Russia Won’t Accept Terms to End Sanctions Over Ukraine
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Sid Shniad
2014-10-21 22:45:31 UTC
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*Bloomberg Oct 20, 2014*

*Russia Won’t Accept Terms to End Sanctions Over Ukraine *

*By Volodymyr Verbyany and Daryna Krasnolutska*

Russia <http://topics.bloomberg.com/russia/>’s foreign minister said his
country won’t accept conditions to end sanctions after talks in Italy
<http://topics.bloomberg.com/italy/> failed to produce a breakthrough over
the truce in Ukraine’s conflict-ridden east.

Russia has been told to comply with various criteria before the U.S. and
its allies revoke the limitations, Sergei Lavrov
<http://topics.bloomberg.com/sergei-lavrov/> said in a transcript of an NTV
interview posted yesterday on the ministry’s website. The cease-fire in
Ukraine’s easternmost regions, sealed Sept. 5, was broken several times
during the past 24 hours, with two soldiers and 14 pro-Russian fighters
dying, the military said today.

The U.S. and the European Union slapped restrictions on Russian officials
and companies after the March annexation of Crimea and July’s downing of a
Malaysian passenger plane over eastern Ukraine. Russia’s partners,
including overseas politicians and businessmen, understand that a policy
designed to punish the country is doomed to failure, Lavrov said. Russia
denies stoking its neighbor’s conflict, which the United Nations estimates
has cost more than 3,500 lives.

“We respond very simply: we shall not agree to any criteria or conditions,”
Lavrov said. “Russia is doing more than anyone else to resolve the crisis
in Ukraine <http://topics.bloomberg.com/crisis-in-ukraine/>.”

Speaking in Moscow today, Lavrov told reporters that a political solution
is possible to end Ukraine’s crisis.
Moody’s Downgrade

Ukrainian President Petro Poroshenko, German Chancellor Angela Merkel and
Russian leader Vladimir Putin <http://topics.bloomberg.com/vladimir-putin/>
sought during Milan talks last week to shore up a six-week truce amid
continuing skirmishes between government troops and separatists. Soldiers
opened fire after coming under mortar and missile attack near a village in
the Luhansk region, Vladyslav Seleznyov, a spokesman for the country’s Defense
Ministry <http://topics.bloomberg.com/defense-ministry/>, said on Facebook
late yesterday.

The EU and the U.S., which have limited technology exports to Russia and
curbed the ability of state-run banks to raise funds abroad, have accused
Putin’s government of providing the rebels with cash, weapons and fighters.

The impact of the crisis and sanctions on Russia’s economic growth led
Moody’s Investors Service to cut the nation’s credit rating to the
second-lowest investment grade at the end of last week. Moody’s downgraded
the government one level to Baa2 and kept a negative outlook.
Ruble Weakness

The ruble fell after the downgrade, retreating 0.7 percent to a record-low
46.1410 against the central bank’s target basket of dollars and euros by
3:19 p.m. in Moscow. The central bank sold $2.12 billion on Oct. 16 to
support the currency, according to its website.

Ukraine’s hryvnia has also been under pressure because of the conflict and
the onset of recession. Central bank First Deputy Governor Oleksandr
Pisaruk told reporters today in Kiev that $100 million will be sold to
lenders to aid the local currency, which was 0.2 percent weaker against the
dollar as of 3 p.m. in the capital.

Energy has been another focus of Ukraine’s economic woes. Putin, whose
nation pipes about 15 percent of the EU’s natural gas needs through
Ukraine, said last week that supplies to Europe
<http://topics.bloomberg.com/europe/> would be reduced if the Ukrainian
government siphoned off fuel for its own use. Ukraine has said it won’t
take any gas bound for Europe and that it’s a reliable transit country.

Ukraine will have gas for the winter after agreeing to pay $385 per
thousand cubic meters of fuel from Russia until March 31, Poroshenko said.
The government may use loans from the International Monetary Fund
<http://topics.bloomberg.com/international-monetary-fund/> or other
financial organizations to pay for the purchases, he said.

“I can say that Ukraine will have gas, Ukraine will have heating,”
Poroshenko said in televised remarks Oct. 18.

The EU has been seeking to broker an interim deal between Putin and
Poroshenko to avoid a repeat of supply cuts experienced in 2006 and 2009.
The next round of talks is scheduled to take place tomorrow.

To contact the reporters on this story: Volodymyr Verbyany in Kiev at
***@bloomberg.net; Daryna Krasnolutska in Kiev at

To contact the editors responsible for this story: Balazs Penz at
***@bloomberg.net Andrew Langley, Paul Abelsky
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