Putin says neither side upholding ceasefire agreement in Ukraine

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Putin leaves G-20 summit early after Ukraine criticism

Heavy fighting rages in eastern Ukraine

MOSCOW – Russia's president said he believes peace in Ukraine is possible but that neither side is fully holding up a truce struck in September.

In an interview with German television broadcast late Sunday, Putin said he was convinced that it was possible to end the deadlock in east Ukraine, where pro-Russian rebels have been battling Kiev's troops in a conflict that has claimed at least 4,000 lives since March.

But the Russian leader also noted that neither the rebels nor Ukrainian troops have fully withdrawn from key locations in the region in order to create a buffer zone, a key part of a truce deal agreed to in September.

"It is true that there are certain settlements that the armed rebel formations should abandon, and they are not being abandoned," he said. But he blamed the Ukrainians for not holding up their end of the agreement and setting a bad example for the rebels to follow.

Since Ukraine's pro-Russian president was ousted from power last February, Moscow has often referred to the new, Western-leaning government as a "junta" brought to power by an unconstitutional coup. Putin spoke more diplomatically on Sunday, saying he believed Ukraine "is a big European country with a European culture."

But he also lashed out against far-right nationalist elements in Ukraine and against what Moscow perceives as the repression of Russian-speakers in the region.

"I'll say this bluntly: we're very concerned that the desire could arise to use ethnic cleansing. We're afraid about a drift toward neo-Nazism" in the region, he said.

In response to a question about whether Russia was arming the rebels, as contended by both Kiev and the West, Putin said merely that "anyone waging a fight that they believe fair will find weapons."

He stressed that without such arms the rebels would be quickly destroyed by the Ukrainian forces -- something Russia "does not want, and will not allow." While Putin stopped short of acknowledging Russia's material role in the conflict, his comments went further in emphasizing Moscow's willingness to support the separatists than ever before.

During a speech Monday after the G-20 summit in Australia, German Chancellor Angela Merkel struck a defiant note on sanctions against Russia for its role in Ukraine, saying that those measures would remain in place "as far and long as they are needed."

Merkel spoke out against a political system dominated by "spheres of influence, which spurn international law," and warned that regional conflicts like the one raging in east Ukraine "can very quickly broaden to major fires."

But in Brussels, the European Union's foreign affairs chief said more sanctions against Russia would not help end the east Ukraine crisis.

Federica Mogherini said at a meeting of EU foreign ministers that there was a need to re-launch a dialogue with Russia, and also said she is seeking more ways to assist Ukraine in implementing economic and institutional reforms.

World leaders at the weekend G-20 summit in Brisbane roundly criticized Putin over Russia's escalating aggression in Ukraine, but came up with no clear plans how to turn up the diplomatic heat.