Ministry, said in a statement on Facebook.

The army inflicted losses and destroyed vehicles by firing on rebel bases, while insurgents struck back by attacking Ukrainian checkpoints, with artillery fire hitting Ukraine from Russia, he said.

--With assistance from Jason Corcoran in Moscow.