Ukrainian tanks take up positions

KIEV:Pro-Russian insurgents dug in across eastern Ukraine, fortifying their positions around seized buildings and erecting fresh barricades even as Ukrainian tanks took up positions outside one eastern city now controlled by armed men.

In Kiev, Ukraine's acting president, Oleksandr Turchynov, announced an "anti-terrorist operation" to root out the separatists, but it was unclear how that measure differed from the one announced yesterday, which resulted in no visible action.

Much of the focus was on the eastern city of Slovyansk, 160 kilometres from the Russian border, which has come under ever more secure control of the gunmen since it was taken over on Saturday.

An Associated Press reporter saw at least 14 armoured personnel carriers with Ukrainian flags, one helicopter and military trucks parked 40 kilometres (24 miles) north of the city. Other heavy military equipment appeared to be parked in a nearby area off limits to journalists.

Government troops at a checkpoint at the spot, located outside the town of Izyum, searched vehicles driving in and out for weapons.

Roads into Slovyansk were dotted with militia's checkpoints, at least one with a Russian flag. Another bore a sign reading: "If we don't do it, nobody will."

Despite mounting fears of a possible imminent assault by Ukrainian troops, the city appeared calm. That may be because the threat the Ukrainian military posed to the highly organised pro-Russian insurgents was unclear.

One video posted online late yesterday showed a hapless Ukrainian tank stuck in the mud in a field reportedly outside Slovyansk. Local residents chased it on foot, trying to stop it, shouting: "Who are you going to fire at?"

The insurgents, many of them armed, continued to occupy government, police and other administrative buildings in at least nine cities in the country's Russian-speaking east of the country, demanding broader autonomy and closer ties with Russia. The central government has so far been unable to rein in the insurgents, and many of the local security forces have switched to their side.

The unrest comes a month after Russia annexed the Crimean Peninsula following the removal of Ukraine's pro-Russian president in Kiev after months of protests.

The city of Horlivka, also not far from the Russian border where the local police station was seized yesterday by unidentified gunmen, has been turned into the latest of a wave of sit-ins across eastern Ukraine.

Outside the police station, a sign pinned to the wall of tyres listed items required by protesters, including blankets, drinking water and tape to cover up windows smashed during the storming of the building.

Anatoly Zhurov, a 53-year-old Horlivka resident at the site, said the insurgents' goal was to resist the government in Kiev.

Elsewhere the interior ministry in the Donetsk region said the police station in Kramatorsk that had been seized by pro-Russian gunmen was "liberated" today, but a nearby small airport was still controlled by the militia.

Mr Turchynov, speaking to parliament in Kiev, gave few details of the "anti-terrorist operation", saying only that it would be conducted in a "responsible and balanced" manner. He blamed Russia for sponsoring the camouflage-wearing insurgents, who are often armed and move with a precision unlikely for local militia.

"The plans of the Russian Federation were and remain brutal. They want not only for Donbass (Donetsk region), but for the whole south and east of Ukraine to be engulfed by fire," Mr Turchynov said. The aim of the government operation is to "defend the citizens of Ukraine, to stop terror, stop crime and stop attempts to tear our country into pieces".

Ukraine's security services said they have identified a Russian foreign intelligence agent who is running pro-Russian operations in Slovyansk. It named him as Igor Strelkov, a man they said also co-ordinated Russian troops in Crimea during the seizure of military facilities on the peninsula that used to belong to Ukraine.

Russia strongly warned Kiev against using force against the pro-Russian protesters, saying Moscow could walk out of the international conference in Geneva on Thursday that is devoted to the Ukrainian crisis.

"You can't send in tanks and at the same time hold talks. The use of force would sabotage the opportunity offered by the four-party negotiations in Geneva," Russian foreign minister Sergey Lavrov said at a press conference.

In a sign that Ukraine's economic situation is becoming ever more dire, its central bank increased its benchmark interest rate by a whopping 7% to 14.5%. The move aims to contain the risk of inflation by supporting the currency, which has been falling to record lows in recent days. A dropping currency fuels inflation by boosting the cost of imports.

However, hiking interest rates can cause collateral damage to the economy by making loans and mortgages more expensive to residents and businesses.

Ukraine has relied on cheap gas supplies from Russia for years. Moscow raised gas prices for Kiev in the past weeks, leaving Ukraine scrambling to pay the mounting gas bills as well as past bills that Russian president Vladimir Putin now says adds up to over 35 billion dollars.

In the wake of Moscow's threats to cut off energy supplies to Ukraine, the German utility company RWE AG said it has started supplying gas to Ukraine via Poland and could sell it up to 10 billion cubic metres of natural gas a year. Ukraine consumes between 52 and 55 billion cubic metres of gas a year.

In Kiev, two pro-Russian politicians were attacked by pro-Western activists as tensions mounted over unrest in the east.

Oleh Tsaryov, a pro-Russian politician and a candidate in the May 25 presidential elections, was beaten by dozens of enraged activists early today as he was leaving a television studio. The activists pelted him with eggs, shouted insults and then assaulted him.

Another Russian-leaning politician and presidential hopeful, Mikhaylo Dobkin, was sprayed with a green disinfectant and had flour thrown at him late yesterday.

Moscow has accused Kiev authorities of condoning such radicalism and says attacks against pro-Russian candidates shows that the presidential election will not be fair or democratic.