Putin backs separatist claims to whole Donbas region of Ukraine

Vladimir Putin has endorsed the claims of Russian-backed separatists to the entire Donbas region of eastern Ukraine, taking the countries closer to full-blown conflict despite tougher than expected western sanctions.

Minutes after Russia’s upper house of parliament unanimously approved a “peacekeeping” mission to the Donbas, Putin said “the best solution” to the crisis would be for Ukraine to “demilitarise”, abandon its goal of joining Nato and pledge neutrality.

The move came hours after Germany’s Chancellor Olaf Scholz halted the approval of the Nord Stream 2 gas pipeline, which connects Russia directly with Germany, scuppering Europe’s most controversial energy project.

Moscow warned European consumers would end up paying the price for the halting of Nord Stream 2. “Welcome to the brave new world where Europeans are very soon going to pay €2,000 for 1,000 cubic metres of natural gas!” tweeted Dmitry Medvedev, deputy chair of Russia’s security council and a former president.

By recognising the two breakaway provinces of Donetsk and Luhansk, Russia had committed a “grave breach of international law”, Scholz said. The two Moscow-backed separatist states only control about a third of the Donbas, an important industrial region, but claim “historical borders” that Ukraine won back from them after the conflict broke out in 2014.

Putin’s decision to send in military support while endorsing the territorial ambitions of the rebel enclaves has heightened western fears of a broader Moscow offensive in coming days.

Nato believes Putin’s move is part of a plan for a “full-scale attack” on the country. “Every indication is that Russia is continuing to plan for a full-scale attack on Ukraine,” alliance secretary-general Jens Stoltenberg said on Tuesday. “Moscow has now moved from covert attempts to destabilise Ukraine, to overt military action.”

Putin said Russian forces would not necessarily enter the Donbas “right now” and said he hoped the border dispute could be resolved through negotiations, but warned of unspecified consequences if his demands were ignored.

The sanctions packages under preparation by the US, UK, EU and Japan were expected to fall short of the toughest economic curbs available, which diplomats said would be triggered if Russia were to drive deeper into Ukraine.

Volodymyr Zelensky, president of Ukraine, urged the west “not to wait” with sanctions until Russia escalated its military campaign, saying “the first steps of this aggression have already been taken”.

At the outset of Russia’s massive troop build-up on the Ukrainian border, Scholz angered critics of Nord Stream 2 by saying it was “purely a commercial project” and appearing to suggest it would not be included in any sanctions package. But his public comments on the pipeline have hardened in recent weeks.

Nord Stream 2 AG, the operator of the pipeline, said it “took note” of Scholz’s comments but could not comment until it had “appropriate information from the authorities”. Gazprom, which owns the pipeline and was due to supply the gas that will flow through it, declined to comment.

Global stocks fell on Tuesday and oil prices rallied, with Brent crude rising more than 3 per cent to close in on $100 per barrel, topping a seven-year high. Russian markets remained volatile for the second day in a row. The benchmark Moex index fell as much as 9 per cent before ending the day up 1.6 per cent.

In the UK, Prime Minister Boris Johnson announced sanctions on five Russian banks and three “high net worth” individuals after Putin ordered troops into eastern Ukraine. In what he described as the “first tranche” of sanctions, Johnson said the people — Gennady Timchenko, Boris Rotenberg and Igor Rotenberg — will have their assets frozen and be banned from entering the UK.

“We hold further sanctions at readiness to be deployed,” Johnson said.

Bill Browder, a financier and prominent advocate of tougher sanctions on Russia, called the UK measures “pretty tepid”. The three “have been on the US sanctions list since 2018”, Browder said on Twitter.

The EU has unanimously approved a package of sanctions against Russia and its surrogates in Ukraine, targeting 351 members of the Russian parliament and 27 individuals and entities blamed for undermining Ukraine’s sovereignty.

“This package of sanctions has been approved by unanimity,” said the EU’s top diplomat Josep Borrell after a meeting of foreign ministers in Paris. “It  will hurt Russia and it will hurt a lot.”

He added the EU was targeting “the ability of the Russian state and government to access our capital markets and financial services”, including the raising of sovereign debt, but gave no further details.

On Monday night, the Biden administration issued an executive order banning new investment, trade and financing by US people and entities in the Luhansk and Donetsk regions. A White House official said further sanctions against Russia would be announced on Tuesday: “We are co-ordinating with allies and partners on that announcement.”

Additional reporting from Henry Foy, Sam Fleming and Eleni Varvitsioti in Brussels, Laura Hughes in London, Victor Mallet in Paris, Leila Abboud in Vendome and Demetri Sevastopulo in Washington