Poroshenko and US press Putin on Ukraine violence

Kiev — Ukraine President Petro Poroshenko made a personal plea to Russia's Vladimir Putin and Washington threatened tougher measures Wednesday should Moscow fail to rein in separatists mounting a new offensive in the east of the ex-Soviet republic.

Poroshenko's personal letter and US Treasury Secretary Jack Lew's warning came one day after European Union leaders unanimously backed pursuing more economic restrictions against Russia for its alleged meddling in Ukraine.

Greece and Cyprus later distanced themselves from the statement but are not expected to fight new penalties the bloc's 28 foreign ministers will draft in Brussels on Thursday.

Western sanctions and a coinciding slide in the price of its vital oil exports have sent Russia into recession and seen Standard and Poor's slap a "junk" rating on Moscow's foreign currency debt.

The downgrade threatens to further alienate Western investors as the grade is the worst in Russia since the start of Putin's 15-year rule.

Yet the pain appears to have done little to alter Putin's tough approach to his western neighbour or to dent Russians' monumental trust in the Kremlin chief.

The pro-Moscow rebels last week defiantly pulled out of peace talks and vowed to take a strategic government-held coastal city that provides a direct land bridge to Ukraine's Russian-occupied Crimea peninsula.

The fighters later denied killing 31 civilians in a weekend rocket assault on the port of Mariupol that international monitors said was launched from rebel-held territory.

A new eastern offensive has also seen separatists in the Lugansk and Donetsk regions try to link up their armies by taking over isolated pockets of land still controlled by government troops.

The Kiev military and local pro-government officials said three soldiers and the same number of civilians died in the latest clashes overnight. The United Nations believes the latest spiral of violence has pushed the war's death toll above 5,100.

Poroshenko's office said the letter to Putin demanded that Moscow immediately rein in the offensive and fulfil the terms of a long-ignored September peace plan it signed with Kiev and two top separatist leaders in Belarus.

"On Monday, I sent a letter to President Putin whose main elements included not only the demand to cease fire and implement the Minsk Agreements but also to release Nadezhda [Nadia] Savchenko and all the hostages," the presidency quoted Poroshenko as saying.

The female Ukrainian pilot claims to have been abducted by the rebels and smuggled to Moscow.

She is charged with involvement in an attack that killed two Russian reporters in June. Savchenko's lawyers said she went on a hunger strike in protest on December 13.

US help for Ukraine

There was no immediate reply to Poroshenko's letter from the Kremlin.

But Putin this week accused NATO of launching a proxy war in eastern Ukraine designed to weaken Russia and sever the two country's ancient relations.

US finance chief Lew said during a visit to Kiev that Washington would prefer to ease its worst crisis with Moscow since the Cold War.

"Our first choice is a diplomatic resolution that allows us to lessen sanctions," Lew told reporters after meeting his Ukrainian counterpart Natalie Jaresko.

"But we are prepared to do more if necessary. To that end, we'll continue to work with our allies to increase the pressure on Russia."

Moscow flatly denies backing the insurgents and claims the sanctions are an attempt to punish Russia for going against US policies.

"At the same time, we've been clear from the beginning: if Moscow fully implements its obligations pursuant to the Minsk Agreement, sanctions against Russia could be eased," Lew added.

US President Barack Obama and German Chancellor Angela Merkel agreed in a late Tuesday phone call "on the need to hold Russia accountable for its actions".

Lew also told Jaresko — a US national confirmed to her post last month — that Washington was ready to provide up to $3 billion in support should Kiev press ahead with overdue economic restructuring steps.

Ukraine's economy contracted by nearly 8 per cent last year and Kiev is currently facing a massive foreign debt burden that threatens to put it into default within the next few months.