Separatists tighten grip on east Ukraine, EU agrees more sanctions on Moscow

BY THOMAS GROVE AND GABRIELA BACZYNSKA

SLAVIANSK/DONETSK, Ukraine Mon Apr 14, 2014 6:21pm EDT

(Reuters) - Armed pro-Russian separatists seized more buildings in eastern Ukraine on Monday, expanding their control after the government failed to follow through on threatened military crackdown leaving Moscow's partisans essentially unopposed.

European foreign ministers agreed to widen sanctions against Moscow and the White House said Washington was seeking ways to impose more "costs" on Russia, for what Kiev and its Western friends call a Russian plot to dismember Ukraine.

Rebels in the town of Slaviansk, where the authorities failed to follow through with their announced "anti-terrorist" operation, called for Russian President Vladimir Putin's help.

Ukraine's interim president Oleksander Turchinov said on Monday the offensive against the rebels would still go ahead. But in a sign of discord behind the scenes in Kiev, he sacked the state security chief in charge of the operation.

In one of the first signs of a military deployment by Kiev's forces, a Ukrainian column of two tanks and more than 20 armored personnel carriers packed with paratroops was seen about 70 km (50 miles) northwest of Slaviansk on Monday evening, according to video journalist Maksim Dondyuk who filmed them.

In Donetsk, rebels holed up in the administrative headquarters of a province that is home to 10 percent of Ukraine's population said they planned to seize control of infrastructure and the levers of state power. They have declared an independent "People's Republic of Donetsk" and sought Putin's protection if they are attacked.

Rebels have also seized buildings in around 10 other towns and cities across other eastern provinces which form the heartland of Ukraine's heavy industry.

In a bid to undercut the rebels' demands, Turchinov held out the prospect of a countrywide referendum on the future shape of the Ukrainian state. Pro-Russian secessionists want separate referendums in their regions, which Kiev says is illegal.

The uprising in eastern Ukraine began eight days ago but has accelerated sharply in the past 48 hours, with separatists seizing ever more buildings, including arsenals filled with weapons. They have met little opposition.

Kiev says the separatists are organized by Moscow, seeking to repeat the seizure of the Crimea region, which Moscow occupied and annexed last month.

Russia says the armed men are all locals acting on their own, but Western officials say the uprising is too well-coordinated to be entirely spontaneous, and bears too many similarities to the Russian operation in Crimea.

"I don't think denials of Russian involvement have a shred of credibility," British Foreign Minister William Hague said, before a meeting with EU counterparts.

Hague later announced that the ministers had agreed to expand a list of Russians barred from travelling or doing business in the EU. Work would begin to come up with new names for the sanctions list, Hague said.

In Washington, White House spokesman Jay Carney said President Barak Obama would speak to Putin by phone later on Monday. Washington is also planning to expand its sanctions list. Russia has so far shrugged off targeted sanctions.

Moscow says it has the right to intervene to protect Russian speakers in Ukraine, and has portrayed the people of the east as under threat from gangs of Ukrainian-speaking "fascists". NATO says Russia has tens of thousands of troops massed on the frontier, able to capture eastern Ukraine within days.

ULTIMATUM EXPIRES

Turchinov had threatened to launch a military crackdown by 9 a.m., but as the deadline expired there was no sign of any action in Slaviansk. A rebel leader, in an appeal issued through journalists, asked Putin to "help us as much as you can".

The Kremlin said the Russian president was listening.

"Unfortunately, there's a great many such appeals coming from the Eastern Ukrainian regions addressed directly to Putin to intervene in this or that form," spokesman Dmitry Peskov said. "The president is watching the developments in Eastern Ukraine with great concern."

Also in Slaviansk, about 150 km (90 miles) from the Russian border, a small airfield which was occupied by Ukrainian air force planes on Sunday was empty on Monday and pro-separatist forces said they were now in control of it.

Eastern Ukraine seems to be rapidly spinning out of the control of the central government. The governor of Donetsk, a multi-millionaire appointed by Kiev, has not been seen since April 11. A man calling himself Donetsk's new police chief has appeared wearing the orange and black separatist ribbon.

The Ukrainian defense ministry acknowledged that it has had difficulty mobilizing the armed forces in the east, where some units have been blockaded in by rebellious locals.

"On some occasions we have lost the information war and there have been blockades of our units. People don't understand why they are coming," said acting Defence Minister Mykhailo Koval. He said 26 members of a reconnaissance unit had been blockaded for the past day and a half in Slaviansk.

"Negotiations are under way to free them to allow them to link up with our main force."

In the town of Horlivka about 100 pro-Russian separatists attacked the police headquarters on Monday. Video footage on Ukrainian television showed an ambulance treating people apparently injured in the attack.

Russia's foreign ministry called Turchinov's planned military operation a "criminal order" and said the West should bring its allies in Ukraine's government under control.

Turchinov's website said he told U.N. Secretary-General Ban Ki-moon he would welcome U.N. peacekeepers in Ukraine. The proposal was rhetorical as no such deployment has been proposed or could ever take place over Russia's Security Council veto.

The Ukraine crisis has led to the biggest confrontation between Moscow and the West since the Cold War. Washington said a Russian fighter aircraft had made 12 low altitude passes over a U.S. warship in the Black Sea over the weekend, which it called a "provocative and unprofessional Russian action".

Outside the Slaviansk city council offices stood a group of about 12 armed men in matching camouflage fatigues with black masks, one of whom was holding a Russian flag.

They said they were Cossacks - paramilitary fighters descended from Tsarist-era patrolmen - but did not say where from. One told Reuters: "The borders between Ukraine, Russia and Belarus are artificial and we are here to take them away."

In Donetsk, leaders of the self-declared "People's Republic" held a strategy meeting to plan their seizure of control of the rest of the region's state functions.

"Everything from city cleaning to the sewage system, the airport, railway stations, military... should be under your control," one leader, Vladimir Makovich, told about two dozen other senior separatists in a dark room on the top floor of the 11-storey government headquarters.

Over the past week, the rebels have turned the massive Soviet-era building into a bastion for urban warfare. Barricades crisscross the corridors and steel plates are welded to windows.

"We are ready for storming at any time. No matter what happens, this building will not be given up," said Alexander Zakharchenko, 38, commander of a paramilitary unit made up of members of a martial arts club.

Turchinov's announcement he was sending in the army was the first time the military has been activated in six months of internal disorder. The plan implies a lack of confidence in the 30,000-strong interior ministry troops, partly discredited by identification with ousted president Viktor Yanukovich.

Russian stocks and the ruble fell sharply on Monday, reflecting fears of further Russian military intervention in Ukraine and more western sanctions against Moscow.

Kiev is also facing economic disarray. The central bank nearly doubled its overnight interest rate to 14.50 percent from 7.50 percent. Ukraine's hryvnia currency has lost 38 percent of its value against the dollar this year.

Moscow has largely brushed off sanctions so far, which the United States and Europe have explicitly designed to target only a limited number of officials and avert wider economic harm.

(Additional reporting by Natalia Zinets and Richard Balmforth in Kiev; Writing by Peter Graff)