Ukraine Cease-Fire Frays as Rebel Assaults Test Military Nerves

The cease-fire in Ukraine that curtailed casualties for four weeks is starting to fray as pro-Russian insurgents continue to test the nerves of the military with targeted attacks, the government in Kiev said.

Shelling continued late yesterday in the Donetsk region near the Russian border, where a high-voltage transmission line was severed, knocking 400 substations offline and cutting power to several districts, the local city council said.

Separatists tried to storm the government-held Donetsk airport twice, Ukraine military spokesman Andriy Lysenko told reporters in Kiev yesterday. Rebels shelled army positions with Grad multiple-rocket launchers in at least four locations, the military said on Facebook. Nine Ukrainian soldiers were killed two days ago, the most since a Sept. 5 truce.

The violence contrasts with comments last week by President Petro Poroshenko that the worst of the war is over as Ukraine focuses on elections next month, securing gas supplies and preparing a bid for European Union membership. Russia, which denies involvement in the war, said it wants to normalize ties with the EU and the U.S. after being hit by sanctions.

A cease-fire doesnt mean peace, Jan Techau, director of the Brussels office of the Carnegie Endowment, said by phone. Its a hot stalemate with skirmishes but no massive offensive. It clearly shows that theres no solution to the conflict.

Since the cease-fire was reached in the Belarusian capital Minsk, the two sides have since agreed to establish a 30 kilometer (19 miles) buffer zone between government forces and the rebels and exchange prisoners.

The conflict has killed more than 3,500 people and driven at least 615,000 from their homes, the United Nations estimates.

The ruble declined to a new low against the dollar in Moscow yesterday, while the Micex (VTBMICX) stock index rose 0.2 percent.

While EU countries delayed the creation of a free-trade area with Ukraine until 2016 at Russias urging, they have held fast on refusing to ease sanctions. The government in Moscow asked the central bank to consider providing foreign currency swaps to banks, the government said on its website. Sanctioned companies including state-run oil producer OAO Rosneft (ROSN) and gas producer OAO Novatek have asked for aid.

Russias economy is not in very good shape, Foreign Minister Sergei Lavrov said in an interview with Bloomberg Sept. 28. He softened his stance in comments about the U.S., telling Russian Channel Five television it was time for ties to undergo a reset 2.0, a reference to a bid by President Barack Obamas administration in 2009 to improve relations.

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Ukraine Cease-Fire Frays as Rebel Assaults Test Military Nerves

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