(Bloomberg) -- Russia gave civilians one road out of Kyiv as its forces pushed their advance around the Ukrainian capital and other key urban centers, overshadowing tentative diplomatic efforts at achieving a cease-fire following President Vladimir Putin's invasion.
With battles reported in the suburbs of Kyiv and heavy fighting around Ukraine's second city, Kharkiv, President Volodymyr Zelenskiy warned that Monday will be critical for Ukraine's fate.
“It is a war, a real war,” Kharkiv's mayor, Ihor Terekhov, was cited as telling the Ukrainska Pravda website. According to city authorities, civilians were killed and wounded after heavy shelling in residential areas, Pravda reported. Russia says that it is only attacking military targets.
Five days in, and the stakes were rising ever higher for Russia, too. A wall of western sanctions imposed over the weekend targeting Russian banks, companies and individuals led to a collapse in the ruble and prompted the central bank to impose capital controls to try and allay investor panic and shore up the economy.
In a sign of Russia's international isolation, Switzerland cast aside its traditional neutrality and joined in enacting penalties. Putin responded with his own set of sanctions on those countries targeting Moscow, while Russian airspace was closed to a slew of European nations in a reciprocal measure.
Read more: Russia Erects Financial Defenses to Shield Economy
In Ukraine, a delegation led by Defense Minister Oleksiy Reznikov met with Russian counterparts on the northern border with Belarus on Monday, the first opportunity for negotiations since Russia instigated the hostilities with a multipronged attack on its neighbor on Feb. 24. Both sides later returned to their respective capitals for consultations, according to Ukrainian presidential adviser Mykhaylo Podolyak
Human shields
While he said that both sides agreed to study the possibility of a second round of talks, any rapid resolution of the conflict always seemed like a remote possibility since Putin demands the surrender of Ukraine's military and the removal of the country's democratic leadership, which he denounces as a “junta.”
Putin told French President Emmanuel Macron in a call on Monday that he was open to negotiations, but that settlement of the conflict is only possible with due consideration of Russian security interests, Interfax reported.
Zelenskiy said that there were no preconditions, but he expressed skepticism the talks would yield results. He appealed to the European Union for a fast-track path to membership, further undermining any pretense of “neutral status” for Ukraine, another of Putin's conditions. The low profile of the Russian delegation, at deputy ministerial level, further weighed on expectations of any breakthrough.
On the ground, the fighting continued unabated. Russian forces seized the port of Berdyansk, while the Washington Post, citing an unidentified U.S. official, reported that Belarus was preparing to send troops into Ukraine in support of Russia as soon as Monday. On Sunday, Putin set his nuclear arsenal on high alert.
Read more: Putin Nuclear Threat Makes World Ask Again If He's Bluffing
Speaking in Warsaw, Polish Prime Minister Mateusz Morawiecki said that Russia “threatens an attack” in Ukraine that could cut off the border with Poland, adding that “we must act quickly” to deliver humanitarian aid to those fleeing the war.
Refugees from the fighting streamed over the borders. Filippo Grandi, the United Nations High Commissioner for Refugees, said in a tweet that more than 500,000 people had fled Ukraine into neighboring countries.
The Russian army told Kyiv residents that “all civilians located there can freely leave” the capital by a single highway, Defense Ministry spokesman Igor Konashenkov said, an offer that raised fears of an all-out attack on the capital. He alleged that the Ukrainian authorities were using people as human shields.
Zelenskiy's office responded by dismissing as fake news the notion that Kyiv is surrounded.
“Russians can only dream about it,” the presidential office said in a statement. “Kyiv is completely controlled by the Ukrainian forces, arrivals to Kyiv are available. Yes, in some suburbs the confrontation continues, there were heavy battles. But we will not give up the capital.”
The U.K. Defence Ministry said in a tweet earlier Monday that the bulk of Putin's ground forces remained more than 30 kilometers (18 miles) to the north of Kyiv, “having been slowed by Ukrainian forces defending Hostomel airfield.” Despite heavy fighting in the key cities of Chernihiv and Kharkiv, both cities remain under Ukrainian control, it said.
Massive increase
“Logistical failures and staunch Ukrainian resistance continue to frustrate the Russian advance,” the U.K. ministry said.
The Kremlin may have underestimated the international response to its aggression. Stocks and the ruble sank on Monday as another round of sanctions by the U.S., the EU, Japan and others isolated Russia from the global financial system. A senior official from U.S. President Joe Biden's administration said the market seizure was evidence of a vicious feedback loop triggered by Putin's choices.
In Berlin, the German government overturned years of established policy against sending weapons into conflict zones by allowing the supply of arms to Ukraine. In another historic shift, it announced a fund of 100 billion euros ($112 billion) in this year's budget to massively increase its defense spending and bring outlays above NATO's 2% of GDP target.
Addressing a special session of the German federal parliament, the Bundestag, on Sunday, Chancellor Olaf Scholz said that Putin's attack on Ukraine “marks a watershed in the history of our continent.”
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