NATO accused Russia of sending columns of troops and heavy weapons into Ukraine in the past two days, as the government in Kiev warned the nation’s eastern combat zone is close to returning to open war.

Russia’s Defense Ministry denied the accusations, according to state-run RIA Novosti. Pressure has been building for days in eastern Ukraine, with the government and rebels accusing each other of gearing up for a renewed military push that risks swelling the death toll of more than 4,000. The UN Security Council is scheduled to hold an emergency session in New York today over the intensifying conflict.

“We have seen columns of Russian equipment, primarily Russian tanks, Russian artillery, Russian air-defense systems and Russian combat troops entering intoUkraine,” U.S. Air Force General Philip Breedlove, NATO’s top military commander, told reporters in Bulgaria. “We do not have a good picture at this time of how many. We agree that there are multiple columns that we have seen.”

The separatists and their Russian backers are amassing troops in the areas of the Donetsk and Luhansk regions they’ve seized, Ukrainian Defense Minister Stepan Poltorak told a government meeting in Kiev earlier today. One Ukrainian serviceman died and five were wounded in the past 24 hours, a military spokesman said. There was no independent confirmation of the accounts.

Friction over the region’s fate is driving a wedge between Russia and its former Cold War foes in their worst geo-political standoff since the fall of the Iron Curtain. Ukraine says President Vladimir Putin is stoking the unrest to create a potential frozen conflict that will thwart the former Soviet republic’s efforts to deepen ties with the EU. Putin denies his country is involved militarily.

David Fuller's view

Needless to say, this is unwelcome news in the EU, which is besieged with economic problems, largely of its own creation.  Additionally, Russia’s cynical aggression is certainly a major concern for democratic Europe.  These countries know that NATO is a helpful but very thin line of defence against Russia’s beefed-up military machine.  If Putin is thinking mainly about himself, he may conclude that superior military power is the main card that he has to play. 

This is a dangerous situation, not only for Ukraine but all of the other East European countries which were previously under the former Soviet Union’s control.  None that are democracies today want to have anything to do with Putin’s Novorossiya.  Those countries that have joined NATO and also expressed an interest in becoming part of the European Union are entitled to protection from Russia. 

This is an extremely risky and prior to this year, largely unexpected situation for EU countries and also the USA.  The EU is in the hot seat but the US is also involved, as the biggest contributor to NATO.  The ridiculous aspect, although unfortunately true, is that this is all due to one insecure and aggressive ex-KGB throwback to the Soviet Union – Vladimir Putin. 

Some global investors have been drawn to Europe because its stock markets are comparatively cheap.  However, in the global beauty contest of investing, many others are driven away by the EU’s economic problems and also the deteriorating situation with Russia.  There are numerous top-heavy patterns from Germany to Austria, France, Italy and Spain, to mention a few.  Mario Draghi’s push for a significant QE programme by the European Central Bank can cushion downward risk but I would be wary of most EU stock markets, with the possible exception of the few big, multinational corporate Autonomies.