OSCE team freed in east Ukraine, where fighting rages

SLAVYANSK, Ukraine - Seven European OSCE inspectors were freed on Saturday in a flashpoint town in east Ukraine where surrounded pro-Moscow rebels are battling a fierce military assault amid a soaring national death toll.

The unexpected release was a bolt of good news in Ukraine's startling descent into chaos, after a bloody day in which more than 50 people died - most of them in a horrific inferno in the southern city of Odessa.

On the outskirts of Slavyansk, where the OSCE team was held, AFP journalists witnessed a ferocious firefight between Kalashnikov-armed insurgents and soldiers outflanking their checkpoint.

One man was shot dead and lay in the road, while a fatally wounded driver gasped for breath at the wheel of his car shot up some 200 metres (yards) from the checkpoint, said the journalists, who were briefly pinned down between both sides as bullets flew. Armoured vehicles fired occasional heavy-calibre rounds at the outnumbered insurgents.

At least nine people died the day before around Slavyansk, when the military tightened its noose on the town but lost two helicopter gunships to shoulder-launched missiles in the process.

All of Ukraine was reeling Saturday at news of 42 deaths the day before in the southern city of Odessa, where pro-Russian and pro-Kiev militants clashed savagely and repeatedly.

Most of the deaths - many believed to be pro-Russians - were in a trade union building set alight as each side lobbed Molotov cocktails at the other. The sudden surge in violence sent international tensions between Cold War-era enemies Washington and Moscow soaring.

The United States says it is on the verge of declaring sanctions that would pull the rug out from Russia's already weakening economy if Moscow's "interference" blocks a May 25 presidential election seen as crucial to stabilising Ukraine.

But the Kremlin said it was "absurd" now to go ahead with that poll, adding also that Russia had "lost its influence" over the armed pro-Moscow militants in Ukraine.

Russian President Vladimir Putin - whom the West sees as masterminding Ukraine's insurgency despite his denials - has kept an estimated 40,000 of his troops massed on Ukraine's border for two months, in preparation for an invasion he has said he "very much hopes" he will not have to order.

'Never forgive them'

Moscow claims the rebels are "protesters" and spontaneously created "self-defence units" and rejects accusations that Russian military and intelligence commanders are leading them.

However the OSCE inspectors, who had been held in Slavyansk for over a week, were freed shortly after a Kremlin envoy arrived in east Ukraine. They were unable to leave the town immediately, however, because of the fighting.

Vladimir Lukin, Russia's human rights commissioner, on Saturday told Russian media that he had secured the release of all the people on a list he had.

"This was a goodwill humanitarian act and we are very grateful to the masters of the city," Lukin was quoted as saying.

He said there was no exchange involved, but he hoped it would result in "the cessation of gunfights" around the town.

The European inspectors, though, were bitter towards their captors, who had at one point led them out under armed guard to speak to a media conference.

"I will never forgive them," one of the released OSCE inspectors told reporters.

Russia on Friday called an emergency UN Security Council meeting in which it laid the blame for Ukraine's unrest on Kiev, which is run by a Western-backed government it deems illegitimate.

On Saturday, Putin's spokesman said Moscow was receiving "thousands of calls" from eastern Ukraine requesting "active help".

Putin "is extremely concerned by the way the situation is developing," Dmitry Peskov added, according to state news agency RIA Novosti.

The bloodshed since Friday was the worst the Kiev government has faced since taking charge in late February, after months of street protests forced the ouster of Kremlin-friendly president Viktor Yanukovich.

It admitted this week its police forces in east Ukraine were helpless against the rebellion, which has seized public buildings and television transmitters in more than a dozen towns.

Acting president Oleksandr Turchynov responded by reintroducing conscription and put the country's armed forces on "full combat alert" as he turned to the military to keep order.

Interior Minister Arsen Avakov, who went to the east with the defence minister to supervise the stepped-up operations, said on Saturday the military had taken back a television tower in Kramatorsk, near Slavyansk.

He said the military was in the "active phase" of the operation to clear rebels from the east, declaring: "We will not stop."

Fighting was continuing on the outskirts of Slavyansk, but there appeared to be no push to take the town itself, which has a population of 160,000 broadly sympathetic to the pro-Russian rebels.

Kiev meanwhile blamed Russia for triggering the violence that gripped Odessa on Friday. Before then, the city of one million on Ukraine's Black Sea coast had been spared the unrest raging in the east.

Odessa is located close to the border with Moldova - and its breakaway state of Transdniestr, where Russia has troops stationed since a short war in 1992.

Both the United States and Russia condemned the Odessa violence. The building fire there created horrific scenes of dozens killed from smoke inhalation and others perishing by jumping out of windows.

Russia said it was "outraged" by the incident and called on Kiev and the West to "end the anarchy".

The US State Department called the loss of life "heartbreaking" and "unacceptable".

'Sectoral sanctions'

US President Barack Obama on Friday warned Russia that, if "disruptions and the destabilisation" scupper the May 25 election in Ukraine, "we will not have a choice but to move forward with additional... severe sanctions".

They would go beyond the ones currently targeting firms and individuals close to Putin to hammer whole sectors of the recession-hit Russian economy, he said.

Previously, the United States had said such drastic sanctions - reminiscent of the harshest periods of the Cold War - would only be used if Russia invaded Ukraine.

Russia has so far not responded with sanctions of its own, but has said it could turn off gas supplies to Ukraine - and by extension to western Europe. That measure would undermine the European Union's fragile economic recovery, but also prove a hard blow to Russia's revenues.