ZeroHedge - BY TYLER DURDEN - TUESDAY, MAR 29, 2022 - 09:17 AM

Update (0900ET): As markets increasingly hope that a ceasefire deal in Ukraine might finally be at hand, media reports claim that Russia's high command has already started to withdraw forces from around Kyiv in what the US believes represents a "major" policy shift.

Russia has reportedly said it wouldn't mind if the Ukrainians joined the EU, so long as they remain militarily neutral. But whether or not this is a genuine breakthrough remains to be seen.

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As the first statements coming off now concluded for the day Russia-Ukraine ceasefire talks trickle out, both Interfax and Reuters are reporting the potential for a major breakthrough, as Russia's Defense Ministry has said it's seeking to create conditions for dialogue towards halting military activity around the capital of Kyiv and the major northern city of Chernihiv.

The New York Times suggests this possible overture comes as Russian forces are facing stiff resistance near the capital, as also yesterday Ukraine said it retook the major Kyiv suburb of Irpin. "Diplomats from Ukraine and Russia were discussing a possible cease-fire on Tuesday at talks in Turkey, an effort that comes as a Ukrainian counteroffensive pushed back Russian forces in a hard-fought area near Kyiv, the capital," NY Times writes.

Tuesday's Ukraine and Russia delegations hosted in Istanbul, Turkey

The talks were called "constructive" by the Russian top negotiator Vladimir Medinsky, who said he will take Ukraine's proposals for stopping the war directly to Putin, which crucially is centered on a pledge of 'neutrality' vis-a-vis NATO. The meeting, held in Istanbul, lasted four hours.

"The two delegations also discussed international security guarantees for Ukraine, according to Mykhailo Podolyak, an aide to President Volodymyr Zelensky of Ukraine." Negotiations will likely continue Wednesday, according to NY Times: "The Kremlin’s spokesman, Dmitri S. Peskov, told reporters that the talks, which he said could continue on Wednesday, could be of great consequence, without offering details on the shape of a possible deal." Following this, there've been reports that talks could continue through into the night.

Ukraine's top negotiator said Ukraine is now offering to discuss the Crimea question - and there could be enough substantial agreement on the scope of negotiations to hold a direct Putin-Zelensky meeting, something which Putin has thus far clearly rejected. According to the full quote from the Russian side:

"Due to the fact that negotiations on the preparation of an agreement on the neutrality and non-nuclear status of Ukraine, as well as on the provision of security guarantees to Ukraine, are moving into practice, taking into account the principles discussed during today's meeting, by the Russian Ministry of Defense in order to increase mutual trust and create the necessary conditions for further negotiations and achievement of the ultimate goal of agreeing on the signing of the above agreement, a decision was made to radically, at times, reduce military activity in the Kiev and Chernigov direction", Deputy Defense Minister Alexander Fomin told reporters.

And on a possible Putin and Zelensky meeting while implementing terms of agreements, Medinsky further told reporters:

"After today's meaningful conversation, we have agreed and are proposing a solution according to which the meeting of the heads of state is possible simultaneously with the initialing of the treaty by the foreign ministers. Moreover, at the time of this initialing and consideration of the details of the treaty, various political nuances and details can be discussed."

"We have received written proposals from Ukraine confirming their readiness for a neutral, non-aligned and non-nuclear status, along with a refusal to produce and deploy all types of weapons of mass destruction, including chemical and bacteriological ones, and a ban on the presence of foreign military bases and foreign troops on the territory of the country", Medinsky said.

However, for the first time, Medinsky said that such a meeting of presidents is now "possible" - according to statements given to TASS, suggesting that Tuesday's talks appear to be the most substantive so far since the invasion and conflict began.

But one significant future hurdle to anything final leading to a complete cessation of hostilities is that Ukraine has insisted that a national referendum would be needed for any central terms of agreement with Russia - for example on giving up Crimea.

The Ukraine side also reportedly stipulated that it would need "full peace" across the country for any final peace agreement to be deemed in force. Ukraine is further open to keeping neutral status if the peace holds up.

As for a possible halt in fighting near Kyiv, the Pentagon issued a quick statement saying it's seen no signs of withdrawal on the part of Russian army units from near the capital, which would likely take some significant time to implement.

In the positive headlines, notes Bloomberg, "Stoxx Europe 600 Index extends gains to 1.8% as Russia decided to cut military activity near Ukraine’s Kyiv, Chernihiv, Russian Deputy Defense Minister Alexander Fomin tells briefing after bilateral talks in Istanbul."


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