Russian President Vladimir Putin waves to people in the city of Gorno-Altaisk, Siberia. Picture: RIA Novosti, Alexei Nikolsky, Presidential Press Service

Russian President Vladimir Putin's surprise announcement of a ceasefire plan for Ukraine has been greeted with widespread scepticism, with suspicions still running deep in Kiev and the West over Moscow's true motives.

Analysts suggested Putin could be seeking to create a “frozen conflict” in eastern Ukraine, similar to the situations in Abkhazia and South Ossetia in Georgia, and Transdniestr in Moldova.

Putin's aim, some analysts believe, is to keep Kiev's pro-Western leaders permanently off balance, thwarting their drive to join NATO and keeping eastern Ukraine's huge industrial base dependent on Russian trade.

The timing of his announcement Wednesday appeared designed to head off possible new Western retaliatory measures over what Kiev has branded a “direct invasion” by Russia.

Kiev and the West reacted with alarm after NATO reported last week that Russia had funnelled troops and heavy weapons to support pro-Kremlin rebels in a counter-offensive that has significantly turned the tide of the five-month conflict.

The Russian strongman, while still denying Moscow has any direct role in the pro-Kremlin uprising across the border, unveiled a seven-point ceasefire plan after talks with Ukrainian President Petro Poroshenko.

But his proposals, set to be discussed at a meeting of the OSCE-sponsored Ukraine Contact Group in Minsk on Friday, clearly lack universal support.

NATO chief Anders Fogh Rasmussen, speaking on the eve of the alliance's summit in Wales where leaders plan to step up their defence of eastern Europe, dismissed the plan as “insincere”.

US President Barack Obama, on a visit to Estonia, said it was too early to assess the ceasefire call, and warned that Moscow's attempts to redraw borders “at the barrel of a gun” threatened a united Europe.

“Russia has ripped up the rulebook with its illegal, self-declared annexation of Crimea and its troops on Ukrainian soil threatening and undermining a sovereign nation state,” Obama and British Prime Minister David Cameron wrote in a statement published Thursday.

And despite Poroshenko himself announcing he struck an agreement with Putin on a “permanent ceasefire”, his own premier appeared less than convinced.

“This latest plan is another attempt to pull the wool over the eyes of the international community,” Prime Minister Arseniy Yatsenuk said.

The presence of Russian troops in Ukraine has exacerbated fears, particularly in Poland and the Baltic states, that Putin could be trying to seize back former Soviet and tsarist lands after Moscow's annexation of Crimea in March.

“Judging by its actions, Russia has apparently chosen to carve a Transdniestr-style bandit fiefdom out of parts of Ukraine,” said Holger Schmieding, chief economist of Germany's Berenberg Bank.

He said the truce plan itself, which calls first for an end to “active offensive operations” in the east, left many questions unanswered about the future of a country at risk of partition.

Although the rebel demands have varied over time, most accuse Kiev's leadership of persecuting Russian speakers in the east and still view themselves as part of a broader post-Soviet country with its roots in Moscow.

“Even if the ceasefire holds for now, will Russia be content with the extra autonomy which Kiev can offer for eastern Ukraine? Or will Russia demand that Kiev recognises a de facto separation of the region occupied by the pro-Russian forces from Ukraine?” said Schmieding.

Putin's announcement came on the eve of the NATO summit where the alliance is set to unveil a rapid response force for eastern Europe to counter Russian “aggression”.

Analysts said Putin's initiative also appeared designed to avert further EU sanctions, after a series of punishing Western measures sent the Russian economy to the brink of recession.

But they said Russia still appeared to hold all the cards, with the insurgents seizing swathes of land across the southeast in a matter of days, sending government troops into retreat after weeks of advances.

The conflict is inflicting an increasingly costly human toll, with around 2 600 people dead since mid-April, and the United Nations reporting that as many as one million people have been displaced.

“We need people to stop dying,” said Poroskenko, whose own call for a unilateral ceasefire in June collapsed in a matter of days.

Oleksandr Sushko, director of the Institute for Euro-Atlantic Cooperation in Kiev, said the time appeared ripe for all sides to agree to an end to hostilities.

Ukrainian troops are finding it “impossible” to rout the separatists now threatening the strategic port of Mariupol, in what some see as an attempted land grab to carve out a land corridor between Russia and Crimea.

At the same time, Putin has “paid dearly” for his actions - with Russia increasingly isolated on the international scene and the economy under threat - “so he can accept a certain deescalation at this stage,” Sushko said.

But analysts said the deck was stacked in Putin's favour, with cash-strapped Ukraine more in need of a ceasefire than Russia.

“Time is on Putin's side,” said Nikolai Petrov from Moscow's Higher School of Economics. “He is taking the initiative because he is in a strong position. Kiev and the West have no choice but to accept these proposals.” - AFP