(Bloomberg) -- German Chancellor Angela Merkel gave no immediate sign of a diplomatic breakthrough to end the Ukraine crisis as fighting between government troops and Russian-backed troops ratcheted up after inconclusive talks in Moscow.
“It is uncertain whether this will be successful,” Merkel said in Munich on Saturday after she and French President Francois Hollande met Russian President Vladimir Putin at the Kremlin for more than five hours ending early in the morning. “But in my view and in the view of the French president, it’s at least worth making an attempt,” she said.
Merkel, Hollande, Putin and Ukrainian President Petro Poroshenko plan a conference call tomorrow to discuss a potential settlement. Amid the cease-fire bid, Ukraine said rebel forces are readying a new offensive to extend their territorial gains in the east.
The next 24 to 48 hours could determine whether a tenuous peace takes hold or a wider war breaks out, potentially with the U.S. and some European allies supplying arms to Ukraine’s government. A breakdown of the diplomacy would also strain trans-Atlantic unity in dealing with Russia, as Europe’s consensus on economic sanctions shows signs of fraying.
Poroshenko took a bow to a crowd of international diplomats at the Munich Security Conference when Merkel hailed his commitment to ending the conflict. Poroshenko told reporters he won’t meet Russian Foreign Minister Sergei Lavrov, who’s also in Munich.

‘No Breakthrough’

“There’s been no breakthrough; Ukraine can’t meet Putin’s demands,” Joerg Forbrig, a senior program director at the German Marshall Fund in Berlin, said by phone. “Military aid for Ukraine is becoming more likely after the failure of these talks and the likelihood that the rebels will now go on the offensive.”
Hanging over the negotiations is the prospect of deeper sanctions on Russia, an economic collapse in Ukraine and the risk that the conflict descends into a proxy war.
Fighting in eastern Ukraine continues along the whole front, Volodymyr Polevyi, a spokesman for the Ukraine military, said during a press briefing in Kiev on Saturday. Rebels are readying a new offensive near Debaltseve and the city of Mariupol along the Sea of Azov, Polevyi said, citing military intelligence reports of rebels massing troops. Five Ukrainian soldiers died in fighting over the last 24 hours, while the government troops killed 48 insurgents, he said.

Military Aid

In Washington, U.S. officials said that in addition to possible steps that have surfaced previously -- more economic aid to Ukraine, non-lethal military aid and defensive weapons -- there is a discussion of adding air, missile defense, ground combat and intelligence deployments in eastern Europe and possibly Scandinavia.
The officials, who spoke on the condition of anonymity to discuss deliberations inside the North Atlantic Treaty Organization, said the debate parallels the one about weapons to Ukraine: would such moves help deter Russia or prompt Putin to escalate threats and military maneuvers?
Lavrov told the Munich meeting that Ukraine’s hope the provision of U.S. lethal weapons would resolve the conflict was misplaced, and such a move would only worsen the standoff.
The Russian Foreign Ministry warned Feb. 5 that U.S. lethal military assistance to Ukraine would do “colossal damage” to relations between Russia and the U.S.

No Weapons

Merkel repeated her opposition to supplying weapons to Ukraine. “The progress Ukraine needs won’t be achieved with more weapons. I have a lot of doubts,” she said.
Merkel evoked the perseverance of the U.S. and Europe in confronting the Soviet Union during four decades of Cold War that ended with collapse of communism. Europe also needs staying power and unity now, said Merkel, who grew up in communist East Germany.
Facing Poroshenko in the audience, she said: “There’s no way to win this militarily -- that’s the bitter truth. The international community has to think of a different approach.”
“I am 100 percent convinced that our principles will succeed and triumph,” she said. “Nobody knew when the Cold War would end. But it happened. So we need to have faith in our own past experience.”
In Moscow early Saturday, Russian officials sought to put a positive spin on the inconclusive Kremlin talks, suggesting that they could still produce an accord.

Minsk Accord

Ukraine, the U.S., the European Union and NATO say Russia is supporting the separatists with hardware, cash and troops, accusations the Kremlin denies. Russia says Ukraine is waging war on its own citizens and discriminates against Russian speakers, a majority in Donetsk and Luhansk.
Even as Merkel stands firm on her opposition to arming the Ukrainian army and President Barack Obama is skeptical, some officials and diplomats in Washington are openly discussing the idea.
“The least we can do is provide them with defensive weapons,” Senator Lindsey Graham, a South Carolina Republican, said in an interview in Munich. “My belief is providing defensive weapons to the Ukrainians is the best way to keep this thing from escalating.”
Heavy fighting has forced more than 1.5 million people to flee their homes, with some 600,000 Ukrainians seeking refuge in neighboring countries since last February, the United Nations’ refugee agency said in a report today.
Pro-Russian rebels have gained ground against Ukrainian government forces in the worst fighting in five months that’s driving the country closer to economic collapse. The conflict has killed more than 5,350 people since April, according to the United Nations.
To contact the reporters on this story: James G. Neuger in Munich at jneuger@bloomberg.net; Henry Meyer in Munich at hmeyer4@bloomberg.net
To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net; Alan Crawford at acrawford6@bloomberg.net Leon Mangasarian, Tony Czuczka