Europe, Backed By U.S., Give Russia Deadline On Ukraine

BRUSSELS, Belgium -- Europe, backed by the U.S., on Friday gave Russia 72 hours to take concrete steps to calm tensions in Ukraine or face further sanctions, as Ukraine's president extended a shaky cease-fire that was about to expire. The moves came after the European Union signed broad trade-and-political agreements with Ukraine, Moldova and Georgia, pushing the bloc's influence eastward but potentially deepening strains with Russian President Vladimir Putin. The pacts, which lower trade barriers and aim to promote democratic reforms, were years in the making but faced doubts recently as Moscow sought to reassert its influence in the former Soviet republics. It was former Ukrainian President Viktor Yanukovych's decision not to sign the EU agreement in November that sparked the huge pro-Western protests that eventually led to his ouster. That in turn sparked unrest in parts of eastern Ukraine including the Crimean peninsula, which Russia quickly annexed. Ukraine's new President Petro Poroshenko announced a weeklong cease-fire on June 20, a step that was to lead to talks on his plan to end the insurrection. After signing the trade pact Friday in Brussels, he said it would be impossible for Ukraine to maintain the cease-fire much longer if the pro-Russia separatists, as well as Moscow, continued to ignore his peace push and launch attacks. Early Saturday, after conferring with his security advisers back in Kiev, Mr. Poroshenko announced that he had decided to extend the cease-fire by 72 hours, to Monday night. By then, Mr. Poroshenko said on the presidential website that he expected the four steps spelled out earlier in Brussels by European leaders for avoiding new sanctions would be met. They include establishing "effective control of the border" with independent monitors, the release of hostages and the launch of peace talks. "Ukraine reserves the right to suspend the cease-fire early if there is any use of force or a failure to follow these conditions," the presidential statement said. The White House later endorsed the four steps. "Failing to take them only increases the likelihood that additional economic costs will be imposed" on Russia, press secretary Josh Earnest told reporters traveling with President Barack Obama on Air Force One. The EU leaders said they would assess the situation next week and would impose fresh sanctions "should it be required." That is likely to include adding names to the current list of individual Russian or separatist officials slapped with asset freezes and visa bans, EU officials said. Russian firms could also be targeted, on top of the two Crimea-based companies already listed. The leaders warned they were prepared to come back "at any time" and impose broader sanctions on Russia if the situation doesn't improve. Mr. Earnest said the U.S. wasn't prepared to draw a "clear line" between meeting the four demands and imposing new sanctions, but added that the U.S. has shown "a clear willingness to act in concert with our partners and allies to further isolate Russia." Several officials said the Ukrainian leader's arguments played a key role in shaping the EU sanctions threat, which was much tougher than had been expected. "Until now Russia [is] doing nothing" to help the cease-fire, Mr. Poroshenko said in Brussels. "Can you imagine? We declare a cease-fire and they send tanks." Ukraine and the West have accused Russia of sending heavy weaponry and fighters across the porous border to join the rebels—a charge Moscow has denied. Earlier Friday, Mr. Putin called for a "long term cease-fire as a necessary condition for holding in-depth talks." Rebel leader Alexander Borodai, after meeting with government representatives Friday, said his group was ready to extend the cease-fire, but wouldn't agree to cede control of border posts they have seized. He also said that the talks with Kiev would be possible only if Ukraine withdraws all security forces from the Donetsk and Luhansk regions, where the fighting has been concentrated. Friday's talks followed another night of clashes in the Donetsk region, with the government saying militants killed five soldiers and wounded several more. Each side has accused the other of instigating violence. However, the separatists did free four observers from the Organization for Security and Cooperation in Europe on Friday after holding them for more than a month. A second team of observers captured on May 29 in eastern Ukraine hasn't been released, although Mr. Borodai promised the observers would be soon. Meanwhile, the United Nations refugee agency said that 110,000 Ukrainians have fled to Russia to escape the fighting, with tens of thousands more having been internally displaced. In Brussels, Mr. Poroshenko said he had "a full understanding that this war is impossible to win just by military means." "We should fight for the hearts and the brains of the people" in the east, he said. He accused the separatists of being under Moscow's "direct control." By signing the agreements with Georgia, Ukraine and Moldova, EU leaders hoped to show they won't let a newly aggressive Russia deter them from welcoming countries into the European orbit. The leaders of the three countries said the agreements are a pivotal step in aligning their countries permanently with Europe. But the Kremlin has made it clear it sees the deals as a threat to its rightful sphere of influence. Russia's Foreign Ministry reiterated Friday that the signing of the pacts will have serious consequences for those countries' relations with Russia, although it didn't say what. The deals are part of an eastward-looking EU strategy launched in 2009, with an EU-Ukraine agreement always the centerpiece. Azerbaijan, Belarus and Armenia turned down similar bilateral pacts. EU leaders have insisted that efforts to strengthen ties with their eastern neighbors weren't intended to isolate Moscow. "There is nothing in these agreements, nor in the European Union's approach, that might harm Russia in any way," European Council President Herman Van Rompuy said Friday. Russia fought a war against Georgia in 2008, and still occupies the Georgian regions of Abkhazia and South Ossetia. In Moldova, Russia has significant influence over the separatist region of Transnistria, where it has stationed thousands of troops. In Washington, the State Department offered congratulations to Georgia, Moldova and Ukraine for signing the agreements, saying that they mark "a major step toward integrating these Eastern Partnership countries more closely with the European Union and realizing a Europe whole, free, and at peace."

US Encouraging Ukraine Into Confrontation - Russian Foreign Minister

KIEV, Ukraine -- Russia's foreign minister has accused the United States of encouraging Ukraine to challenge Moscow and heavily weighing in on the European Union. Speaking in televised remarks, Sergey Lavrov said that "our American colleagues still prefer to push the Ukrainian leadership toward a confrontational path." He added that chances for settling the Ukrainian crisis would have been higher if it only depended on Russia and Europe. Lavrov spoke after the European Union summit, which decided not to immediately impose new sanctions on Russia for destabilizing eastern Ukraine, but gave the Russian government and pro-Russian insurgents there until Monday to take steps to improve the situation. Ukraine has signed a free-trade pact with the EU, the very deal that angered Russia and triggered the bloodshed and political convulsions of the past seven months that brought Russia-West relations to their lowest point since the Cold War times. In November, under pressure from Moscow, a former Ukrainian president dumped the EU pact, fueling huge protests that eventually drove him from power. Moscow responded by annexing the mainly Russian-speaking Crimean Peninsula in March, and pro-Russian separatists soon rose up in Ukraine's eastern provinces. The US and the EU slapped travel bans and asset freezes on members of Russian President Vladimir Putin's inner circle and threatened to impose more crippling sanctions against entire sectors of Russia's economy if the Kremlin fails to de-escalate the crisis. The EU leaders on Friday gave Russia and the rebels until Monday local time to take steps to ease the violence, including releasing all captives, retreating from border checkpoints, agreeing on a way to verify the cease-fire and launching "substantial negotiations" on Ukrainian President Petro Poroshenko's peace plan. The weeklong cease-fire, which both sides have been accused of violating, expired at 10 pm local time, but Mr Poroshenko quickly declared its extension until 10 pm local time Monday. Lavrov has acknowledged that Russia has some leverage with the rebels, pointing at their move this week to release four observers from the Organization for Security and Cooperation in Europe after weeks of captivity, but claimed that Moscow's influence is limited.

Ukraine Troops Killed In Fresh Attack In East

KIEV, Ukraine -- Three members of the Ukrainian military have been killed after pro-Russian separatists attacked their post near the eastern flashpoint city of Slavyansk with small arms and mortar fire, a military spokesman said. The reported attack on the post manned by members of the government's "anti-terrorist operation" took place on Saturday despite a government ceasefire, which was extended on Friday until Monday night. "As a result of the fighters shooting at the post near Slavyansk, three members of the Ukrainian forces were killed and a fourth was wounded," a military spokesman, Oleksiy Dmitrashkovsky, told the Interfax news agency. Hours after the attack, the Organisation for Security and Cooperation in Europe said that pro-Russian separatists in Donetsk had released four of the group's monitors held since the end of May. Two groups of unarmed observers from the European security organisation, totalling eight international monitors and a Ukrainian translator, were captured at roadblocks three days apart in late May. But the second team seized on May 29 in the neighbouring Luhansk province appeared to have been abducted by a different group and negotiations for their release are ongoing. The latest violence in Slavyansk came a day after four soldiers were killed and five wounded as Ukraine's military regained control of a checkpoint in the eastern region of Donetsk that had been earlier taken over by separatists. Ukraine's president, Petro Poroshenko, announced the extension on Friday night, partly at the urging of some European leaders, after returning to Kiev from an EU summit in Brussels where he signed an association agreement. The ceasefire extension was announced in line with a deadline set by EU leaders for rebels to agree to disarm, return border checkpoints to Kiev authorities and free hostages, including the OSCE monitors. Poroshenko also called on Russia to close centres being used to recruit separatist volunteers on its side of the border. The one-week truce had been due to expire on Friday at 7pm GMT, and will now expire at 7pm GMT on June 30, according to the presidential website.

Ukrainian President Accuses Russia Of Doing Nothing To End 'Disastrous' War

BRUSSELS, Belgium -- The prospect of further western sanctions against Russia over Ukraine has grown after the Ukrainian president, Petro Poroshenko, accused Moscow of doing nothing to end the "disastrous war" in the east of his country. In an interview with the Guardian and four other European newspapers on Friday, Poroshenko said separatists in Donetsk and Luhansk regions had carried out "more than 150 attacks" against government troops since a ceasefire began on 20 June. Five more Ukrainian soldiers died on Friday, he said. Speaking in fluent English in Brussels, Poroshenko stated bluntly that the rebels were under the control of Vladimir Putin's Kremlin. "I think now Russia has done nothing [to end the violence]," he said. "Russia is the leader of these banned groups. We are talking of Russian citizens, Russian officers, Russian soldiers of fortune." He characterised the Kremlin's strategy in Ukraine as "not very pragmatic" and "very emotional". While Poroshenko signed the outstanding chapters of a historic association agreement with the EU, pro-Russian and pro-Ukrainian sides in Donetsk announced that they had extended a ceasefire for three days to allow talks to continue. The Brussels deal brings Ukraine significantly closer to European markets and the EU – though with no prospect of eventual membership. Russia warned that the move would have "grave consequences". One Putin adviser, Sergei Glazyev, called Poroshenko a "Nazi". Poroshenko told the Guardian that Ukraine had paid "a very high price" for its pro-European choice. "We want to modernise my country. We want to introduce freedom, democracy and European values. Somebody doesn't like that. Someone attacks us for that," he lamented. Last November, Ukraine's then president Viktor Yanukovych refused to sign the EU agreement, instead accepting a bailout from Moscow. This triggered mass street protests, which led to Yanukovych fleeing the country and to Russia's invasion and annexation of Crimea. Asked whether Ukraine would get Crimea back during his presidential term, a smiling Poroshenko said: "Certainly". He did not reveal how this might happen. Poroshenko called Friday's signing ceremony, performed in the cavernous European council building in Brussels, the most important day for his country since independence from the crumbling Soviet Union back in 1991. Symbolically he inked the agreement with the same black pen that Yanukovych was supposed to use at a summit in Vilnius last year. "It is with me!" he said, showing the pen afterwards to the Guardian. Poroshenko said that he had discussed his 15-point peace plan for Ukraine at length with EU leaders, including Angela Merkel, François Hollande and David Cameron. He said the EU was "completely united" in its support for his country, which faced a grave security crisis. "That is why I'm happy. They spoke with one voice," he told the Guardian. The European council – representing EU leaders – will decide on Monday whether to impose new "targeted measures" against the Russian Federation, Poroshenko said. This is likely to mean additional sanctions against the Russian economy, in areas such as energy, finance and defense. EU states are divided as to how far these so-called "level three" sanctions, in preparation since March, should go. Poroshenko said his peace plan envisages a series of concrete steps. They include a ceasefire verified by European monitors, "including a Russian officer"; the return of three border checkpoints to Ukrainian forces; the release of all hostages seized by separatists; and the launch of "substantial" peace talks. Four Organisation for Security and Co-operation in Europe monitors were freed on Friday, but separatists were still holding 180 prisoners, Poroshenko said, including eight captured on Thursday. Poroshenko said it was now up to Russia to decide whether to back his plan. Putin's only positive step so far, he said, had been to withdraw this week a threat to use military force. Poroshenko said it was clear Russia had intended to destabilise Ukraine from the beginning. He said he had done his best to persuade Russia's president to sign up to a peace deal when he met him in Normandy, together with Merkel and Hollande, days before his inauguration. His goal was to make Russia "a predictable partner", he added. Poroshenko admitted that the situation in parts of the east of the country was a "real disaster". He said: "Half of Donetsk province and one third of Luhansk province is a zone of war." "There are no banks open. No pensions are being paid. There is no water, electricity. Lots of people with weapons are on the streets. People are afraid to go outside." He said that in areas controlled by Kiev – some 87% of the country – by contrast, life was entirely calm. "Within 2km from our checkpoints it's normal life. It's peace. It's calm." Poroshenko conceded that it was impossible to win back the east using military force alone. His strategy had other components, he said. It included constitutional changes to decentralise power, guarantees for Russian speakers, and the rebuilding of houses and other infrastructure damaged by fighting from state funds. He also wanted to create jobs and renew traditional industries. All this was impossible to do, he recognised, while "there was a war going on" and with rebels in control of key towns. At one point Kiev lost control of 280km (174mi) of its border with Russia, he said. He said a "significant part" was now back under "our control" but that "many tanks and artillery systems" had already crossed from Russia. These were now in separatist hands, he added. Looking pained, Poroshenko talked of the price his country was paying to try and defend its unity and integrity. "If every day Ukraine pays with several lives of Ukrainian soldiers, with several injured, this is not a peace plan. This is not a ceasefire. We just block the operation of our army and they do what they want."

Ukrainian Move Against Putin Easier Said Than Done

KIEV, Ukraine -- The Ukrainian Energy Forum is ongoing in Kiev, and it could not have come at a more interesting time for a country that some experts say is at the center of an impending global gas war. Ukraine Prime Minister Arseniy Yatsenyuk submitted a draft law to parliament last week suggesting that the country drastically change its gas storage and transportation system. Specifically, the Ukrainian government wants to keep at least 51 percent ownership of pipelines and other domestic energy facilities, but begin selling the rest to companies from the United States and European Union. The proposed move is seen as a measure designed to buttress Ukraine's position against Gazprom, the energy giant that's controlled by the Russian government. Gazprom claims that Ukraine owes it $2 billion for natural gas that it used domestically. But sources who spoke with CNBC cast doubt on the success of such an effort, saying that Russian President Vladimir Putin will continue to play his hand in the region until a deal is made that gives him control of the pipeline, which transports Russian natural gas to markets in Europe. Robert Bensh, managing director of Pelicourt, an energy firm that holds assets in Ukraine, told CNBC that Putin will do everything he can to prevent such a law from going through. "Putin will not stop until he gets that pipeline," Bensh said, adding that Ukrainian President Petro Poroshenko "will be forced by Putin to sell the pipeline in order to resolve all gas debts and to remove all opposition forces within Ukraine, at the very least." Ian Brzezinski, senior fellow at the Atlantic Council who focuses on trans-Atlantic security, told CNBC that Putin's goal is to reassert Russian hegemony, if not control over Ukraine. "Acquiring control of a pipeline is one step toward and one benefit of achieving his overall objective," Brzezinski said. Bensh said, however, that he believes the United States will not idly stand by while Russia attempts to take control of Ukraine's gas transportation system. The U.S. ambassador to Ukraine, Geoffrey Pyatt, did not immediately respond to CNBC's request for comment on the matter. Timothy Ash, head of emerging markets at Standard Bank in London, characterized the draft law as a political move by Ukraine, which faces serious financial difficulties that Russia could help relieve if it felt pressure to do so. He does not see such a move succeeding, however, because Russia's influence over Ukraine is too great. "Russia comes in and takes Crimea, so they could get what they want with the pipeline as well," Ash said. Bensh told CNBC that Russian involvement in dividing up or acquiring the pipeline could cause a global gas war which would see Russia more strongly playing its hand as Ukraine and Europe's energy supplier. Russia recently inked a deal with China to provide more gas to the world's second-largest economy, an agreement that gives Putin more market leverage in his dealings with Ukraine and the West. Brzezinski, however, disagreed. "I do not see a global gas war, but I do see gas serving as a tool in a regional conflict, and that is already the case," he said. A spokesman from Chevron, which has operations in Ukraine, told CNBC that the company is not in a position to comment on the pipeline ownership proposal.

Five Ukraine Soldiers Are Killed As Rebels Defy Extended Cease-Fire

KIEV, Ukraine -- Rebels killed five Ukrainian soldiers in violation of a truce extended by the country’s government after the European Union gave Russia three days to quell the insurgency or face deeper sanctions. Twelve soldiers also were wounded in the attacks by pro-Russian separatists in Ukraine’s eastern region, government officials said. The violence occurred as EU leaders in Brussels demanded on June 27 that the separatists, whom Ukraine and its allies say are backed by Russian President Vladimir Putin, abide by a cease-fire that Ukrainian President Petro Poroshenko had extended through tomorrow, release hostages and start talks to implement a peace plan. Rebel leaders agreed to the extension, according to news service Interfax. Still, the defense ministry in Kiev said yesterday’s casualties occurred in two separate incidents. “Despite peace initiatives by Ukraine’s leadership and a unilateral cease-fire, the situation in the Eastern regions continues to escalate,” the ministry said in a statement. “Insurgents are ignoring the peace plan to ease the situation in Ukraine’s east and keep attacking troops.” Rebels in eastern Ukraine did release a total of eight monitors from the Organization for Security and Co-operation in Europe who had been held hostage since late May, according to accounts from the OSCE and Alexander Maltsev, a separatist spokesman for the self-proclaimed Donetsk People’s Republic. Other people not associated with the OSCE are still being held in the region. The EU leaders said that failure to meet their demands will result in “further significant restrictive measures” against Russia, according to a statement issued June 27. “If no visible progress is made on these points, then we are prepared to take further decisions, including drastic measures,” German Chancellor Angela Merkel said after the meeting. “We expect progress to come really in the hours ahead.” The U.S. blames Putin for supporting rebels and stoking violence the United Nations says has killed more than 400 people in the country of more than 40 million. The U.S. is preparing sanctions against Russia on technology aimed at exploiting and producing oil and gas products, a major part of that country’s economy, according to three people briefed on the plans. The U.S. and European allies imposed sanctions about two months ago on a small number of people and companies close to Putin. The U.S. is pushing Ukraine into conflict with Russia, Russian Foreign Minister Sergei Lavrov said yesterday, adding that the government in Kiev must consult with those in the country who are seeking more autonomy. “There are our partners from overseas, our American colleagues who, based on plentiful evidence, still prefer to push the Ukrainian authorities along the confrontational road,” Lavrov said on state-run television. He also said that while separatists in eastern Ukraine’s self-proclaimed republics of Donetsk and Luhansk listen to Moscow, they don’t respond to all requests from the Kremlin. Poroshenko signed a free-trade pact June 27 with the 28-member EU to bolster solidarity with the richer nations to Ukraine’s west. He said the agreement showed Ukraine’s “sovereign choice in favor of future membership of the EU.” “We’re just looking to modernize our country,” Poroshenko said in an interview in the French daily Le Figaro published yesterday. “We introduce freedom, democracy and rule of law, European values, and we’re being attacked because of it.” A previous rejection of the trade accord by the man Poroshenko replaced, Viktor Yanukovych, triggered deadly protests in Kiev last November that this year ousted the pro-Russian administration. Russia responded by annexing Crimea from Ukraine and has voiced support for Russian speakers in Ukraine’s southeast, who it says are under attack by their own government. About 67 percent of Ukrainians would vote to join the EU in a referendum, according to a June 6-11 Razumkov Center poll of 2,012 voters, versus 20 percent who wouldn’t. While the deal doesn’t offer EU membership, it gives Ukrainian companies better access to the world’s biggest trading bloc and will boost exports by 1 billion euros ($1.4 billion) a year, according to an EU estimate. In exchange, Ukraine pledged to use EU funds to meet product, safety and consumer standards, bolster human rights and fight graft Putin, who is trying to establish a Eurasian trading bloc made up of former Soviet states to rival the EU, has said the agreement will damage Russia’s economy. His government has said those who sign agreements with the EU may face repercussions. In yesterday’s violence, insurgents killed three soldiers and wounded four at a checkpoint in the Donetsk rebel stronghold of Slavyansk, military spokesman Oleksiy Dmytrashkovskyi said. Two other soldiers were killed and eight wounded in an attack by insurgents in the Luhansk region, he said. There were no details on rebel casualties. More than 20 Ukrainian soldiers have died in rebel attacks since the cease-fire began, Interior Minister Arsen Avakov said on June 27. The EU has imposed asset freezes and travel bans on 61 people connected with unrest in Ukraine and Russia’s seizure of Crimea in March. It has stopped short of broader curbs on investment and trade that might damage the European economy as it shakes off the effects of the debt crisis. Russia’s economy can withstand sectoral sanctions, though a worst-case scenario would result in an economic contraction, higher inflation, and declining incomes and government reserves, Russian Economy Minister Alexei Ulyukayev said on state-run TV yesterday. The UN estimates that about 54,000 people have fled to other places inside Ukraine, while 110,000 displaced Ukrainians have arrived in Russia this year. Russia’s failure to comply with the EU deadline could lead to additional asset freezes and travel bans after June 30. A move toward more sanctions could come as early as mid-July, when the leaders are scheduled to meet again. EU sanctions require a consensus of the bloc’s 28 governments, making it possible for countries such as Austria, Slovakia or Italy to stand in the way. Austria deepened its economic ties with Russia last week by signing an accord with OAO Gazprom (OGZD) for direct pipeline access to Russian gas. “The important thing is that for the very first time in history we -- the EU and Ukraine -- agreed on a common stance vis-a-vis Russia,” Polish Prime Minister Donald Tusk told reporters in Brussels on June 27.

Can Russia become politically irrelevant state?

Without a shadow of doubt, the recently signed Sino-Russian gas deal was a perfect opportunity to clink glasses for champagne lovers of both delegations. While one side was happy with the price, the other one looked content with its new customer and volume of the order. This gas supply treaty, which on a surface may look like an ordinary business deal, albeit very massive, marks the beginning of closer cooperation between the two eastern heavyweights in almost every aspect. It also will have an impact for the major geopolitical and energy sector players globally. Take the European Union for instance. As paper was still absorbing the fresh ink of the signatures under the treaty text in Shanghai, here in Europe the ragtag collection of bog - standard politicians, who proudly call themselves the European Commission, were left shell-shocked. Those gentlemen saw their much celebrated leverage of a massive buying power slipping away. They realised that China passed the ball to Mr. Putin, who effectively is now in the driving seat when it comes to the EU - Russian relations. European leaders came very close to understanding that from now on any new package of sanctions against Russia may very well backfire, although officially both sides underline the importance of keeping the energy resources out of weaponry list. Despite such bilateral declarations, the European Union is seeking to diversify its energy supply. However, other gas and oil rich nations such as Qatar, Norway, Azerbaijan, Iran or even the United States are not charity organisations, nor are they stupid enough not to exploit the new realities in a global gas market. They are likely to milk out some extra cash from the cornered EU, and the ordinary Europeans will be forced to pick up the bill. Back in Russia, the news of sealing the deal with the Chinese was received as a very positive step, although it is still far too early to celebrate. Yes, Mr. Putin shook away his annoying eternal European critics, who are now busy scratching their own heads, thinking of how to find a way out of their own potentially vulnerable position. But the Russian president also has his own problems to solve. Russia now stands at a crossroads that may lead it either to the direction of development or stagnation. It is vital for the Russian leadership to understand that high price for the energy resources in the future and the 400-billion-dollar deal with China offers a perfect opportunity to modernise the world's largest country. This can be done by funding infrastructure projects, easing business climate and attracting foreign investors. And when we say 'foreign' that does not necessarily mean Western. In fact, money, if used wisely, can even help stabilise Russia's demographic situation especially in its long-neglected Far East region. But is Moscow ready to take concrete steps in order to make all that happen? There are many sceptics who will say that it is not. According to them, Russia is traditionally a hostile country, when it comes to change or adaptation to new realities. However, the last ten years or so illustrate that the will to improve is alive and kicking. Although, we have to admit that the majority of obvious 'technological leaps forward' can be observed almost exclusively within the defence industry. However, the hugely successful Sochi Winter Olympics was a clear sign that Russia has the vast amount of untapped potential to bring itself 'up to date' in other spheres of life too. It is also important for policy makers in the Kremlin and the Duma to comprehend that the most valuable asset of their homeland is not oil, gas, gold or iron ore, it is the Russian people. Future citizens can have by far greater impact on their country's fortunes and prosperity than a mere sale of natural resources. The income that Russia receives from export of fossils must not serve only as a filler of a budget holes or only as a fuel for furnaces of the military industrial complex. Gas or oil revenue also must be more actively reinvested in ordinary people through education and social programs, if the country wants to realise its whole human potential in the future. The potential, which is not absent, but rather suppressed by underfunding, colossal bureaucracy and corruption. If those three issues are not addressed seriously, then Russia may go down the wrong path - the path of stagnation and weakening. Sandwiched between China in the east and the EU (NATO) in the west, Russia could face a dangerous transformation into resource-rich, but politically irrelevant state. This is not a desirable development for humanity, because the world with several centres of political gravity will always remain a better option than unipolar dictate

Russia passes into service 4th-generation K-560 sub, combat robots come next

The first multipurpose nuclear submarine of project Yasen, K-560 Severodvinsk, joined the Navy of the Russian Federation on Tuesday. The ceremony to raise St. Andrew's flag on the fourth-generation nuclear submarine was held at the pier of military shipyard Sevmash in Severodvinsk, ITAR-TASS reports. The Commander of the Navy of the Russian Federation Viktor Chirkov took part in the ceremony. The trial operation of the Severodvinsk submarine started on December 30, 2013, Specialists Sevmash say that this is the most modern and low-noise domestic submarine. The sub will be based in the town of Zaozersk. Before the end of 2014, the Severodvinsk will travel to the permanent base point of the Northern Fleet, Admiral Chirkov said. The multipurpose submarine that does not carry ballistic missile was designed by marine engineering bureau Malachite in St. Petersburg. The construction started at Sevmash on December 21, 1993. The submarine was launched only in 2010, due to a number of economic difficulties and new design features. For example, for the first time in Russian shipbuilding, torpedo compartments are located behind the central post. This made it possible to place a large sonar antenna on the front part of the sub. Vertical missile launchers were used for missile arms. The Severodvinsk received state-of-the-art communication and navigation systems and a fundamentally new nuclear power plant. The displacement of the submarine is 9500 tons; its length is 120 meters; the maximum depth - 600 meters. The submarine develops the maximum underwater navigation speed of 57 km/h; the crew - 85 people. Before 2020, Sevmash is to build seven nuclear submarines of Yasen and Yasen-M classes armed with cruise missiles. The main feature of Project 885 submarines is their multi-purpose use. The subs are capable of striking not only enemy ships and submarines, but also ground targets. The submarines are armed with state-of-the-art cruise missiles "Caliber" and "Onyx". Navy Commander Victor Chirkov said that the appearance of the Severodvinsk in the navy was a significant step in the practical implementation of the plan to strengthen the capacity of the underwater navy. The admiral noted that the navy command works on design and construction questions jointly with the industry. According to the commander, the works to design fifth-generation submarines are already underway in Russia. "Tough laws and ship-building regulations exclude pauses in the creation of new generations of submarines," he said. "Therefore, we demand the industry should avoid interruptions and start designing the next generation of submarines as soon as the works on the previous generation ends. This is not the stage of construction, but the design phase. This is very important. With such an approach, we will avoid technology backlog and build the submarines that meet most modern requirements," said the admiral. The capacity of the Russian underwater fleet will be enhanced with the help of combat robots, said Admiral Chirkov. "Improving combat capabilities of nuclear and non-nuclear submarines will also depend on the integration of prospective robotic systems. This is provided by the plans, and these plans will be implemented," said the commander. In the future, Russia plans to build two groups of nuclear submarines of new generation - multi-purpose and strategic ones - on Northern and Pacific fleets. "The implementation of the long-term program of military shipbuilding enables us to accomplish the task of building the group of nuclear multi-purpose submarines of new generation on the Northern and Pacific fleets, along with the creation of the groups of new missile strategic submarines," said the admiral. Presently, the Russian Navy has 60 submarines, ten of which are strategic nuclear subs and more than 30 of them are multipurpose nuclear subs. The rest are diesel and special purpose submarines. The command of the Russian Navy intends to abandon the practice of decommissioning the vessels that can still be repaired and modernized. The Severodvinsk will serve to protect the borders of Russia for at least 30 years.

Poroshenko is not the master of Ukraine. He is like the Queen of England

he political crisis in Ukraine after the presidential election has not abated, but evolved into another phase. In Kiev, riots have been rather frequent lately. The people, to whom pro-Western media refer as EuroMaidan activists, are the driving force of those riots. This time, the goal of the Maidan-concerned citizens is the Verkhovna Rada. The people demand the Rada should be re-elected immediately. Needless to say that this action, like the entire Maidan in general, was ordered and paid for by certain political forces. These forces do not hide themselves - it is the Udar party of former boxer (and now mayor of Kiev) Vitali Klitschko and neo-Nazi Freedom party of Oleg Tyagnibok that need the Rada to change. Members of Svoboda want to "reset" the parliament in a hope to obtain more mandates than they have now. As for the Udar party, it is clear that there are people from the presidential administration who want changes for themselves. No wonder, as current president Poroshenko and Klitschko are now partners. Prior to the presidential election, they amicably shared the positions of the leader of Ukraine and the leader of its capital, which subsequently materialized in reality. But why does the "Chocolate King" in the presidential office and his partner in the political business need a new Rada? What is it that they do not like about the old parliament? In fact, after the coup on February 22, the previous majority of the Party of Regions and its allies was more than successfully recruited by the new government. One did not have to do much for that. There was a meaningful appeal from U.S. Ambassador Mr. Payette to members of the Party of Regions who fled to Europe: "Go back to Ukraine - one must start working." Presumably, the U.S. official was talking about a possibility to freeze their foreign assets in case of refusal. In Ukraine, Right Sector militants and other Nazi formations found much more convincing arguments in the form of threats of arson of numerous luxury villas near Kiev. As a result, the process went very quickly. The "supporters of state bilingualism," "friendship with Russia" and other slogans to defraud voters in Russian-speaking regions, started voting for the war in the Donbas, for mass mobilization in the Ukrainian army (ukroarmy), for accepting any terms of the IMF and so on. Very few MPs, such as deputy Oleg Tsarev and several Communists, found the courage to take a strong stand against the policies of the pro-American junta. But, alas, they could not do anything in the parliament that turned into Washington's another puppet theater. Nevertheless, Poroshenko does not like the Rada Ukraine has today. He does not have the powers that his predecessors had. Poroshenko was bluffing when he said: "I am quite satisfied with Prime Minister Yatsenyuk, I will not look for a replacement." He, as the head of state, under the current Constitution can not single-handedly appoint the prime minister, individual ministers (except for ministers of defense, foreign affairs and chief of the Security Bureau), the Attorney General - all this is the power of the Verkhovna Rada and the ruling coalition of deputies, which, incidentally, is controlled by Poroshenko's main rival for supremacy - Yulia Tymoshenko. Poroshenko, in fact, is not the "master of Ukraine." He is like the "Queen of England" - well, maybe just a little bit more influential than she is due to the functions of the Supreme Commander. This, indirectly explains why Kiev does not go for peaceful initiatives to solve the Donbass crisis. In a nutshell, without a meaningful support in the parliament in the face of loyal deputies, Poroshenko will not see real power in his hands. It just so happens that he needs to reset the Rada to achieve that. The president needs new parliamentary elections as soon as possible, while Ukraine still has some Russian natural gas, while Ukraine remains a fairly solvent state, while the numbers of casualties in the civil war counts thousands,not hundreds of thousands. When autumn comes, the artificially created rankings of the new Ukrainian president will deflate like a soap bubble. Poroshenko's Napoleonic plans come across a lot of obstacles. The biggest one of them is the fact that MPs were elected in the autumn of 2012 for five years, and they are not willing to re-invest millions of dollars in the early re-elections of their own selves. But here's another problem, the largest ruling coalition of Tymoshenko's faction takes the same position. Why does she need to fight for power again if she already has through the influence of key ministers, including Interior Minister Avakov? When summer ends, it will be possible to accuse Poroshenko of all consequences of the terrible crisis. Yulia Tymoshenko will not lose this chance to appear in front of all Ukrainians as a wise and caring mother of the nation. To crown it all, the president does not have legal means to make the Rada hold new elections. The Constitution stipulates for only three reasons for such a move - the lack of the ruling majority for a month, the absence of government for the same period of time, and the inability of the Parliament to meet for 30 days. None of these conditions is currently available. And this is the time when the guarantor of the Constitution thought of his lackeys from the Maidan, whom he did not even make happy with his own presence after the inauguration. On Tuesday, Maidan activists arranged a "corridor of shame" at the entrance to the Rada. They say that all unreliable deputies should walk through this corridor and sign a petition for the dissolution of the parliament. The outcome of the struggle of Poroshenko and his allies for early elections to the Verkhovna Rada is not exactly clear. It is the Americans, who say the final word on that, but their choices is still unclear too.

Opinion: How Not To Rescue Ukraine From Collapse

WASHINGTON, DC -- Ukraine has a new democratically elected government that faces the immense task of preventing an economic free fall. Vladimir Putin is counting on economic chaos to reestablish Moscow’s control over Ukraine. His machinations in the eastern part of the country have hit snags following his seizure of Crimea. But this former KGB agent knows how to bide his time while letting events create new opportunities. Unfortunately, bad economic advice from the IMF may do just that for the master of the Kremlin. Two months ago Ukraine’s beleaguered interim government signed a desperate deal with the IMF to get badly needed monetary help. Kiev received $3 billion right away, with access to as much as $14 billion more over the next two years. Alas, the deal’s terms were typical IMF antigrowth nostrums and encapsulate all the bad economic dogma that’s plaguing the world today. As discussed in my new book, coauthored with Elizabeth Ames, Money: How the Destruction of the Dollar Threatens the Global Economy–and What We Can Do About It, the most critical factor in enabling an economy to achieve vigorous, sustainable growth is a sound currency. Even if a country gets its policies right regarding taxes, spending, the rule of law and regulations, it will flounder if its money is soft. Money measures value the way a clock measures time. When Britain 300 years ago fixed its pound to gold, the Sceptred Isle vaulted from a second-tier power to the mightiest nation the world had ever seen. In the early 1790s the U.S. put itself on the road to surpassing Britain when our first Treasury Secretary, Alexander Hamilton–with George Washington’s vigorous approval–linked the dollar to gold. This link, coupled with fiscal reforms, turned the U.S. from a junk bond nation into one with a triple-A credit rating. The U.S. became an irresistible magnet for foreign capital and the catalyst for ever-growing capital creation here at home. Yet the IMF ignores the link between gold and a sound currency. Here’s what the agency’s head declared in announcing the Ukraine deal: “The program focuses on maintaining a flexible exchange rate to restore competitiveness,” which is Keynesian-speak for further devaluation of the already weak hryvnia. Argentina has been following such an approach for a century and has gone from being one of the world’s richest economies to one of increasing poverty and economic stagnation. In a painful display of its economic illiteracy the IMF also said that Ukraine should push for “domestic price stability,” as if Ukraine were in a separate universe from the rest of the world. In other words, Kiev could trash the value of the hryvnia to make its exports “more competitive” while maintaining a sound hryvnia at home. Every country that’s tried that impossible trick has ended up with a punk economy of subpar growth. Needless to say, the IMF pushed for “revenue enhancements,” a euphemism for tax increases. Just what a struggling economy doesn’t need. We can only hope that Ukraine’s new president, Petro Poroshenko, can see through this destructive nonsense and institute a currency board that will fix the hryvnia to the dollar or the euro, which would permanently stop its slide. He should also enact lower taxes à la Hong Kong, Singapore and Switzerland. Putin is counting on the IMF’s economic malpractice to help him achieve his expansionist goals in Ukraine.

Ukraine's Poroshenko 'To Order Unilateral Ceasefire'

KIEV, Ukraine -- Ukraine's president has set out proposals for a peace plan for eastern Ukraine involving a unilateral ceasefire by government forces. Petro Poroshenko said the temporary truce - expected "in hours or days" - would allow pro-Russian militants in the region to lay down their arms. One separatist group has already rejected the proposal. Mr Poroshenko's comments come after he held a phone conversation with Russian President Vladimir Putin. They discussed a solution to the crisis in eastern Ukraine, where pro-Russian rebels are battling government forces. More than 30 gunmen were killed and wounded in fighting near the town of Shchastya in the Luhansk region on Tuesday, a spokesman for the government's "anti-terrorism operation" said. Kiev also said that 147 Ukrainian military personnel had been killed and 267 injured in fighting since March. UN human rights investigators say the security situation in the Donetsk and Luhansk regions has deteriorated significantly over the past month. A report revealed a rising number of abductions and killings, with civilians increasingly caught in the crossfire and thousands forced to flee the violence. Meanwhile, Ukraine's Interior Minister Arsen Avakov has said an explosion at a major pipeline in central Ukraine was caused by a bomb. He said explosives had been placed under a concrete support at the Urengoy-Pomary-Uzhgorod Pipeline. No-one was reported injured by the blast. European and Russian companies said gas exports were not affected by Tuesday's pipeline explosion. 'New warfare' Speaking at a graduation ceremony at the National University of Defence in Kiev, Mr Poroshenko said a "brief" truce would be introduced to allow "Russian mercenaries" to leave Ukraine. "The peace plan begins with my order for a unilateral ceasefire," Mr Poroshenko announced on Wednesday. "We expect that disarmament of military groups and restoration of order will take place right after it." The president added that his peace plan would have 14 points, including the closure of the Ukrainian-Russian border and changes to the constitution to give more power to the regions. A presidential spokesman told the BBC the ceasefire could be announced in "hours or days" but gave no further details. But Denis Pushilin, one of the leaders of the self-declared Donetsk People's Republic, a breakaway area which has asked to join Russia, rejected the proposal for the rebels to lay down their arms, Russia's TV channel Dozhd reports. Mr Poroshenko also said Russia was waging "a new type of warfare" with the use of professional subversive groups and volunteers. The Kremlin confirmed that Mr Poroshenko and Mr Putin "touched upon" the issue of a possible ceasefire during their talks on Tuesday, but gave no details. Meanwhile Russia says it has launched a criminal investigation into Ukraine's interior minister and a local governor over the killings of civilians and journalists. Mr Avakov and Ihor Kolomoisky, governor of Dnipropetrovsk, are accused of organising military operations, including rocket strikes, in cities such as Donetsk, Sloviansk and Mariupol that left more than 100 dead, Russian state media said.

Pro-Russia Militia In Ukraine Seeks Urgent Help from Moscow

KIEV, Ukraine -- A Kiev offensive to retake control of restive areas along the country's eastern border has accelerated in recent days, prompting leaders of an armed pro-Russia uprising to appeal to Moscow for urgent military help on Tuesday. Ukrainian government troops have advanced from the north and south in a bid to cut off the fighters and weapons that Kiev says are flowing over its border from Russia. So far, though, Moscow has given little sign it intends to respond to repeated requests from separatists and send in troops to assert control in parts of Ukraine's east, as it did with Crimea in March. The Kremlin appears to be keeping its support at a level that won't provoke harsher economic sanctions from the West but will keep the conflict bubbling to use as leverage over Kiev by sending more fighters and weapons, some Western diplomats and analysts say. While the West has warned Russia it risks more penalties if it doesn't help stabilize Ukraine's east, some European countries have voiced reluctance to step up sanctions, given deep trade ties with Moscow. "Russia's intention is instability, not occupation or even separation," said Adrian Karatnycky, senior fellow at the Atlantic Council, a Washington-based think tank. "So a low-intensity guerrilla war and disruptive occupation of cities is what they aimed for and what they are employing." Ukrainian and U.S. officials say Russia in recent weeks has allowed fighters, tanks and other heavy weaponry across the border, which Russia has denied. In one of the deadliest clashes to date, separatists last week downed a Ukrainian military transport plane with heavy machine-gun fire and shoulder-launched missiles, killing all 49 people on board. But separatist leaders said Tuesday that their manpower and weapons weren't enough to hold off a Ukrainian military operation in recent days aimed at sealing the border. After regaining control of the large port town of Mariupol on Friday, Ukrainian forces on Tuesday advanced toward the outskirts of Luhansk, the capital of Ukraine's easternmost region and a separatist stronghold. Ukrainian President Petro Poroshenko said Monday that a cease-fire could be declared as early as this week if government forces retake control of the border. Ukraine would then disarm the rebel fighters and grant amnesty to anyone not guilty of serious crimes, he said. "They are methodically cutting off the rebel regions from the border with Russia," said a rebel commander known as Igor Strelkov in a video posted by Russian newspaper Komsomolskaya Pravda. Mr. Strelkov said Ukrainian forces were advancing from the north and south along the border with Russia at a speed of up to nine miles a day. A Ukrainian army spokesman said its forces had killed or wounded around 30 rebel gunmen in the Luhansk region Monday. Mr. Strelkov complained that Russia had missed its chance to send in "peacekeepers" after separatists declared victory in a May 11 secession referendum in parts of Ukraine's east. Kiev declared the vote illegal and riddled with irregularities. "We can only defend," he said, as explosions boomed in the background. "Unfortunately, our opponent is superior to us on all parts of the front." In Moscow for meetings with Russian officials, another separatist leader thanked Russia for sending humanitarian aid but said that rebels needed military aid and advice to form a functioning government. "We are not professional politicians or revolutionaries," Denis Pushilin, a leader of the self-proclaimed Donetsk People's Republic, told a news conference in the Russian capital Tuesday. "We are looking to the Russian Federation for help." Mr. Pushilin said that there was a "flow of volunteer [fighters] from Russia and European countries" but that they remained outnumbered and outgunned by the Ukrainian army. Mr. Pushilin said he had met with top Russian officials during his visit to Moscow, including presidential advisers Vladislav Surkov and Sergei Glazyev. The officials' offices didn't respond to a request for comment, and the meetings weren't widely reported in state-controlled media. Russian state television did show Mr. Pushilin's meeting last week with radical nationalist lawmaker Vladimir Zhirinovsky over plates of biscuits. The Kremlin's perceived inaction has drawn criticism among some radical nationalists in Moscow. "Putin is dragging his feet," Alexander Dugin, a pro-Kremlin ideologue who has been one of the closest allies of the separatists in Moscow, wrote in a Facebook post Monday. Ukrainian officials said Russia has started moving some military units toward the border after they had been ordered back to their bases last month. A spokesman for Ukraine's foreign ministry said Russia was also forming groups of volunteer fighters in a border region to be sent into Ukraine. The spokesman, Yevhen Perebyinis, said Russia's continued interference means the West should implement tougher economic sanctions. "We're not expecting anything [positive] from the Russian side. They have made absolutely clear that they don't intend to stop their activities, and the only thing that can stop the Russian side is tougher sanctions," he said.

Ukraine crisis: Russia halts gas supplies to Kiev

Ukraine says Russia has cut off all gas supplies, in a major escalation of a dispute between the two nations. "Gas supplies to Ukraine have been reduced to zero," Ukrainian Energy Minister Yuri Prodan said. Russia's state-owned gas giant Gazprom said Ukraine had to pay upfront for its gas supplies, after Kiev failed to settle its huge debt. Gazprom had asked Ukraine's state gas firm Naftogaz to pay $1.95bn (£1.15bn) of the $4.5bn it said it was owed. It said it would continue to supply gas to Europe, although Gazprom chief Alexei Miller warned there now were "significant" risks for gas transit to the EU via Ukraine. Ukraine has enough reserves to last until December, according to Naftogaz. Later, the White House urged Moscow to resume talks with Ukraine, saying an EU proposal that Kiev pay $1bn on Monday and the rest in instalments was a "reasonable compromise". Russia-Ukraine ties remain tense since Moscow annexed Crimea in February. Kiev says Moscow backs separatists in the east of the country. Russia denies the charge. In other developments: Pro-Russian gunmen seized the regional treasury in the eastern city of Donetsk, potentially disrupting payments of pensions and other social benefits Ukraine's National Bank building in the city was captured by separatists, reports said Separatists in the eastern town of Kramatorsk said they had come under fire from government troops On Monday, Gazprom said in a statement: "Today, from 10:00 Moscow time [06:00 GMT], Gazprom, according to the existing contract, moved Naftogaz to prepayment for gas supplies. "From today, the Ukrainian company will receive Russian natural gas only in the amounts it has paid for." Moments later, both Gazprom and Naftogaz filed lawsuits against each other at the International Council Commercial Arbitration (ICCA) in Stockholm. Gazprom said it wanted to recover $4.5bn from Naftogaz while Naftogaz said it was seeking to recover $6bn in "overpayment" for gas since 2010. Russian Prime Minister Dmitry Medvedev said Ukraine's position "smacks of blackmail". Ukrainian Prime Minister Arseniy Yatseniuk accused Moscow of blocking the deal to cause supply problems in Ukraine in the winter. The latest moves follow crisis talks between Ukraine, Russia and the EU in Kiev over the weekend. "We reached no agreement. The chances that we meet again are slim," Gazprom spokesman Sergei Kuprianov said. However, EU Energy Commissioner Guenther Oettinger said he was "not pessimistic" about a deal. In a surprise move, he also signalled that issues around Gazprom's proposed South Stream gas pipeline were not insurmountable. The European Commission has said the pipeline - which would take gas directly to Europe bypassing Ukraine - may break EU competition rules, but on Monday Mr Oettinger said: "South Stream is a project that we indeed accept." Gazprom stressed it would continue to supply Europe with gas at "full volume". However, correspondents say EU member states could be affected. About 15% of the EU's gas supply is Russian gas piped through Ukraine. Ukraine's discounted rate for gas - negotiated with former President Viktor Yanukovych - was axed in April after Moscow accused Kiev of failing to pay its bills. Earlier this month, Gazprom gave Ukraine more time to settle its gas bill after receiving a part-payment of $786m. Ukraine said it refused to clear its debts completely in protest at Gazprom's recent 80% price increase. Ukraine's gas bill was $268 per 1,000 cubic metres until April. The price is now $485.50. Kiev had earlier said it was ready to make the $1.95bn payment if Russia cut its price to $326. But Moscow said $385 was the final offer. Addressing security chiefs, Ukrainian President Petro Poroshenko said he had set government forces the task of regaining full control of Ukraine's border with Russia this week. He said that once the frontier was secure, a ceasefire could be declared and efforts made to agree a detailed peace plan.

Should Russia put strong political pressure on Ukraine?

Senior research officer at the Russian Academy of Sciences, Dmitry Gudimenko, urged Russia in an interview with Pravda.Ru to put pressure on Ukraine politically and economically "Ukraine threatens to confiscate the property of Russian companies under the pretext of compensation for the Crimea. It is assumed that Poroshenko will approve that. Is it possible legally?" "This is debatable. I am not a lawyer and I do not know the nuances of international law. In my opinion, it would violate certain laws. The cases that come to mind in relation to the nationalization and confiscation of foreign property in a country are the Communist revolution in Russia, after which the Bolsheviks nationalized most businesses, including foreign ones. "Another case is the confiscation of assets of German companies during World War II in the countries that were fighting against Germany. In both cases, it is obvious that the confiscation of foreign property takes place either during a revolution and political chaos, or in a war. "Russia is not in a state of war with Ukraine. For the time of peace, this would be a radical and extraordinary move that would go beyond the limits of decent political institutions. Ukraine can do it indeed, because the sitting Ukrainian authorities are now radically-minded people. They are not just radical, but also extremely anti-Russian." "How do you think Russia should act under these conditions?" "Placing orders with Ukrainian companies in Russia or in other countries is a complex and lengthy process. This is a question of at least several years - one needs to find new connections, new suppliers, new contractors. This is a difficult and painful process, especially when it comes to cooperation with Ukrainian companies in the defense sector. In particular, Ukrainian companies make engines for Russian helicopters." "Should Russia recall its specialists and remove strategic plants? How should Russia act in a situation of instability?" "Dismantling plants is a very complex process. I do not exclude such a possibility, but this is not the best solution. I believe that the Russian authorities need to be more proactive in dealing with the Ukrainian administration and resort more actively to all sorts of pressure, including economic, political and even military. The impression is that the Ukrainian government does not understand normal language. They seem to understand only the language of force. It appears to me that the people in power in Ukraine can hardly be referred to as normal. Yesterday, Russia reversed the decision on cutting gas supplies. The Ukrainian officials took it as encouragement to further aggressive actions. "The tragedy of the situation is that in terms of economic cooperation, not counting the gas industry, Russia is more dependent on Ukraine than Ukraine is on Russia. And here, it is very unproductive to separate economics and politics. I do not share this approach. If Russia puts strong political pressure on the Ukrainian leadership, then significant changes will be immediately noticeable in the economic sphere.

Western leaders need Putin like the sky needs the sun

According to well-known US-based publication The Olympian, even though Russia did not participate in the G7 Summit, the country dominates over the leaders of world's powers, while the latter tend to resume contacts with the Russian president. An article posted in the publication says that as long as Russia refrained from invading Ukraine, started to withdraw troops from the Ukrainian borders and grudgingly accepted the results of the presidential election in the troubled country, it is obvious that Western leaders no longer want to raise the issue of sanctions against Russia and try to resume diplomatic contacts with the country instead. Indeed, Obama's promised sanctions were not adopted. French President Francois Hollande, German Chancellor Angela Merkel and British Prime Minister David Cameron intend to meet with the Russian President during the celebrations of the 70th anniversary of the Normandy landings. However, Obama himself does not plan to hold a tete-a-tete meeting with his Russian counterpart, although he said, for some reason, that he would try to persuade Putin to meet with Poroshenko. According to the publication, the G7 members realize that they can not get rid of Putin, because they need his support in addressing other global issues of world security. For the United States, Russia remains a strategic challenge, although European countries that receive oil and gas from Russia are interested in doing business with Moscow, and they have never sought to specifically isolate Russia. It is an open secret that Germany, for example, always wanted "a constructive dialogue with Russia," while France continues to build helicopter carriers for Moscow. To crown it all, global corporations and oil and gas giants say that they are not going to carry out previously adopted sanctions against Russia. German Chancellor Angela Merkel supported France's plans to execute the contract for the supply of two Mistral helicopter carriers to Russia, despite criticism from the U.S., EUobserver reports. It goes about the contract worth 1.2 billion euros for the construction of two French helicopter carriers for the Russian Navy. The contract was signed in June 2011 by Russian defense giant Rosoboronexport and French company DCNS. Russia's United Shipbuilding Corporation (USC) takes part in this deal as a subcontractor for French shipyard STX France in Saint-Nazaire. Earlier, French President Francois Hollande said, after the first day of the G7 summit, that his country would fulfill the contractual obligations and deliver the ships to Russia in October. There are no measures in the second phase of anti-Russian sanctions that stipulate a possibility to terminate the contract. U.S. Secretary of State John Kerry stated that France's plan to execute the contract with Russia was raising concerns with the United States. According to Merkel, the contract can be terminated only during the next step of sanctions against Russia, which involve economic restrictions. "The issues affecting exports to Russia fall under the third phase of sanctions. With regard to the third stage, we agreed - and I personally agreed with the U.S. President - that if the elections in Ukraine take place, then we will not enact the third stage of sanctions. We have now seen that the elections were successful," said the Chancellor of Germany. However, Merkel added that the third stage would be triggered, should the situation in Ukraine continue to destabilize. According to RIA Novosti, a representative of Rosoboronexport reported that Russia strictly adheres to the current schedule of payments under the contract with France, while the French side sticks to the construction schedule. As expected, the first Mistral ship - "Vladivostok" - will be put into service in 2014; the second one - "Sevastopol" - in 2015. Both ships will be named after Russian cities. Noteworthy, Sevastopol is now a Russian city of federal significance in the Crimea, formerly a Ukrainian territory.

Sanctions against Russia will only backfire to the West

Russian Deputy Prime Minister Dmitry Rogozin believes that sanctions against Russia can not lead to the isolation of the country. He is confident that such policies will only backfire to the West. Rogozin touched upon the issue of sanctions against Russian at Tekhnoprom 2014 Forum in Novosibirsk. "In the U.S., they now openly talk about a new round of the containment policy of Russia. Containment what? We are not going anywhere geographically. It goes about the containment of the technological development," he said. Rogozin is certain that the policy of sanctions will backfire. "No one will ever be able to isolate our country. This contradicts to the national character of the Russian people: when one forbids something for us, we want it even more," said Dmitry Rogozin. He believes that Russia should be cautious about active suggestions of technological cooperation. "We would be lazy then. Now I can say that we expect a technological breakthrough," Interfax quoted the vice-premier as saying. The United States and several European countries do not want to leave the issue of sanctions against Russia alone. At the same time, Western politicians want Moscow to recognize the legitimacy of Ukrainian President-elect Poroshenko, withdraw troops from the border with Ukraine and, as President Barack Obama said, use influence on armed men in eastern Ukraine to "convince them to put an end to violence, lay down their arms and engage in a dialogue with the authorities." Should "Russia's provocations" continue, Obama promised to take "additional measures" against our country. The list of such measures included the so-called third phase of sanctions to affect separate sectors of the Russian economy - for example, the banking sector, the mining industry, energy and so on. Clearly, the West threatens Russia with sanctions to put pressure on Russia's policies. The question is how effective it can be. But if we talk about a technological breakthrough - does Russia have the resources for that? Sanctions can be seen both as a tragedy and an opportunity to consolidate resources and think what we can do ourselves. It is important to keep the sense of proportion here. The North Koreans, for instance, took the bid on their own strength to absurdity. They try to do everything themselves, but nothing works out. There is no point in doing everything alone, but in a number of areas, where dependence is high, one should try and do it," the head of the department for applied political science of the Financial University under the Government of the Russian Federation, Konstantin Simonov, told Pravda.Ru. "If we choose the right priorities, I think success is possible. A priority can be the defense industry, telecommunications, oil and gas complex. In the oil and gas sector, Russia is now 30 percent dependent on foreign equipment. This is not right. One should change the tax system and encourage foreign oil companies to order equipment from Russian companies. We have great experience, history, science and people," said the analyst. "The right thing to do is to take important priorities and focus on them. Of course, in today's world, it is foolish to try to do everything yourself. Russia must not separate itself from the rest of the world. Sanctions, in some areas, could help us in our development," said Konstantin Simonov.

Passenger bus rams into pedestrians in St. Petersburg, 26 hurt

The number of those who were injured in yesterday's road traffic accident in St. Petersburg reached 26. The accident took place on Nevsky Prospekt, at about nine o'clock in the evening. Passenger bus No. 181 swerved into a crowded sidewalk and rammed into four lampposts. The driver after he felt pain in the heart. No one was killed in the accident, although 26 people, including pedestrians, suffered injuries of various degree. "My vision went dark all of a sudden and I lost control of the steering wheel," the driver later said. The people on the sidewalk managed to escape from the bus, although some of them, who were walking on a hot summer night on Nevsky Prospekt, did not manage to react properly. There were many passengers inside the bus, all the seats were taken, about 8-9 people were standing. The driver suffered bone fractures of the legs. He was hospitalized in severe condition. Twenty-six people - both passengers and pedestrians, including children, - suffered injuries. Eighteen people, four of them minors, received medical aid on the spot and refused from hospitalization.

Poroshenko welcomes his first grandchild

Petro Poroshenko has become a grandfather on the day of his inauguration. Poroshenko said so himself at the reception in Mystetskiy Arsenal art center that followed the inauguration ceremony on June 7, Channel Five's anchor Tetiana Danylenko wrote on her Twitter. The baby was delivered by Yuliya Poroshenko, the wife of Poroshenko's eldest son Oleksiy, 29. Oleksiy Poroshenko is the deputy of regional council of Vynnytsia Oblast, the region that elected his father to parliament in 2012. His wife works at McKinsey & Company, her Facebook page says.

Journalists gather for Mezhyhirya Fest investigative conference at fugitive ex-president’s estate

Documents exposing the enormous web of corruption involving Victor Yanukovych were in the spotlight at Mezhyhirya Fest, an international conference on investigative journalism held at the fugitive ex-president’s opulent country estate outside Kyiv. The three-day festival at the sprawling 140-hectare estate, some 10 kilometers north of the capital, featured more than 30 events and brought together more than 300 leading Ukrainian and international experts and activists. Debates and workshops on subjects ranging from social media use in an age of digital activism and legal aspects of investigative journalism were held at “Putin’s House,” the guest house in which Russian President Vladimir Putin allegedly stayed on his visits to Mezhyhirya. Putin is now harboring Yanukovych, who is wanted for mass murder and corruption charges, in Russia. The venue represented a symbolic victory, said Anna Babinets of YanukovychLeaks, the team of Ukrainian journalists who first gained access to the compound following Yanukovych’s hasty flight from Ukraine on Feb. 22 as the EuroMaidan Revolution succeeded in ousting him from power. “This festival is a step towards strengthening the victory of democracy in Ukraine, and the venue is a reminder of the fact that things have changed. It’s great to be able to hold the event here,” Babinets said. Attracting international media attention, the team discovered some 200 folders containing more than 25,000 records documenting the politician’s activities. The majority were retrieved from the estate’s swimming pool and the Dnipro River which skirts its perimeter, into which Yanukovych and his team presumably threw the stash in the hopes of preventing details of his illicit finances from ever emerging. They were not so lucky. With the help of 17 scanners and more than 60 volunteers, including experts in the preservation of documents, the team dried out and scanned each sheet of paper before uploading the incriminating evidence onto “yanukovychleaks.org,” a website created for this purpose. On the first day the site attracted almost two million visitors, and now hosts 23,456 records in Ukrainian, Russian and English. A half-hour documentary about the team’s efforts premiered at the event. Among the documents uncovered is a $12 million hand-written check to an undisclosed beneficiary, a €39 million chandelier supply contract for the ex-president’s mansion and details of how his security entourage followed the movements of EuroMaidan activists. One notebook found, which belonged to Konstyantyn Kobzar, head of Yanukovych’s personal security detail, revealed how the team closely monitored Tetyana Chornovol, a Ukrainian journalist known for her investigations into corruption, in the days leading up to her brutal beating by several men on Dec 25. In cooperation with Ukraine’s General Prosecution Service, dozens of court cases have been opened against the ex-head of state and members of the so-called “family,” Yanukovych's close circle of advisers, who continue to evade law enforcement agencies. According to First Deputy General Prosecutor Mykola Holomsha, some 400 business entities were involved in money laundering under Yanukovych’s rule, many of them state-owned. More than $32 billion was exported when corrupt officials fled the country in February, while only $187 million has been seized since the investigation began, Holomsha said. SEE ALSO Globe and Mail: Harper stands firm against ‘imperialist’ Putin Documents exposing the enormous web of corruption involving Victor Yanukovych were in the spotlight at Mezhyhirya Fest, an international conference on investigative journalism held at the fugitive ex-president’s opulent country estate outside Kyiv. The three-day festival at the sprawling 140-hectare estate, some 10 kilometers north of the capital, featured more than 30 events and brought together more than 300 leading Ukrainian and international experts and activists. Debates and workshops on subjects ranging from social media use in an age of digital activism and legal aspects of investigative journalism were held at “Putin’s House,” the guest house in which Russian President Vladimir Putin allegedly stayed on his visits to Mezhyhirya. Putin is now harboring Yanukovych, who is wanted for mass murder and corruption charges, in Russia. The venue represented a symbolic victory, said Anna Babinets of YanukovychLeaks, the team of Ukrainian journalists who first gained access to the compound following Yanukovych’s hasty flight from Ukraine on Feb. 22 as the EuroMaidan Revolution succeeded in ousting him from power. “This festival is a step towards strengthening the victory of democracy in Ukraine, and the venue is a reminder of the fact that things have changed. It’s great to be able to hold the event here,” Babinets said. The band Dakh Daughters provided the entertainment on June 6. Attracting international media attention, the team discovered some 200 folders containing more than 25,000 records documenting the politician’s activities. The majority were retrieved from the estate’s swimming pool and the Dnipro River which skirts its perimeter, into which Yanukovych and his team presumably threw the stash in the hopes of preventing details of his illicit finances from ever emerging. They were not so lucky. With the help of 17 scanners and more than 60 volunteers, including experts in the preservation of documents, the team dried out and scanned each sheet of paper before uploading the incriminating evidence onto “yanukovychleaks.org,” a website created for this purpose. On the first day the site attracted almost two million visitors, and now hosts 23,456 records in Ukrainian, Russian and English. A half-hour documentary about the team’s efforts premiered at the event. Among the documents uncovered is a $12 million hand-written check to an undisclosed beneficiary, a €39 million chandelier supply contract for the ex-president’s mansion and details of how his security entourage followed the movements of EuroMaidan activists. One notebook found, which belonged to Konstyantyn Kobzar, head of Yanukovych’s personal security detail, revealed how the team closely monitored Tetyana Chornovol, a Ukrainian journalist known for her investigations into corruption, in the days leading up to her brutal beating by several men on Dec 25. In cooperation with Ukraine’s General Prosecution Service, dozens of court cases have been opened against the ex-head of state and members of the so-called “family,” Yanukovych's close circle of advisers, who continue to evade law enforcement agencies. According to First Deputy General Prosecutor Mykola Holomsha, some 400 business entities were involved in money laundering under Yanukovych’s rule, many of them state-owned. More than $32 billion was exported when corrupt officials fled the country in February, while only $187 million has been seized since the investigation began, Holomsha said. “I have never seen stealing on such a scale. All government agencies were corrupt from the bottom up. The state suffered total losses of around $38 billion,” he said at a press conference on the first day of the festival. “People ask us why we these people were able to escape. My answer is simple: people who controlled the borders were themselves appointed by the former regime. They refused to prevent them from leaving.” Holomsha also spoke of crimes committed against journalists, which have increased in frequency since the armed conflict in the east began. “Over 90 acts of aggression have been recorded against journalists in Ukraine since the start of the crisis. We will put all our efforts into getting these crimes investigated,” he said, adding that the prosecution service is currently looking into 210 cases of interference in journalists’ work. However, Holomsha did not disclose preliminary results of the prosecution service’s investigations, a fact which provoked skepticism among some of those present. “Real cooperation between journalists and law enforcement is impossible. In past years neither journalists nor the general public have had any access to these agencies. We wrote letters and articles to which they paid no attention and we have never received any responses from them,” said Denis Bigus, a member of the YanukovychLeaks team. “Mr. Holomsha has spoken honestly today and I’m grateful to him for this. But this is nothing more than adequate cooperation – it’s certainly not a partnership,” he said. Babinets was more optimistic. “I believe the way Mr. Holomsha spoke gives hope of a new start. He may not have announced any real results but phrases such ‘I am accountable to you’ suggest a new relationship between state organs and civil society and a new system of transparency are emerging,” she said. Among the most interesting details disclosed was the degree of international cooperation involved in the agency’s criminal investigation. Bank accounts belonging to members of the so-called “family” in the United States and the United Kingdom have been frozen and 66 percent of foreign-based assets connected to Yanukovych have been inspected, according to Holomsha. While Mezhyhirya served as a symbolic venue for the proceedings, a performance on June 6 by Dakh Daughters, an art-rock outfit, provided a fitting soundtrack. The group played an active role in the EuroMaidan Revolution events, and sang on Independence Square in December in front of the thousands who had braved the bitter cold to stand together and fight for a democratic future for Ukraine. The festival culminated in the presentation of Ukraine’s first ever investigative journalism award. It went to Lyubomyr Ferens of TVi, an independent Ukrainian TV channel, for his investigation into government involvement in the killing of Serhiy Nigoyan, a 20-year-old Armenian EuroMaidan activist shot during the Hrushevskoho Street clashes in January. He is one of more than 100 protesters killed allegedly on orders of Yanukovych and his former top advisers. The event received funding from several sources, including the U.S. government's Media Development Fund, the Organized Crime and Corruption Reporting Project, Share Foundation, Yanukovych Leaks and Scoop. The event was organized by the Media Development Foundation, a non-profit organization formed by Kyiv Post journalists to support investigative journalism, student journalism exchanges and professional development.

New Kiev Mayor Vows 'Zero Tolerance' On Graft

KIEV, Ukraine -- Vitali Klitschko, Ukraine's boxing champion turned pro-European protest leader, was sworn in as mayor of the capital Kiev on June 5, promising "zero tolerance" of corruption. Dressed in a dark suit and red tie, the former world boxing champion assumed his new title at Kiev's city hall, which has been controlled by pro-European protesters since December. "Change in our country will come from the capital, from Kiev," said Klitschko, who won 56.7 percent in the election for mayor, held at the same time as the presidential polls on May 25. "Kiev will become a true European capital," Klitschko vowed. "I declare a policy of zero tolerance on corruption," he said, promising an audit of all services provided by the authorities. "I don't promise it will be paradise in this city from tomorrow. We have many problems we need to solve together." Klitschko, who heads the pro-European Udar party, emerged as one of the leaders of the movement that ousted former president Viktor Yanukovych this spring, ending an administration widely seen as tainted by graft. He initially ran for the presidency but withdrew to put the weight of the pro-European camp behind front runner Petro Poroshenko, who ended up with a 54.7 percent majority and was sworn in on Saturday. "I am happy that our alliance with Petro Poroshenko has secured such a level of confidence among the people of Kiev," Klitschko said. "The cooperation of the president, the Udar party and other democratic forces in parliament will enable us to put in place a programme of change."

Ukraine, An Old Country Searching For A New Soul

KIEV, Ukraine -- Ukraine has emerged as the “it” country in the global spotlight. With 56 international delegations at the inauguration of Ukraine president Petro Poroshenko and a noticeable spike in cultural and intellectual life prompted by the revolution in Kiev, Ukraine stands out as an old country with a new soul—just what the West needs. Across the street from the ancient Monastery of Lavra in Kiev – a nearly 1000 year-old center of Orthodox Christianity – an avant-garde jazz concert took place one quiet evening in late May. The performance closed a month-long art and culture marathon, the ArtForum festival. The new artistic venture – integrating music, theater, art and brainy discussion — is the result of the Maidan revolution and the need for artistic and intellectual freedom, not only in Ukraine but outside the country, on both sides, East and West. “Right now, I think Kiev can become that breath of fresh air, the escape,” said Yevgeny Utkin, a Ukrainian businessman who, together with his wife Irina Budyanskaya, organized the ArtForum and hosted it at their Master Class cultural and educational center near the monastery. Utkin says that his Master Class was created as an “island of freedom and creativity” for artists and thinkers before Maidan. But now, with Russia oppressing creative freedoms next door, having a democratic platform has gained new importance. On the closing night, an experimental jazz vocalist, Nazgulya Shukaeva, sang a tribute to Ukrainian protesters who gave their lives during the winter’s violent clashes. The Open University of Maidan held a lecture in one of the education rooms. The basement displayed Maidan-themed installations and photos. Utkin, Russian by origin, is a famous IT-entrepreneur in Ukraine who reportedly invested up to $100 million in venture capital in 2012. Back in the Soviet days, he worked at the Science and Research institute outside of Moscow. Later, after profiting on microelectronics, he shifted his focus towards investing and remained at the top of the list of Ukraine’s richest, as compiled by Forbes local edition. The businessman and his family –– including both his sons – participated in the protests in Maidan throughout the entire winter. Together with other Ukrainians they lived through all the phases of the uprising, from the peaceful gatherings in December to Molotov cocktails and deadly clashes in the square in February. Today, the cultural activities in the Master Class center resonate with Kiev’s current mood: recovering from traumatic events and looking to the future. In addition to flourishing as a European capital, Kiev is trending as world cultural hub that not only serves as an example of fledgling freedom among post-Soviet countries but also brings much needed freshness and sincerity to an old Europe. Culture is only a fraction of what makes Ukraine an emerging European magnet. Just a few weeks ago a group of international thinkers, writers and academics from Europe – prodded by Leon Wieseltier of the New Republic and Timothy Snyder of Yale University – gathered in Kiev for an intellectual discussion they called “Ukraine: Thinking Together.” Amidst talk of Russian propaganda and imperialism, cultural identities and geopolitics, there was a notion that Ukraine has turned into a nice alternative to Western weaknesses. Some at the conference opined that Westerners take for granted the core principles of democracy (the rule of law, equality and fairness). European and American politicians continue to make largely hypocritical statements stating that Russia’s aggression towards Ukraine and European security deserves punishment, while enjoying money from corrupt post-Soviet sources. All the while flirting with organizations from the extreme right. Ukrainians that fought for the right to live in a democratic country bring a genuine level of passion to the European bureaucracy. “Despite living under stress for the past half-year, some precious things are happening,” said Budyanskaya, co-founder of Master Class. “People come together, they want to do something, influence something.” Utkin’s cultural center cooperates with embassies and cultural centers from other countries. “We are impressed by their desire to collaborate with us,” Budyanskaya said, stating that they would like to promote Ukrainian artists and musicians. While Kiev is hopeful and energized, not everything is so rosy in other sectors of the country. With the war in the East and an old oligarchic system still alive, Ukraine president Poroshenko, inaugurated on June 7th under the anticipative eye of Ukrainians and the international community, has to act quickly and decisively to get the country out of its political and economic hole. “What’s happening today is saying goodbye to the Soviet Union,” Utkin said, comparing the chaos in the Donetsk region to the painful process of cutting the umbilical cord long after birth. There is no way back. Despite the pitfalls, the country has a chance to succeed because what took place in Kiev this past winter is irreversible. “Today we have a society here — those millions of people who were in Maidan — that represent the healthy part of our humanity.”

Ukraine Energy Firm Hiring Biden’s Son Raises Ethical Concerns

WASHINGTON, DC -- Vice President Joe Biden’s visit Saturday to Ukraine in support of the country's new democratic government is renewing concerns about his youngest son being hired by a Ukraine company promoting energy independence from Moscow. Hunter Biden will be working for the company while his father and others in the Obama administration attempt to influence energy policies and other issues of the new government, which is gripped in a struggle with Russia and pro-Russian separatists to control the county. The company, Burisma Holdings Limited, says it wants to reduce Ukraine's dependence on Russian gas and oil, a goal that parallels U.S. efforts to aid Ukraine's energy industry. The other major issues are Hunter Biden’s new employer leases natural gas fields in Crimea, an eastern Ukraine peninsula being controlled by Russia in the country’s months-long political upheaval. And the company is owned by a former Ukraine government minister, Nikolai Zlochevskyi, who has ties to the country's ousted pro-Russian president, Viktor Yanukovych. The 44-year-old Biden was hired in April and will be a director and lawyer for the company. American conflict-of-interest laws and federal ethics rules essentially do not regulate the business activities of adult relatives of those who work in the White House, and there’s no indication that the situation crosses legal or ethical lines. But ethics experts appear divided over the implications. "The primary problem here is the fact that Hunter Biden has set up a financial arrangement with someone who might have business pending before this administration," said Craig Holman, an ethics expert with Public Citizen, a Washington-based government reform organization. Joe Biden led the U.S. delegation at Saturday's inauguration of Ukraine's new president, Petro Poroshenko, and announced $48 million in additional aid for the Kiev government. Biden met Poroshenko and said "there is a window for peace and you know as well as anyone that it will not stay open indefinitely ... America is with you." The Office of the Vice President said some of the money will help Ukraine “enhance its energy security.” Ukraine is an important natural-gas and petroleum-liquids transit country. Two major pipeline systems carry Russian gas through Ukraine to Western Europe. At least two oil and natural gas fields leased by subsidiaries of Burisma are in Ukrainian territories where pro-Russian sentiments remain strong, according to government and media releases, independent energy maps and Burisma's website. One is in the breakaway Russian-backed state of Crimea. The other is in the eastern Ukrainian Kharkiv region. Instability there could force the younger Biden's new company to coordinate with pro-Russian separatists whom the U.S. considers illegitimate. White House officials declined to comment on Hunter Biden's association with Burisma and the company's holdings in Crimea and east Ukraine. The vice president's spokeswoman, Kendra Barkoff, previously said that Biden's son is a private citizen and a lawyer, and that Joe Biden "does not endorse any particular company and has no involvement with this company." Presidents and vice presidents have long been vexed by relatives rewarded for family ties. Political loan troubles shadowed Vice President Richard Nixon's brother, Donald, during the 1960 election, and President Jimmy Carter's brother, Billy, who accepted a $220,000 stipend in 1981 from Libya's Moammar Gadhafi. In recent years, several Bush and Clinton relatives were caught in a string of murky financial and political dealings. But "unless there's solid evidence that Hunter Biden got his job to influence American foreign policy, there's no clear line that's been crossed," said Melanie Sloan, executive director of the Citizens for Responsibility and Ethics in Washington. A former Washington lobbyist, the vice president's son is effectively exempt from most rules that would require him to describe publicly the legal work he does on behalf of Burisma. Zlochevskyi's name is missing from Burisma's web site, but financial documents in Cyprus as well as U.S. Securities and Exchange records show that he owns the bulk of Burisma's shares. Zlochevskyi's Cyprus-based Brociti Investments Limited controls Burisma.

New Ukraine President Seeks End To Violence

KIEV, Ukraine -- In his first address as Ukraine's new president, Petro Poroshenko declared that Crimea "is, was and will be Ukrainian." The billionaire businessman took the oath of office in Kiev Saturday, in front of parliament, world leaders and dignitaries including U.S. Vice President Joe Biden. Poroshenko — Ukraine's fifth president since the 1991 breakup of the Soviet Union — said in his inaugural address that he will not accept Russia's annexation of Crimea. Moscow sent troops to the Black Sea peninsula earlier this year and took control of it in March. The new Ukrainian leader also pledged to open a dialogue with countrymen in eastern regions where pro-Russian separatists have clashed with Ukrainian forces. He offered amnesty to fighters who lay down their arms and offered to negotiate an end to the violence. "I want peace and I will bring unity to Ukraine," Poroshenko said. "That's why I'm starting my work with a peace plan." Poroshenko addressed eastern Ukrainians directly in a section of his speech in Russian. He promised a decentralization of power, respect for local communities as well as new regional elections. Poroshenko has already held brief talks with Russian President Vladimir Putin about a possible cease-fire. They spoke Friday in France, during ceremonies commemorating the World War II battle of D-Day 70 years ago. Many Ukrainians blame Russia for fueling violence in the east, where Russian fighters have been seen among rebels battling Ukrainian government troops. Moscow has repeatedly denied it is directing the rebels or has supplied their modern military equipment. Meanwhile, Putin reportedly ordered the Federal Security Service to beef up protection of Russia's border with Ukraine. On Saturday, Russian news agencies said the move aims to prevent illegal crossings into Ukraine. Biden attended the morning inauguration ceremony with the U.S. ambassador to Ukraine, Geoffrey Pyatt, and several other officials and lawmakers. Later in the day, he announced the U.S. is offering Ukraine an additional $48 million to help Kiev enact reforms, build law enforcement capacity, and strengthen national unity. The U.S. also pledged $8 million to Georgia and $5 million to Moldova. The extra aid must be approved by Congress. The White House said Saturday that such activities complement long-term U.S. assistance programs designed to support reforms and build institutional capacity across a range of sectors. After the ceremony, Biden passed up a motorcade to stroll a couple of blocks to a presidential reception at St. Sophia cathedral. He set off with U.S. Sen. John McCain, soon joined by the rest of the delegation. As they walked, crowds lined the way. Some people applauded and yelled "thank you" and "USA." At St. Sophia, Poroshenko stood on a red carpet, flanked by Ukrainian flags. He and Biden spoke quietly for a couple minutes before posing for photos. McCain came next, greeting Poroshenko with a hug. Sens. Chris Murphy and Ron Johnson and Rep. Marcy Kaptur greeted Poroshenko together. "It’s wonderful to stand with you," Murphy told the new president. U.S. Secretary of State John Kerry was visiting his ancestral home in Saint Briac-Sur-Mer, France, where he expressed the hope that, "in the next few days, we can see some steps taken that will reduce the tensions." Kerry said such measures offered "the possibility of a cease-fire, the possibility of Russia helping to be able to get the separatists to begin to put their guns away, get out of buildings and begin to build Ukraine." Poroshenko's supporters and critics are watching to see how he will engage with Putin and others. Taras, a Kiev resident standing outside St. Sophia's Cathedral with his wife and infant son, said he thinks dialogue is the way forward. Poroshenko “has to negotiate with Putin,” he said, “because only by negotiations can we find a solution." The new president, Taras said, "should demolish the terrorists and restore order in the country.” In restive eastern Ukraine, Denis Pushilyn, head of the self-declared Donetsk People’s Republic’s Supreme Council, dismissed the prospect of peace talks without concessions by the central government. "After they withdraw military forces from our territory, after we exchange hostages and prisoners of war from both sides... then maybe a dialogue with Poroshenko will be possible," the Associated Press reported Pushilyn as saying shortly after the inauguration speech. Pushilyn said the new president was unwelcome in eastern Ukraine, adding, “We did not elect him.” Poroshenko was elected by a wide margin in May, rising to power on a wave of nationalism that followed the ousting of his Russian-backed predecessor, Viktor Yanukovych, during protests in February. The 48-year-old first came to prominence in Ukraine as a businessman, earning billions from his chain of Roshen chocolate stores. Archbishop Stephan of Ukraine's Orthodox Church said he wonders if Poroshenko's money will get in the way of his ability to lead the people. If Poroshenko “can be replanted into a position where he takes care of other people instead of his business, will he succeed?" the archbishop asked, adding, "I don't know. But we will pray that he will.” Ukraine has long been divided between the pro-Russian east and the Europe-leaning west. Poroshenko already has promised greater economic and diplomatic ties with Europe, a move that could anger Moscow and complicate his efforts to unite the country.