Ukraine Says Russia Exporting ˜Terror’ Amid Eastern Push

 Ukraine accused Russia of fueling “terrorism” in its eastern provinces as government troops pressed on with an offensive to rein in separatist unrest.

After freeing a nearby airfield yesterday, Ukraine sent armored vehicles into the Donetsk region town of Kramatorsk, where pro-Russian forces have clashed with police. Local media reported that several armored personnel carriers were captured and began flying Russian flags. The Interior Ministry denied an Interfax report that two Ukrainian soldiers had been kidnapped.

ukrainemilitary_small Ukraine Says Russia Exporting ˜Terror' Amid Eastern Push

“Russian has a new commodity for export in addition to oil and gas — terrorism,” Prime Minister Arseniy Yatsenyuk told a government meeting today in Kiev. “It’s become clear our Russian neighbors have decided to build a new Berlin Wall and want a return to the Cold War.”

The airport operation marked Ukraine’s first foray against armed activists holding government buildings in cities near the Russian border. Efforts to contain the insurgency risk escalating tensions with Russia, which denies involvement in the unrest and has warned of a potential civil war. NATO says Russia has 40,000 troops massed on Ukraine’s border after its annexation of Crimea last month.

With tensions running high, the U.S. and its European allies are threatening a new round of penalties against Russian interests if the crisis continues. Envoys from Ukraine, Russia, the U.S. and European Union are scheduled to hold talks tomorrow in Geneva on the situation.

Sanctions Pain

Sanctions imposed by the U.S. and EU have already had an impact. Russia’s Micex Index (INDEXCF) of equities has lost 13.1 percent this year, including a 0.3 percent decline today. The ruble has weakened 8.8 percent against the dollar in 2014, though advanced 0.4 percent against the U.S. currency today.

The unrest has also hurt Ukrainian asset prices. The hryvnia, this year’s world’s worst performer against the dollar among more than 100 currencies tracked by Bloomberg with a 26 percent loss. It strengthened 6.3 percent today after, a third day of gains after this week’s emergency interest-rate increase.

The clashes have prompted diverging views from Russia and the U.S. Speaking with United Nations Secretary-General Ban Ki-moon, President Vladimir Putin called the events “unconstitutional” and demanded international condemnation of the crackdown, according to a statement e-mailed by the Russian leader’s press service.

The U.S. is “admiring” the restraint show by Ukraine, with Russia directly and indirectly supporting the provocations, White House press secretary Jay Carney said yesterday.

In Brussels, representatives of the 28 NATO governments meet today to discuss proposals for beefing up the alliance’s eastern defenses. Options include reworking contingency plans, holding more exercises and making “appropriate deployments,” NATO Secretary General Anders Fogh Rasmussen said in Luxembourg yesterday.