Germany's 'secret deal with Russia to end violence in Ukraine which would see Crimea officially annexed in exchange for $1billion'

Angela Merkel 'dealing directly with Vladimir Putin to thrash out pact'

'Would call on Russia not to meddle with Ukraine's trade with the EU'

'Moscow would also have to offer Kiev long-term gas supply contract'

Eastern Ukraine would be given some devolved powers, it is claimed

Ukrainian President would also 'abandon any attempts to join Nato'

Germany and Russia are working on a secret peace deal to end the conflict in Ukraine that would see Moscow's controversial annexation of Crimea officially recognised in exchange for a $1billion compensation package, it was claimed today.

Angela Merkel and Vladimir Putin have reportedly been locked in talks that will primarily seek to ensure the Kremlin withdraws its support for rebels fighting for independence in eastern Ukraine.

Putin would also have to agree not to interfere with Ukraine's new trade relations with the European Union and offer Kiev a long-term contract for future gas supplies with Russian firm Gazprom.



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Angela Merkel and Vladimir Putin (pictured earlier this month) have reportedly been holding secret talks aimed at ending the conflict in Ukraine which would see Crimea officially annexed in exchange for $1billion

In return, parts of eastern Ukraine would be granted some devolved powers and Ukrainian President Petro Poroshenko would abandon attempts to join Nato, a source close to the negotiations told Margareta Pagano from The Independent.

A far more contentious bargaining chip would also see the international community formally acknowledging Crimea's annexation to Russia, which may prove a hard sell to some members of the United Nations, the paper reports.

If agreed, Russia would be asked to pay the Ukraine $1billion in compensation for rent it used to pay for basing its navy at the port of Sevastopol before Crimea voted for independence.

One insider said: 'This is Merkel's deal. She has been dealing direct with President Putin on this.

The deal would call on Russia to withdraw its support for separatists who have been accused of shooting down flight MH17 and then preventing investigators from accessing the crash site (above)

'She needs to solve the dispute because it's in no-one's interest to have tension in the Ukraine or to have Russia out in the cold. No one wants another Cold War.'

Talks have reportedly been put on ice since the shooting down of MH17 in eastern Ukraine which has been blamed on pro-Moscow rebels, but sources insist the deal is 'still on the table'.

It comes as Ukraine today announced it had suspended its military offensive in the east for one day to help international experts reach the downed Malaysian airliner's crash site.

Dutch and Australian police experts have been trying for five days to access the area where the remains of around 80 of the 298 people killed have been decomposing in sweltering temperatures since the crash on July 17.



Police officers and military guard the Ukrainian parliament during a closed session where it agreed to stop its offensive against pro-Russian rebels for one day to allow access to the MH17 crash site

Kiev said on the Facebook website of what it calls its 'anti-terrorist operation' (ATO) against pro-Russian rebels that it was heeding calls by UN Secretary-General Ban Ki-moon to stop fighting near the plane crash site.

But the government claimed the separatists were continuing to attack its positions.

It said: ' On July 31, troops involved in the active ATO phase are not conducting military operations apart from protecting their own positions from attack.

'But mercenary fighters of the Russian terrorists are not respecting any international agreements and requests.'