German, French leaders to take Ukraine peace plan to Kiev, Moscow

(Left to right) A four-piece composite picture made of file pictures of Russian President Vladimir Putin, Ukrainian President Pedro Porosgenko, German Chancellor Angela Merkel, and French President Francois Hollande. -- PHOTO: EPA
(Left to right) A four-piece composite picture made of file pictures of Russian President Vladimir Putin, Ukrainian President Pedro Porosgenko, German Chancellor Angela Merkel, and French President Francois Hollande. -- PHOTO: EPA

PARIS/KIEV (Reuters) - The leaders of Germany and France launched a new diplomatic initiative over Ukraine on Thursday, announcing they would fly together to Kiev and Moscow with a proposal to resolve the conflict that could be "acceptable to all".

The coordinated trip by Chancellor Angela Merkel and President Francois Hollande comes as rebels steadily advance on a railway hub held by Ukrainian troops after launching an offensive that scuppered a five-month-old ceasefire.

Washington has begun openly talking of arming Ukraine for the first time. US Secretary of State John Kerry also flew to Kiev on Thursday, although he had no plans to go to Moscow. His likely cabinet colleague, defence secretary nominee Ashton Carter, told lawmakers on Wednesday that he favoured arming Ukraine's forces.

Peace talks collapsed on Saturday in Belarus, EU leaders are expected to consider punishing new economic sanctions against Moscow next week, and Germany hosts world leaders at a security conference over the weekend at which Ukraine is expected to be the main subject.

"Together with Angela Merkel we have decided to take a new initiative," Hollande told a news conference. "We will make a new proposal to solve the conflict which will be based on Ukraine's territorial integrity."

He and Merkel would meet President Petro Poroshenko in Kiev on Thursday and Russia's Vladimir Putin in Moscow the following day. "For several days Angela Merkel and I have worked on a text...a text that can be acceptable to all," Hollande said.

He warned about risks of escalation in Ukraine: "Now we are in a war, and in a war that could be a total war."

Merkel's spokesman Steffen Seibert said in a statement: "In view of the escalating violence in recent days, the chancellor and President Hollande are intensifying their efforts, which have been going on for months, for a peaceful settlement to the conflict in eastern Ukraine."

The Kremlin confirmed the visit. Spokesman Dmitry Peskov told Russian news agencies the leaders would discuss concrete steps to resolve the conflict.

Nato says Russia has sent weapons, funds and troops on the ground to assist the rebel advance, undermining the five-month-old ceasefire in eastern Ukraine where war has already killed more than 5,000 people.

Moscow denies involvement in fighting for territory the Kremlin now calls "New Russia".

The remarks by Carter, President Barack Obama's nominee for defence secretary, were Washington's clearest signal yet that it is considering arming Ukraine. Carter told his Senate confirmation hearing he would "very much incline" toward supplying arms. "The nature of those arms, I can't say right now," Carter said. "But I incline in the direction of providing them with arms, including, to get to what I'm sure your question is, lethal arms."

Asked about the risks of escalation, he said: "I think the economic and political pressure on Russia has to remain the main centre of gravity of our effort in pushing back."

Kerry's visit is more about diplomatic support for now. US officials said he would promise US$16.4 million (S$20.5 million) in humanitarian aid, barely a token gesture for a country that is in desperate need of billions in overseas financing to stave off bankruptcy.

Western advocates of arming Ukraine say giving Kiev weapons would help raise the costs for Putin of pursuing Russia's objectives. Opponents worry about escalating a conflict that would see Nato and Russia actively aiding opposing sides in battle, as in the proxy conflicts of the Cold War.

"RESISTING THE AGGRESSOR"

Ukraine's Poroshenko called unambiguously for Nato arms in an interview with a German newspaper.

"The escalation of the conflict that's happening today, the increasing number of civilian casualties... should move the alliance to provide Ukraine with more support," Poroshenko told Die Welt. "(That) includes, among other things, delivering modern weapons for protection and for resisting the aggressor."

But some Nato members are opposed to sending weapons. "This is not a solution that could involve the European Union or our country in the slightest," Italy's Foreign Minister Paolo Gentiloni said in a radio interview. The EU should maintain pressure through sanctions, not weapons, he said.

The rebels have been concentrating their advance on Debaltseve, a rail hub between their two main strongholds of Donetsk and Luhansk, where a government garrison has held out despite being nearly encircled.

On Wednesday, the rebels appeared to have captured Vuhlehirsk, a nearby small town where government troops had also been holding out. The army said it was still contesting the town, but Reuters journalists who reached it saw no sign of areas under army control.

Some of the residents who had not fled the shattered town came out of cellars where they had been holed up through days of fighting. Four dead Ukrainian soldiers lay in a garden. "Someone should come to remove these corpses, it is inhumane to leave them here to rot," said Sergey Kopun, 50, a metal worker, who emerged from the cellar where he had sheltered with his wife and quadriplegic mother.

In Kiev, the military said on Thursday five more soldiers had been killed and 29 wounded in the past 24 hours. Troops had fended off two attempts to storm Debaltseve.

The war and years of endemic corruption have brought Ukraine to the verge of economic collapse and bankruptcy. The central bank announced a sharp hike in interest rates on Thursday, boosting the key re-financing rate to 19.5 percent from 14 percent, to stave off the collapse of the hryvnia currency.