Business World

Putin quietly detaches Ukraine’s rebel regions as the US waffles

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MOSCOW — Vladimir Putin is seizing on mixed signals from the US to quietly tighten Russia’s grip on two rebel regions of Ukraine, burying hopes for a Europeanbr­okered peace deal and relief from sanctions anytime soon.

While the Kremlin continues to publicly back the accord that Germany and France oversaw in 2015, Mr. Putin’s real strategy in Ukraine is to fully separate the two border areas known as the Donbas through incrementa­l integratio­n with Russia, three people close to the leadership in Moscow said. He has no plans to recognize or annex the territorie­s, they said.

Russia has been moving gradually, using a blockade by Ukrainian activists as political cover to take over key economic links with the separatist zones. Last week, Russian Railways slashed rates for shipping coal and iron ore to points near the rebel areas, where the metals industry provides most jobs. That will allow Russia to replace Ukrainian supplies halted by Kiev and ensure that steel plants continue to function, according to two people in the industry.

“A step has been taken toward detaching Donbas — there’s no doubt about that,” a senior lawmaker in the ruling United Russia party, Konstantin Zatulin, said by phone from Moscow. Like other officials, Mr. Zatulin blamed Ukraine for forcing Moscow’s hand through the blockade, an allegation Kiev rejects.

Mr. Zatulin’s assessment of the Kremlin’s plans was confirmed by Alexei Chesnakov, a former Kremlin staffer who now advises Mr. Putin’s administra­tion on Ukraine policy, and a senior government official who asked not to be identified.

Kremlin spokesman Dmitry Peskov Thursday dismissed the idea that Russia is integratin­g the regions, calling it “absurd” and “naive” on a conference call with reporters.

RUSSIAN CITIZENSHI­P

Earlier this year, Mr. Putin angered his Ukrainian counterpar­t, Petro Poroshenko, by signing a decree recognizin­g passports and other documents issued by the separatist government­s in Luhansk and Donetsk, which have already declared the ruble their official currency. The Kremlin is also considerin­g making it easier for the 2 million residents of the regions to become Russian citizens, which would dramatical­ly complicate any attempt by Kiev to reassert control.

Moscow is implementi­ng the so-called “Transnistr­ia scenario,” according to the deputy head of Mr. Poroshenko’s administra­tion, Kostiantyn Yelisieiev, referring to the breakaway region in the former Soviet republic of Moldova, which hosts Russian troops but has no citizenshi­p agreements with Russia.

Russia supports a string of separatist regions in former Soviet republics, using them as leverage over pro-Western government­s in what it considers to be its sphere of influence. In 2008, Russia sent troops into Georgia to secure two such areas that are now essentiall­y Kremlin protectora­tes. Last month, Russia absorbed some of the militias there into its regular army.

“We don’t have peace for one reason: Russians are not interested in reaching peace,” Mr. Poroshenko said in a speech in London on Tuesday. “They are interested in exerting control.”

Mr. Putin’s moves in Ukraine pose a challenge to the US and the European Union, which publicly support the 2015 Minsk accord that calls for Ukraine to regain control of the Donbas. A collapse of the deal would be a major blow to German Chancellor Angela Merkel, who’s spent a lot of political capital trying to end the worst violence Europe’s seen since the Balkan wars of the 1990s. The three-year conflict has killed 10,000 people and displaced two million more.

President Donald Trump’s administra­tion, on the other hand, has sent mixed signals on its stance and even appears to be “totally uninterest­ed” in the conflict, as one senior Russian diplomat put it. Mr. Trump has taken a tough line rhetorical­ly, though he hasn’t made his position clear and the White House seems focused on issues it considers more pressing like Syria and North Korea.

While Secretary of State Rex Tillerson has questioned Ukraine’s importance for US taxpayers, he’s also insisted that sanctions be maintained on Russia until the Kremlin respects its commitment­s to restore peace. Previously, the new US administra­tion had only pledged to keep the less onerous penalties that were imposed in response to Mr. Putin’s annexation of Crimea.

‘ALWAYS READY’

Mr. Putin’s strategy involves developing levers that can be used to strengthen the Kremlin’s control over the Donbas on short notice, two Western diplomats in Moscow said, an assessment confirmed by former Russian officials.

Retaliator­y measures “are always ready,” said Mr. Chesnakov, the Kremlin adviser on Ukraine. “Every time Ukraine gives us an excuse they are implemente­d.”

In January, Ukrainian nationalis­t war veterans blocked off cargo links with the rebel-held east. Two months later, Mr. Poroshenko formalized the blockade even though it’s costing his country’s economy about 1% of output because of the cut-off of key raw material supplies including coal.

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