Year: 2015

Kiev accused pro-Russian rebels of opening fire with rockets and artillery at villages in southeastern Ukraine on Monday, all but burying a week-old European-brokered ceasefire deal.

The Ukrainian military said it could not pull weapons from the front as required under the tenuous truce, as long as its troops were still under attack.

Ukraine’s currency, nearly in freefall this month, fell a further 10 percent on Monday on fears that the truce could collapse. The central bank said it would tighten currency rules to sustain the hryvnia. The value of Ukrainian debt also fell, with bonds now trading at 40 cents in the dollar.

The reported shooting came closer to killing off the truce, intended to end fighting that has killed more than 5,600 people, which rebels ignored last week to capture the strategic town of Debaltseve in a punishing defeat for Kiev.

Kiev and its Western allies say they fear the rebels, backed by reinforcements of Russian troops, are planning to advance deeper into territory the Kremlin calls “New Russia”. Moscow denies aiding the rebels.

Fighting has diminished since Kiev’s forces abandoned Debaltseve in defeat last Wednesday, and there were hopeful signs for the truce over the weekend, with an overnight exchange of around 200 prisoners late on Saturday and an agreement on Sunday to begin pulling back artillery from the front.

But Kiev said on Monday that two of its soldiers had been killed and 10 wounded in overnight fighting.

“Given that the positions of Ukrainian servicemen continue to be shelled, there cannot yet be any talk of pulling back weapons,” spokesman Vladislav Seleznyov said.

Dmytro Chaly, spokesman for the Ukrainian military in the port of Mariupol, a city of 500,000 people which Kiev fears will be the next target, said rebels opened fire in the afternoon with Grad rockets, artillery and tanks on villages nearby.

Anatoly Stelmakh, another military spokesman, said rebel forces had attacked the village of Shyrokyne on the coast road towards Mariupol overnight.

“The fighters have not stopped their attempts to storm our positions in Shyrokyne, in the direction of Mariupol. At midnight armed groups again attempted unsuccessfully to attack our soldiers. The battle lasted half an hour.”

Rebel commander Eduard Basurin denied rebel fighters had launched any such attack, and said the situation was calm. “At the moment all is quiet, there is no shelling,” he told Reuters.

The head of the Kiev-controlled Donetsk regional police, Vyacheslav Abroskin, said one police officer was killed and two wounded in Mariupol in a shootout when they stopped a militant “reconnaissance group” carrying explosives in a car. One of the rebels was also killed.

UNJUSTIFIABLE AND ILLEGAL

Western countries still hope the truce can be salvaged if the rebels halt, now that they achieved their objective at Debaltseve last week. The foreign ministers of France, Germany,Russia and Ukraine will meet on Tuesday in Paris to try to get the peace deal back on track, a French diplomatic source said.

But Germany, whose Chancellor Angela Merkel was the driving force behind the peace deal, said in unusually strong terms that it was now clear that the ceasefire was not being implemented.

British Prime Minister David Cameron said any further attempt to expand rebel territory would be met with fresh Western sanctions on Moscow: “Far from changing course, Russia’s totally unjustifiable and illegal actions in eastern Ukraine have reached a new level with the separatists’ blatant breach of the ceasefire,” he told parliament.

Nevertheless, the U.S. ambassador to NATO Douglas Lute said it was still too early to “give up hope on the ceasefire” and Russian President Vladimir Putin told state television the deal was the right way to resolve the crisis.

There were signs, however, that a deal reached late last year to ensure Ukraine receives gas from Russia was also in jeopardy. Last week, Kiev cut back supplies of gas to rebel-held areas and Moscow said it would supply some gas to the rebels directly. On Monday, Ukraine’s gas company said Russia had failed to deliver some supplies Kiev had paid for in advance.

In Debaltseve, now under rebel control, thousands of civilians who were trapped through the storming of the town are still living in cellars in the ruins. No one has tallied the civilian dead from last week’s assault.

Nina Shono, 80, one of eight people sheltering in a basement beneath the ruins of their five-storey apartment building, made soup and baked bread on a homemade wood-burning stove in the darkness while a rat scampered in a corner.

“When we were bombed, we were praying and I was crossing myself, everything was collapsing. One explosion. The second explosion, the third. But we are still sitting here,” she said.

In the biggest rebel stronghold Donetsk, occasional artillery fire could be heard through the night and on Monday morning, although it was not clear who was firing and it was far less intense than before the truce.

The separatist press service DAN reported two homes destroyed by shelling on the city’s outskirts overnight.

Nearly a million people have been driven from their homes by the war between pro-Moscow separatists in eastern Ukraine and government forces. Rebels say they launched their advance because previous battle lines had left their civilians vulnerable to government shelling.

Donetsk resident Sergei, 52 said he could do no more than hope that the truce would work out. “No one knows what will happen with the way the sides are behaving,” he said.

Kiev fears unrest could spread to other parts of the mainly Russian-speaking east, where its troops are in control and most residents are loyal but violent separatist demonstrations have occasionally flared in the past year.

Two people were killed on Sunday in Kharkiv, 200 km (125 miles) from the war zone, in a blast at a pro-Ukrainian rally. Kiev said it had arrested four suspects who had received weapons and instructions in Russia.

Brussels: Euro zone finance ministers agreed in principle on Friday to extend Greece’s financial rescue by four months, averting a potential cash crunch in March that could have forced the country out of the currency area.

The deal, to be ratified once Greece’s creditors are satisfied with a list of reforms it will submit next week, ends weeks of uncertainty since the election of a leftist-led government in Athens which pledged to reverse austerity.

“Tonight was a first step in this process of rebuilding trust,” Jeroen Dijsselbloem, chairman of the 19-nation Eurogroup, told a news conference. “We have established common ground again to reach agreement on this statement.”

The agreement, clinched after the third ministerial meeting in two weeks of acrimonious public exchanges, offers a breathing space for the new Greek government to try to negotiate longer-term debt relief with its official creditors.

But it also forced radical young Prime Minister Alexis Tsipras into a major climbdown since he had vowed to scrap the bailout, end cooperation with the “troika” of international lenders and roll back austerity.

European Union paymaster Germany, Greece’s biggest creditor, had demanded “significant improvements” in reform commitments by Athens before it would accept an extension of euro zone funding.

The two main combatants around the table put a radically different gloss on the result.

“Being in government is a date with reality, and reality is often not as nice as a dream,” German Finance Minister Wolfgang Schaeuble told reporters, stressing Athens would get no aid payments until its bailout programme was properly completed.

“The Greeks certainly will have a difficult time to explain the deal to their voters,” the conservative veteran said.

Greek Finance Minister Yanis Varoufakis said the talks had shown elections could bring change to Europe. He insisted he had averted “recessionary measures” and said the government still hoped to raise the minimum wage and rehire some public sector workers.

“Nobody is going to ask us to impose upon our economy and society measures that we don’t agree with,” Varoufakis said.

The euro rebounded against the dollar and global equity markets surged to record closing highs while Greek government bond yields fell on optimism for a debt deal.

REFORM LIST

The accord requires Greece to submit by Monday a letter to the Eurogroup listing all the policy measures it plans to take during the remainder of the bailout period.

If the European Commission, the European Central Bank and the International Monetary Fund are satisfied, euro zone member states will ratify the extension, where necessary through their parliaments.

Euro finance ministers may sign off on the deal on Tuesday via a teleconference. However, if there are doubts they would reconvene in Brussels, officials said, a conditions insisted upon by Spain, whose government also faces a radical leftist insurgency at an election later this year and is keen that Tsipras gets no special treatment.

Irish Finance Minister Michael Noonan voiced caution, telling reporters: “It’s an important first step that we hope will lead to a successful second step on Monday night/Tuesday morning, but then of course there’s a third step with ratifications in parliament.”

With the 240 billion euro EU/IMF bailout programme due to expire in little more than a week, Tsipras had requested a six-month extension of a loan agreement but Germany and its allies objected to the initial formulation of the request.

Greece’s partners insisted on the shorter period and tied further disbursements to a satisfactory review at the end. They also obliged Athens to commit to fully funding any new spending measures and obtaining approval from its lenders.

The ECB said there would be no need for Greece to impose capital controls restricting cash withdrawals after the deal.

An ECB source said the bank’s governing council was ready to resume accepting Greek government bonds as collateral for lending once necessary steps were taken for the extension and the bank determined there was a “great likelihood” that Greece would achieve a “positive conclusion” to its rescue programme.

TRUST IN SHORT SUPPLY

The complex document was crafted in preliminary talks among Varoufakis, Schaeuble, Dijsselbloem and IMF Managing Director Christine Lagarde.

Finance ministers from other euro zone states insisted on more guarantees that Greece would meet the bailout’s strict conditions on budget discipline and economic reforms.

Tsipras had a long telephone call with Germany’s Angela Merkel on Thursday and has spoken repeatedly to the leaders of France and Italy in the search for a solution that allows his radical government to fulfil election promises.

Euro zone officials said Greece’s track record and the combative behaviour of its new leaders had undermined their confidence in whether Athens would deliver what it agrees to in talks with the other countries sharing the euro.

That drove ministers to make Greece hand over custody of nearly 11 billion euros in aid earmarked for stabilising its banks to the euro zone’s rescue fund.

“We wanted to make sure that the … money for Greek bank recapitalisation is for that purpose, not for recapitalisation of the government,” Dijsselbloem said.

Some pointed comments were directed at Varoufakis, an outspoken Marxist economist and blogger, and his casual style. “Even hardliners like us have to give the benefit of the doubt to a communist in a Burberry scarf,” an official of one hawkish European country joked.

Adding to pressure to reach a deal, Greek savers have withdrawn their money from the banks at an accelerating pace despite government assurances that there is no plan to introduce capital controls to stem the outflows.

Deposit outflows rose to a total of over 1 billion euros in the past two days, some of the highest daily levels seen this year, three senior banking sources told Reuters.

Greeks were nervous before a three-day weekend, given memories of capital controls imposed in Cyprus in 2013 over a long weekend, a senior banker said. Monday is a public holiday.