The Vladivostok warship, a Mistral class...The Vladivostok warship, a Mistral class LHD amphibious vessel ordered by Russia to the STX France shipyard in Saint-Nazaire, western France, leaves for her first trial on March 5, 2014. The Vladivostok warship is one of two navy ships ordered from France by the Russian army and it will take part in a sea trial. AFP PHOTO / FRANK PERRYFRANK PERRY/AFP/Getty Images
France has been under pressure to cancel its contract with Russia for Mistral war ships

President François Hollande halted the delivery of the first of two warships to the Russian navy on Wednesday, the clearest sign yet that the west was preparing to take further punitive action against the Kremlin despite claims by Vladimir Putin he was pursuing a ceasefire in Ukraine.

In a terse statement, Paris said Russian actions in the Ukraine “contravened the basis of security in Europe” and therefore conditions for delivery of the first Mistral helicopter assault ship had not been met.

The decision came amid growing criticism from the UK government and other Nato allies over France’s controversial €1.2bn contract on the eve of the alliance’s summit in Wales.

French officials emphasised they had not cancelled the deal, a move that could lead to as much as €1.1bn in fines for breaking the contract. But coming after months of resistance by Paris, it signalled how much relations with Moscow had changed after Nato published evidence of what it claimed was regular Russian troops crossing into Ukraine last month.

The move followed the publication by Mr Putin of a seven-point ceasefire plan for Ukraine, including proposals for an international monitoring force and the establishment of a humanitarian corridor.

Speaking in Ulan Bator on a state visit to Mongolia, the Russian president said he had held a telephone conversation on Wednesday morning with Petro Poroshenko, his Ukrainian counterpart, and that their views on how to end the conflict in Ukraine were “very close”.

Mr Putin’s apparent willingness to take steps to broker peace in eastern Ukraine coincided with a call from US President Barack Obama, on a visit to Estonia, for Nato to help “modernise and strengthen” Ukraine’s military.

In the clearest statement of Mr Putin’s position since an escalation of fighting over the last week, he outlined proposals that would include a ceasefire by both sides and the Ukrainian military withdrawing its forces out of artillery and rocket range of urban areas in the Donetsk and Lugansk areas.

Other measures included, a ban on the use of combat aircraft over urban areas and an exchange of prisoners. He said he had “sketched out” the peace plan on his flight to Mongolia.

Kiev’s response suggested there was a split at the top of the government. On Wednesday evening, Ukraine’s prime minister slammed Putin’s plan, describing it as an attempt to create a “frozen conflict” and “avoid an unavoidable decision by the EU on imposing a new wave of sanctions against Russia.”

Ukrainian prime minister Arseniy Yatseniuk said: “Putin’s real plan is to destroy Ukraine and re-create the USSR. We await a decision by Nato and the EU to stop the aggressor,” as he called on Russia to “withdraw its regular army, mercenaries and terrorists from Ukrainian territory”.

But in a statement issued minutes later, Mr Porsohenko, Ukraine’s pro-western president, struck a more conciliatory tone, expressing hope that a contact group of negotiators representing Kiev, Russia and separatists would broker an acceptable ceasefire agreement on Friday when talks are scheduled in Minsk, Belarus.

Referring to the early morning phone call with Mr Putin, Mr Poroshenko said “we spoke with President Putin about how to stop the terrible processes under way”, adding: “People must stop dying.”

Doubts had already emerged earlier in the day about whether the “ceasefire process”, brokered by the two presidents, would hold in eastern Ukraine as more explosions were heard in the conflict-stricken region.

In a speech in Tallinn, the Estonian capital, Mr Obama promised Nato would defend the three Baltic states, in comments directed at Russia and any possibility its forces could also threaten those nations on its borders.

“You lost your independence once before. With Nato, you’ll never lose it again,” he told the audience.

Mr Obama did not give details about what assistance Nato might offer to the Ukrainian military. The alliance is already offering support for Ukraine military in terms of cyber defence and logistics but has not shipped heavy weapons, a step that Russia would regard as a new provocation.

Speaking before Mr Putin outlined his seven-point proposal, Mr Obama had said he was cautious about any plan for a ceasefire. He said it was too early to tell how serious the plan was, as Moscow had not taken any efforts to end the conflict seriously and “has pretended it is not controlling the separatists”.

“Having said that, if Russia is prepared to stop financing, arming, training, in many cases joining with pro-Russian troops’ activities in Ukraine and is serious about a political settlement, then that is something we all hope for,” he said.

In a sign of the tensions between Russia and Ukraine, Mr Yatseniuk also reiterated his call for eventual Nato membership following Mr Poroshenko’s phone call with Mr Putin.

Mr Obama is visiting Estonia on his way to join other world leaders at a Nato summit in Wales, which starts on Friday.

Hopes that a peace plan could be agreed had initially sent Russian equities as much as 3.2 per cent higher, though they subsequently backtracked to trade at a little more than 2 per cent higher.

The talk of a ceasefire comes as the EU solidifies plans for further sanctions against Russia, including whether to boycott the 2018 football World Cup that Russia is to host.

But underscoring the uncertainty surrounding the supposed ceasefire plan, which has yet to be introduced, Reuters reported explosions on the outskirts of the eastern city of Donetsk while Kiev altered its statement to change the wording, including removing of the word “permanent” before ceasefire.

“The conversation resulted in agreement on a ceasefire regime in the Donbas. Mutual understanding was reached on the steps that will facilitate the establishment of peace,” said the updated statement from Kiev.

Roman Olearchyk in Mariupol, Jack Farchy in Moscow, Richard Milne in Tallinn, Peter Spiegel in Brussels, Richard McGregor in Washington andThomas Hale in London

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Letter in response to this report:

Bravo for French gunboat diplomacy / From Mr John Sivolella

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