Deutsche Tageszeitung - Ukraine, Russia talk as sanctions rain down on Moscow

The meeting came as Russian shelling killed 11 people in Ukraine's second largest city of Kharkiv after days of fighting that have seen the biggest cities, including Kyiv, stay out of Russian hands.

The war has already forced more than 500,000 people into neighbouring countries, the UN said Monday, as fears mount of a protracted conflict in eastern Europe.

Negotiators from Moscow and Kyiv held talks on the border between Belarus and Ukraine on day five of Moscow's invasion, but Ukrainian demands for a ceasefire "and the withdrawal of troops" were almost certain to be rejected.

Ukrainian President Volodymyr Zelensky had sought to play down expectations beforehand, saying: "I do not really believe in the outcome of this meeting, but let them try."

Sanctions imposed by the West over the weekend had an immediate impact on Moscow financial markets on Monday, with the Russian ruble falling to a record low and the central bank more than doubling the key interest rate to 20 percent.

The United States also announced Monday that it had banned all US transactions with Russia's central bank and would freeze its foreign reserves, while traditionally neutral Switzerland also said it would adopt the same measures as the EU.

The sanctions are intended to change the calculus of Kremlin leader Vladimir Putin, but on the ground the roughly 100,000 Russian troops thought to be inside Ukraine pressed ahead with their invasion from the north, east and south on Monday.

"The Western sanctions on Russia are hard, but our country has the necessary potential to compensate the damage," Kremlin spokesman Dmitry Peskov told journalists Monday.

Putin on Sunday put Russia's nuclear forces on high alert in response to what he called "unfriendly" steps by the West, whose unity and speed in isolating the Russian economy has surprised observers.

There were more signs of rare dissent among the usually ultra-loyal oligarchs who surround the Russian leader -- in addition to anti-war demonstrations in Russia that saw an estimated 2,100 people arrested on Sunday.

"It is necessary to change the economic policy, it is necessary to end all this state capitalism," tycoon Oleg Deripaska wrote on Telegram while criticising "fantasists" in charge.

- Russian advances -

Western defence officials and the Kyiv government say battling Ukrainian troops have kept the country's major cities out of Russian hands so far despite incursions in the capital and the second largest city, Kharkiv, over the weekend.

Kharkiv came under heavy shelling as the negotiators were meeting on Monday, according to regional governor Oleg Sinegubov who said that there were 11 dead and dozens wounded.

"As a result of the bombardments that are ongoing, we cannot call on the emergency services," he wrote on Telegram.

The small southern city of Berdyansk has also been occupied, however, Ukrainian officials said.

In Kyiv on Monday, after a relatively calm evening, people rushed out to buy food, forming long queues, after the lifting of a strict curfew imposed Saturday.

Others like bank employee Viktor Rudnichenko took to the streets to prepare for the possible advance of Russian soldiers.

"We will greet them with Molotov cocktails and bullets to the head, that's how we will greet them," Rudnichenko told AFP.

Amid reports of further Russian troop movements towards the capital, Moscow said it had now "gained air superiority over the entire territory of Ukraine", while accusing Ukrainian troops of using civilians as human shields.

Western defence officials have warned that Russia might be preparing to lay siege to Ukraine's cities, which would cause major suffering for civilians.

The UN's refugee agency UNHCR said over half a million people had fled the conflict zone since Thursday.

"You don't conquer a country in two days," said Olivier Kempf, a security analyst at the Foundation for Strategic Research, a Paris-based think-tank, warning against Western optimism about Russia's slower-than-expected progress.

"There have been difficulties, yes, that's war. They perhaps have logistical problems, but no matter what anyone says, they are still advancing," he told AFP.

- Economic pressure -

The talks on the Belarus-Ukraine border are being led by Ukraine's defence minister and Russian presidential adviser Vladimir Medinsky.

Kyiv had been initially reluctant to send a delegation to Belarus, given the country's role in facilitating Russia's attack on Ukraine by hosting troops and weaponry used for the invasion.

"We definitely have an interest in reaching some agreements as soon as possible," Medinsky said in televised remarks before the start of the meeting.

Zelensky meanwhile issued another video address, wearing his now trademark green khaki sweatshirt, calling on the European Union to agree to "the immediate accession of Ukraine via a new special procedure".

But European Council president Charles Michel stressed there were "different opinions and sensitivities within the EU on enlargement."

The EU over the weeekend announced it would provide 450 million euros ($500 million) for Ukraine to buy weapons, including Russian-made fighter jets that Ukrainian pilots could operate.

- Financial hit -

Fresh sanctions announced over the weekend on Russia's economy are intended to cut it off from the global financial system in the way that Iran, Venezuela or North Korea have seen their ability to trade with outside world all but ended.

Russia's central bank said Monday it was more than doubling its key interest rate to 20 percent, dramatically raising the cost of borrowing.

The value of the ruble collapsed against the dollar, down 17 percent in late afternoon trading, while the Moscow Stock Market was closed for the day to prevent an expected mass sell-off.

The ruble was trading at around 94 to the dollar on Monday afternoon, around a third of its value compared with 2014, with long lines of Russians seeking to take out money from their bank accounts.

Many Russian banks have been excluded from the SWIFT bank system, which is used to settle international trade, and the Russian central bank has seen its foreign assets frozen, depriving Moscow of access to these emergency funds.

Russia has acknowledged that a number of its forces had been killed or injured, without giving figures.

The UN human rights chief Michelle Bachelet said Monday at least 102 civilians, including seven children, had been killed in Ukraine.

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(M.Dorokhin--DTZ)