Ukraine Says Russian Forces Among Separatists as Battles Ensue

Ukraine began an offensive against separatists in its restive east, recapturing an airport amid claims that Russian special forces were supporting the anti-government groups.

Units from Ukraine’s interior ministry yesterday ousted pro-Russian activists who had seized the airfield in Kramatorsk, though there were conflicting accounts on casualties. U.S. Representative Mike Rogers, chairman of the House Intelligence committee, accused Russia of waging a campaign of “sabotage.”

“There are Russian citizens who are, again, military and intelligence operatives in eastern Ukraine fomenting this trouble,” Rogers said yesterday in an interview on CNN. “They are recruiting, and there’s some level of training.”

prorussian_small2 Ukraine Says Russian Forces Among Separatists as Battles Ensue

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 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.

“The aim of these actions is to protect people,” acting Ukrainian President Oleksandr Turchynov said in a statement on his website. “Apart from Russian special forces and terrorists, there’s hundreds of thousands of innocent Ukrainian people deceived by Russian propaganda, and that is why we will take any needed anti-terrorist actions prudently and responsibly.”

Military Aid

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 imposed by the U.S. and EU already have had an impact. Russia’s benchmark Micex Index of equities slid yesterday 2.5 percent to 1,311.01, extending its retreat since the takeover of Crimea started on March 1 to 9.3 percent. The ruble weakened 0.5 percent to 36.1500 against the dollar, extending its drop since Feb. 28 to 0.7 percent.

In Washington, President Barack Obama’s administration left open the door to providing some form of military aid to Ukraine.

Pressed on whether the U.S. is considering sending equipment such as armored vests or night-vision goggles, White House press secretary Jay Carney said only that lethal equipment, which would include weapons, is “not something we’re currently considering.” Economic aid for Ukraine is the main focus for the U.S., he said.

Diverging Views

The deadly clashes in eastern Ukraine 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, Carney said.

Poland’s Foreign Minister Radoslaw Sikorski said in an interview with Polish broadcaster TVN24 that Putin has “a credibility problem” in denying Russian troops are in Ukraine after similar denials in Crimea proved to be false.

Sikorski said the U.S. is “seriously considering” putting ground forces in Poland as part of an effort to bolster North Atlantic Treaty Organization forces in eastern Europe.

Putin Conference

Putin, who plans to hold a televised call-in news conference tomorrow, is getting appeals for help from eastern Ukrainians alongside questions about why Russia isn’t taking action, his spokesman, Dmitry Peskov, told reporters yesterday. Putin has parliamentary approval to deploy troops in Ukraine to protect the rights of Russian-speakers and those of Russian heritage.

Ukraine must stop quashing protests and hold a referendum on devolving power to regions, Russian Foreign Minister Sergei Lavrov was quoted as saying by RIA in Beijing yesterday. He said using force could jeopardize the Geneva talks.

“Russia is in an excellent bargaining position before the start of talks,” Gary Greenberg, who oversees about $785 million in emerging-market stocks at Hermes Fund Managers Ltd., said in a phone interview from London. “Having provocateurs in Ukraine or having the Ukrainian government forces start shooting puts Russia in much stronger position in its negotiating dance with Europe and the U.S. This is part of their strategy.”

Airborne Forces

As the operation unfolded in Kramatorsk, Ukrainian First Deputy Prime Minister Vitali Yarema said on Channel 5 that members of Russia’s 45th Airborne Regiment were seen in the city and in the town of Slovyansk. A spokesman for the Russian Defense Ministry declined to comment yesterday on the claim.

Stanislav Rechinsky, an adviser to Ukraine’s interior ministry, said one protester was wounded and no one was killed at the airfield, while Russian state television reported that as many as 11 militants had been killed.

“Ukraine had no option,” Ievgen Vorobiov, analyst at the Warsaw-based Polish Institute of Foreign Affairs, said by phone from Kiev. “The government’s hand was forced into a very uncomfortable decision, even if it fits into the Russian plan. This strike will send Russia a clear signal that the Ukrainian government isn’t ready to pull out of Donetsk and Luhansk.”

Federal Reserve Bank of Boston President Eric Rosengren said yesterday that while the conflict in Ukraine probably won’t destabilize the U.S., Europe faces more risk to its banking system or a potential oil-supply disruption.

‘Oil Shock’

Europe is exposed to Ukraine because of its dependence on Russian natural gas and oil exports, and “if that stopped, there would be a severe oil shock for Europe, which could impact them at a time when their economy is extremely weak,” Rosengren said yesterday in response to an audience question after a speech in Bangor, Maine.

EU ministers meeting in Luxembourg this week added four Ukrainians to the list of people being sanctioned, including former deputy Prime Minister Serhiy Arbuzov. EU sanctions now cover 55 Ukrainians and Russians.

The bloc indicated it will widen the blacklist to target people and possibly groups or companies responsible for destabilization in eastern Ukraine. Any sign that Russian troops were crossing into Ukraine would be a trigger for the EU, according to Hungarian Foreign Minister Janos Martonyi.

“If Russian troops cross the border — a military incursion or invasion — into eastern or southern Ukraine, that would suddenly be a cause for launching stage three, economic sanctions, or targeted measures,” Martonyi said in an interview yesterday in Brussels.