Russia began new military exercises near its border with Ukraine, the defence minister announced Thursday, after Ukrainian forces launched an operation to drive pro-Russia insurgents out of occupied buildings in the country's tumultuous east.
The Ukrainian move, which killed at least two people, brought new threats from Russian President Vladimir Putin, who denounced it as a "punitive operation."
"If the Kiev government is using the army against its own people this is clearly a grave crime," Putin said.
His statement and the announcement of new military exercises involving ground and air forces sharpened anxiety over the prospect of a Russian military incursion into Ukraine. Russia's foreign minister warned a day earlier that any attack on Russian citizens or interests in eastern Ukraine would bring a strong response.
The crisis "could quickly spin out of control," U.N. Secretary-General Ban Ki-moon warned Thursday.
"For two days now the Ukrainian government has warned that it would re-launch an operation to free buildings," CBC foreign correspondent Nahlah Ayed said from the country's east. "This morning’s altercation appears to be the start of that operation."
Animosity between Moscow and Kiev has been high since the ouster of Russia-friendly president Viktor Yanukovych in February in the wake of months of protests. Russia contends the government that took over consists of nationalists who aim to suppress the large Russian-speaking population in Ukraine's east.
In March, Russia annexed the Crimea peninsula after its residents voted to split off from Ukraine. Russian troops backed up local militias that blocked off Ukrainian military bases in the run-up to the referendum.
Ukraine's acting president accused Russia of backing the separatists in the east and demanded that Moscow stop its intimidation campaign, and leave his country alone.
Oleksandr Turchynov said in an address to the nation Thursday that Russia was "coordinating and openly supporting terrorist killers" in eastern Ukraine, where government buildings in at least 10 cities have been seized by pro-Russia gunmen.
Turchynov said Russia must pull back its troops from the Ukrainian border and "stop the constant threats and blackmail."
'We will now fight with Russian troops if ... they invade Ukraine. Ukrainian people and the Ukrainian army are ready to do this.' - Andriy Deshchytisa, Ukraine's foreign minister
His foreign minister, on a visit to Prague, also blasted the Russian decision to start new military maneuvers and said his country would fight any invading troops.
"We will now fight with Russian troops if ... they invade Ukraine. Ukrainian people and the Ukrainian army are ready to do this," Andriy Deshchytisa told The Associated Press.
Russia already has tens of thousands of troops stationed in regions along its border with Ukraine. The latest Russian military exercises involve ground troops in the south and the west and the air forces patrolling the border, Russian Defense Minister Sergei Shoigu said.
Ukraine and Russia reached a deal in Geneva last week to defuse the crisis, but pro-Russian insurgents in the east — and nationalist militants in Kiev — have defied calls for all sides to disarm and to vacate the buildings they are occupying.
NATO Deputy Secretary General Alexander Vershbow sharply criticized Russia for making "veiled threats" and said Russia should pull its troops back to their barracks.
The Ukrainian government and the West worry that Putin would welcome a pretext for a military intervention in eastern Ukraine. Putin denies that any Russian agents are operating there, but insists he has the right to intervene to protect the ethnic Russians who make up a sizeable minority in the east.
U.S. Secretary of State John Kerry accused Russia of failing to live up to commitments it made to ease the crisis.
In unusually blunt language, Kerry said Thursday that unless Moscow takes immediate steps to de-escalate the situation, Washington will have no choice but to impose additional sanctions. He said It would be a "grave" and "expensive mistake."
With no appetite in the U.S. for a military response, U.S. President Barack Obama is largely banking on Putin caving under a cascade of economic sanctions targeting his closest associates. But the success of that strategy also depends on European nations with closer financial ties to Moscow taking similar action, despite their concerns about a boomerang effect on their own economies.
"I understand that additional sanctions may not change Mr. Putin's calculus," Obama said. "How well they change his calculus in part depends on not only us applying sanctions, but also the co-operation of other countries."
Also on Thursday, Prime Minister Stephen Harper called Ukrainian Prime Minister Arseniy Yatsenyuk.
Yatsenyuk expressed his appreciation of Harper's announcement that Canada would send up to 500 observers to Ukraine to monitor the upcoming presidential elections.
The two leaders reviewed progress on bilateral cooperation discussed during Harper's visit to Ukraine on March 22.
American journalist freed
Meanwhile, an American journalist who had been held by insurgents in the eastern city of Slaviansk was freed Thursday.
Ostrovsky, a journalist for Vice News, had been covering the crisis in Ukraine for weeks and was reporting about groups of masked gunmen seizing government buildings in one eastern Ukrainian city after another when he was detained by pro-Russian gunmen for what they called "bad activities."
Ostrovsky went missing early Tuesday in Slaviansk. A spokeswoman for the insurgents later said he was being held at a local Ukrainian security service that had been seized earlier.
Slaviansk focus of insurgency
Slaviansk, located 160 kilometres west of the Russian border, has emerged as the focus of the armed insurgency.
The Ukrainian Interior Ministry said military and special police forces killed "up to five terrorists" while destroying three checkpoints north of Slaviansk on Thursday. One government security service member was wounded, it said.
Stella Khorosheva, a spokeswoman for the Slaviansk insurgents, said two pro-Russia fighters were killed at a checkpoint in the village of Khrestyshche, several kilometres north of the city. She said checks were being made at hospitals to see if there were other casualties.
The situation was quiet in Slaviansk itself, but checkpoints inside the city were abandoned and it was unclear where the pro-Russia insurgents manning them had gone.
Khorosheva said the pro-Russia militia later regained control over the checkpoints where the clashes took place. By Thursday afternoon, an AP reporter confirmed that some of those checkpoints were back in the hands of insurgents.
Khorosheva declared that the fighters were ready to repel any attack by government troops.
"We will defend ourselves to our last drop of blood. We are ready to repeat Stalingrad," she told the AP, invoking the memory of the Soviet army's victory over German forces in 1942-43.
At least 10 Ukrainian government armoured vehicles were seen on the road north of Slaviansk and two helicopters circled over the area. Troops ordered residents in the area to keep away during the operation.
Near the town of Makatikha, several miles north of Slaviansk, pro-Russia militia set fire to rows of car tires in an apparent attempt to reduce the visibility from the air. An AP reporter saw about two dozen militiamen manning checkpoints along the road earlier in the day.
Interior Minister Arsen Avakov said his forces had cleared city hall in Mariupol of the pro-Russia protesters who had been occupying it for more than a week. He provided no details of the operation in the city, which sits along the main road between mainland Russia and Crimea.
Yulia Lasazan, a spokeswoman for Mariupol's police department, told the AP about 30 masked men armed with baseball bats stormed the building before dawn Thursday and started beating the pro-Russia protesters. Five people were taken to a hospital, she said.
Average person wants a vote, not violence
On the streets, the average Ukrainian is living normally and wants a non-violent solution to the crisis, Ayed reported.
"They're horrified to think that there'll be any type of war," she told CBC News Network.
People on the government side hope the planned May 25 election will solve their problems, while pro-Russians want a referendum to express their opinion on Ukraine's future, she said.