RUSSIA TO FLY BOMBERS TO U. S. GULF AS UKRAINE ESCALATES

Russia to Fly Bombers to U.S. Gulf as Ukraine Escalates

By Volodymyr Verbyany and Kateryna Choursina Nov 12, 2014 12:16 PM PT

Photographer: Dimitar Dilkoff/AFP via Getty Images

Tanks drive from a rebel-territory to Donetsk near the town of Shakhtarsk, eastern Ukraine.
Related

   How Savvy Is Putin in Managing Global Perceptions?

   Cameron Raises Prospect of Further Russia Sanctions

Russia plans to extend long-range bomber patrols as far as the Gulf of Mexico and the eastern Pacific Ocean, its defense minister said, as NATO accused Vladimir Putin’s government of sending more troops into Ukraine.

With Ukraine warning its conflict is close to returning to open war, Russian Defense Minister Sergey Shoigu said his country’s military will start conducting regular long-range bomber patrols along Russia’s borders and over the Arctic Ocean. His ministry rejected an assertion from the North Atlantic Treaty Organization’s top general that it was moving combat troops and heavy weapons into Ukraine’s rebel-held east.

“In this situation, we have to maintain a military presence in the western part of the Atlantic and the eastern part of the Arctic Ocean, in the Caribbean and in the Gulf of Mexico,” Shoigu said, according to a statement on the Russian Defense Ministry website.

Standoff in Ukraine

Pressure has been growing between Russia and the U.S. and the European Union as Ukraine and pro-Russian rebels in its eastern regions accuse each other of gearing up for a renewed military push that risks adding to the death toll of more than 4,000. The UN Security Council is scheduled to hold an emergency session in New York today over the conflict.
Photographer: Maxim Vetrov/AP Photo

A Ukrainian volunteer in the village of Peski near Donetsk, eastern Ukraine, on Nov. 11, 2014.
Tank Columns

Friction over the region’s fate is driving a wedge between Russia and its former Cold War foes in their worst geo-political standoff since the fall of the Iron Curtain. Ukraine says President Vladimir Putin is stoking the unrest to create a potential frozen conflict that will thwart the former Soviet republic’s efforts to deepen ties with the EU. Putin denies his country is involved militarily.

“We have seen columns of Russian equipment, primarily Russian tanks, Russian artillery, Russian air-defense systems and Russian combat troops entering into Ukraine,” U.S. Air Force General Philip Breedlove, NATO’s top military commander, told reporters in Bulgaria today. “We do not have a good picture at this time of how many. We agree that there are multiple columns that we have seen.”

The separatists and their Russian backers are amassing troops in the areas of the Donetsk and Luhansk regions they’ve seized, Ukrainian Defense Minister Stepan Poltorak told a government meeting in Kiev earlier today.
Markets Moving

With the conflict pushing the hryvnia weaker and spurring inflation, Ukraine raised its discount rate by 1.5 percentage point to 14 percent, the highest level since 2014, the central bank said in a statement today.

The yield on Ukraine’s dollar-denominated note maturing July 2017 jumped 154 basis points to 17.67 percent by 7:14 p.m. in Kiev, bringing the eight-day increase to 4.28 percentage points. The hryvnia, which is down 18 percent this month in the world’s largest decline, was unchanged at 15.85 per dollar.

“Investors are voting with their feet -- they now expect further Russian military intervention, and expect the West to do nothing to help Ukraine,” Timothy Ash, London-based chief economist for emerging markets at Standard Bank (STAN) Group Ltd., said by e-mail today. Bondholders are increasingly concerned a war could lead to the “collapse of a state” that would “not be able to pay” its debts, he said.

Russia’s ruble, which has fared worse than any other currency during the past three months, was 1 percent stronger at 46.2208 per dollar at 5:36 p.m. in Moscow.
International Law

There’s no evidence confirming Russia has sent troops into Ukraine, news service RIA Novosti cited Russian Defense Ministry spokesman Igor Konashenkov as saying. The ministry no longer pays attention to Breedlove’s comments, Konashenkov said.

If Russia did move in troops “it would be another example of Russia’s blatant disregard for international law,” Pentagon spokesman Steve Warren told reporters today in Washington.

“We’ve seen the Russians operating in and around Ukraine for months,”he said. “We’ve called regularly on Russians to contribute to stability, not continuing to contribute to instability.”

Warren announced today that next month an Air Force F-16 unit will be training with the Estonia Air Force in an exercise that practices close air support tactics.
‘Anti-Russian Sentiment’

The situation on Russia’s southwestern border is “difficult,” Shoigu said. “This is connected to the situation in Ukraine, with the emerging anti-Russian sentiment on the part of NATO and the increase of foreign military presence in the immediate vicinity of our borders.”

NATO and Ukraine said Russian troops were involved in heavy fighting that preceded a Sept. 5 truce signed in Minsk, Belarus. At the time, Ukraine said Russia was conducting a “full-scale” invasion that resupplied rebel forces and aided an assault that halted a government push to retake territory.

President Petro Poroshenko then called for a cease-fire after Ukrainian television images showed Russian tanks advancing toward the Sea of Azov port of Mariupol and fighting raged in its outskirts.

The UN Security Council will hold an emergency meeting at 2:30 p.m. today in New York, Australian representative Gary Quinlan said on his Twitter account.

German Foreign Minister Frank-Walter Steinmeier told reporters that Organization for Security and Cooperation in Europe observers reported pro-Russian separatists were preparing for a major military confrontation.

“That’s in no one’s interest. We’re losing time,” he said in a news conference alongside Hungarian Foreign Minister Peter Szijjarto in Berlin today. “We’ve reached a point where we cannot say how this conflict will continue to develop.”

EU foreign ministers will discuss “restrictive measures” against Russia when they meet next week, Maja Kocijancic, spokeswoman for EU foreign-affairs chief Federica Mogherini, said yesterday.

Further economic penalties aren’t planned, with the bloc considering targeting people associated with “illegal” elections in rebel-held areas of Ukraine on Nov. 2, German Chancellor Angela Merkel said.

To contact the reporters on this story: Volodymyr Verbyany in Kiev at vverbyany1@bloomberg.net; Kateryna Choursina in Kiev at kchoursina@bloomberg.net

To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net Michael Winfrey, James Kraus