Ukraine Sees Chance for Peace as Putin Sidelines Hawkish Envoy

(Bloomberg) -- Ukrainian President Volodymyr Zelenskiy said he’s committed to ending the conflict with Russia, after the appointment of a new Kremlin envoy signaled a possible opening for peace efforts.

“On the first day of my presidency, I said openly: we didn’t start this war, but we have to end it,” Zelenskiy, elected in a landslide election last year on a pledge to stop the fighting, said in a speech at the Munich Security Conference on Saturday. “And we’ll do it.”

The Kremlin offered grounds for encouragement Tuesday when it handed control of Ukraine policy to Dmitry Kozak, a senior official with a reputation for pragmatism. He replaces Vladislav Surkov, a hardliner who held the role throughout six years of war between the Ukrainian army and Russian-backed separatists that has left at least 13,000 people dead.

Kozak negotiated a mass prisoner swap with Kyiv in September and Zelenskiy’s office says that the Ukrainian leader discussed possible new exchanges with Russia’s Vladimir Putin in a phone call Friday. The two presidents agreed to intensify work on existing peace accords.

The Kremlin said Putin “directly raised the question of whether Kyiv really intends to implement the Minsk agreements” negotiated in 2015. Following talks in Paris in December, the two leaders plan a second meeting with French President Emmanuel Macron and German Chancellor Angela Merkel in Berlin in April.

Border Deadlock

Negotiations remain deadlocked over when Russia is ready to return control of the border with the rebel-held eastern Donbas region.

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

The appointment of Kozak, a former deputy prime minister, met with a cautious welcome in Kyiv and European capitals.

Ukraine’s top negotiator, Andriy Yermak, praised his opposite number, saying this week that Kozak seemed “more committed to dialog” than his predecessor.

Kozak has been responsible for Russian financial support of the breakaway regions and is concerned about the economic costs of the standoff, according to Alexei Chesnakov, a former Kremlin official who continues to consult for the Russian authorities on Ukraine.

“You need a lot of investment to get Donbas out of its postwar shock,” Chesnakov said. “Who will pay for it? His answer is ‘Anyone but us.”’

War Anniversary

Now that Putin is inviting world leaders to Moscow to commemorate 75 years since the Allied victory in World War II, he’s seeking to ease tension.

Still, progress in peace talks may remain elusive even if the EU offers to dial back sanctions that have squeezed Russia’s economy.

Ukraine is refusing to grant autonomy to the separatist region and hold local elections there -- which are due to happen nationwide in October -- as long as Russia controls the border.

Chances of a deal remain very low, according to two people close to the Russian government. Poland and the Baltic States will block any EU concessions toward the Kremlin because they take a tough stance toward Russia, one said. Kozak isn’t a hawk and wants to look for a way forward, but it is too early to expect significant progress, a Russian official said.

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.

This means that Russia may have to consider renegotiating the Minsk accord to speed up return of the border in return for a step-by-step lifting of sanctions, said Andrey Kortunov, director general of the Kremlin-founded Russian International Affairs Council.

However, while many top officials in Russia believe that Zelenskiy would risk a domestic backlash if he gave in on the border, there are powerful elements who believe Russia can get everything it wants without any concessions if it is prepared to wait, Kortunov said in an interview.

--With assistance from Ania Nussbaum, Patrick Donahue and Daryna Krasnolutska.

To contact the reporters on this story: Henry Meyer in Munich at hmeyer4@bloomberg.net;Ilya Arkhipov in Moscow at iarkhipov@bloomberg.net

To contact the editors responsible for this story: Gregory L. White at gwhite64@bloomberg.net, Tony Halpin, Tony Czuczka

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