Hopes Fade for Ukraine Deal That Could Ease Russia Sanctions

(Bloomberg) -- Fragile hopes of ending the six-year conflict in Ukraine that might pave the way to an easing of European sanctions on Russia have evaporated as Moscow and Kyiv find themselves in renewed deadlock.

Foreign ministers from Russia, Ukraine, Germany and France made virtually no progress on a video-conference Thursday as Moscow accused Ukrainian President Volodymyr Zelenskiy of backsliding on a commitment to search for a lasting political solution struck at a four-way leaders' summit in Paris in December.

Speaking after the call, Russian Foreign Minister Sergei Lavrov told reporters only one of nine points that leaders signed up to in Paris had been implemented -- on prisoner exchanges -- and only in part. The presidents of Russia and Ukraine had agreed to gather again at the same level this month to discuss holding elections in the disputed Donbas region, a meeting that is now seen as unlikely to happen.

Zelenskiy was elected in a landslide election last year on a vow to stop the war between the Ukrainian army and Russian-backed separatists that has left at least 13,000 people dead. In February, he voiced optimism about ending the fighting after the appointment of a new Kremlin envoy seen as more flexible than his hawkish predecessor.

But after the two sides agreed to set up a new advisory council to map out a political settlement that would include representatives of the rebel territories, the initiative stalled in the face of criticism inside Ukraine.

“Ukraine is ready for dialog with Ukrainians that live in occupied areas,” Foreign Minister Dmytro Kuleba said after Thursday's call. “But we're not obliged to speak to illegal groups.”

Prisoner Exchanges

Despite success in breaking the ice last year with prisoner exchanges, negotiations remain at loggerheads over when Russia is ready to return control of the border with the rebel-held Donbas.

The Ukrainian president in Paris said his country won't grant autonomy to the separatist region and hold local elections there -- scheduled to happen nationwide in October -- as long as Russia controls the border.

Putin's seizure of Crimea from Ukraine in 2014 and his backing of eastern Ukrainian separatists led to the worst east-west standoff since the Cold War and triggered U.S. and European Union sanctions that have hit Russia's energy and financial sectors.

Under the 2015 Minsk agreement that ended the worst of the fighting, Ukraine agreed to take back control of the frontier between Donbas and Russia after giving autonomous status to the region and allowing elections there. Yet that's unpopular, with opinion polls showing Ukrainians support the idea of voting in the east only once Ukraine regains control over the territories.

German Foreign Minister Heiko Maas, commenting on the ministerial discussion, called for a “lasting, real and verifiable cease-fire” and unhindered access for international observers -- which depends on Russia's influence on the separatists.

The EU should consider a step-by-step lifting of sanctions to secure Russian concessions, the Brussels-based International Crisis Group, which works to resolve conflicts, said in a report published on Tuesday.

“It's hard to be optimistic right now,” Olga Oliker, the group's program director for Europe and Central Asia, said by phone. “The status quo is not great for Russia, but they can live with it.”