Russian President Vladimir Putin and his Ukrainian counterpart, Petro Poroshenko, have agreed on terms to end the fighting in eastern Ukraine. That should be great news and investors certainly thought so, driving Russia's main stock index up 2.7 percent.

However, not only have the details of these terms not yet been made public, but the Kremlin promptly cast doubt on the value of the deal. While Poroshenko's press service described it as a "permanent cease-fire" (later changing that to a "cease-fire regime"), Putin's spokesman Dmitry Peskov said the two leaders merely exchanged views on how to end the conflict. Putin couldn't, however, agree to a cease-fire, because Russia wasn't a party to the conflict, Peskov said.

That sounds like a technicality, and it should be. But it's the same sticking point that made it impossible to reach agreement when the two men met Aug. 26 in Minsk, where Putin said getting to a cease-fire and resolution of the conflict was "not our business, it's up to Ukraine itself."

Putin's stance was particularly surreal, given that the airwaves were filled with visual evidence of regular Russian troops operating on Ukrainian soil. The combination of a smoking gun and Putin's denials was enough to drive German Chancellor Angela Merkel to demand tougher European Union sanctions on Russia this week.

If Putin wants to deter a potentially damaging attack on Russia's economy he needs, as Estonian President Toomas Hendrik Ilves said this morning, to admit that Russia "is a party of the conflict and take genuine steps to toward the de-escalation of the conflict." And were Estonia in charge of EU sanctions policy, no doubt that would be true.

The risk, however, is that Putin has, yet again, found a way to play his opponents without changing his goals or strategy. By speaking to Poroshenko and saying the two leaders agree, he suggests he is not the obstacle to a cease-fire. That suggestion, in turn, provides EU countries that oppose tougher sanctions with ammunition to make their case. By leaving the decision on whether to stop fighting to local rebel leaders in Ukraine, Putin can still keep the conflict alive -- if he wishes.

A cease-fire can work only if Russia wants it to. The current rebel leaders were only recently installed, to replace the embarrassingly Russian ex-security service officers who were running the conflict before. The new leaders don't control their supply lines, or in many cases the Russian "volunteers" doing the fighting. Still less do these Ukrainians control Russian regular troops in the field. Putin is the puppet master here. As Ilves said of the cease-fire announcement today, let's see.

David Fuller's view

Stock markets have been enjoying a week when Putin is understandably being less aggressive in Ukraine but just as manipulative and devious as ever.  He wants to dilute the additional sanctions that EU leaders and President Obama will shortly be discussing at this week’s NATO summit in Wales.  Any person with their eyes open and familiar with Putin’s long history knows this, but our combination of fears and hopes that this problem will just go away may muddle thinking and water down the West’s response.  That reaffirmation of weakness would only embolden Putin and make this crisis more difficult to resolve satisfactorily.    

You may also be interested in this further editorial from Bloomberg: Punching Back at Putin.  And also this interesting column by Leonid Bershidsky: The West Must Decide Whether Putin Is Hitler.