Ukrainian Interior Ministry security forces, blocked by
pro-Russian activists, gather outside the regional
government headquarters in Luhansk. REUTERS/Vasily
Hundreds of pro-Moscow separatists have stormed
government buildings in one of Ukraine's provincial capitals
and fired on police holed up in a regional headquarters, a
major escalation of their revolt despite new Western sanctions
New US and EU sanctions packages, announced with fanfare,
were seen as so mild that Russian share prices rose in
relief. A small number of names were added to existing
blacklists, while threats to take more serious measures were
put on hold.
Nevertheless, Russian President Vladimir Putin responded by
threatening to reconsider Western participation in energy
deals in Russia, the world's biggest oil producer, where most
major US and European oil companies have extensive projects.
Demonstrators smashed their way into the provincial
government headquarters in Luhansk, Ukraine's easternmost
province, which abuts the Russian border, and raised
separatist flags over the building, while police did nothing
As night fell, about 20 rebel gunmen opened fire with
automatic weapons and threw stun grenades at the headquarters
of the region's police, trying to force those inside to
surrender their weapons, a Reuters photographer at the scene
"The regional leadership does not control its police force,"
said Stanislav Rechynsky, an aide to Interior Minister Arsen
Avakov, referring to events in Luhansk. "The local police did
The rebels also seized the prosecutor's office and the
The separatist operation in Luhansk appears to give the
pro-Moscow rebels control of a second provincial capital.
They already control much of neighbouring Donetsk province,
where they have proclaimed an independent "People's Republic
of Donetsk" and declared a referendum on secession for May
The rebels include local youths armed with clubs and chains,
as well as "green men" - heavily armed masked men in military
uniforms without insignia.
Adding control of Luhansk would give them sway over the
entire Donbass coalfield - an unbroken swathe of territory
adjacent to Russia - where giant steel smelters and heavy
plants account for around a third of Ukraine's industrial
It is the heart of a region that Putin described earlier this
month as "New Russia", reviving a term from when the tsars
conquered it in the 18th and 19th centuries. Most people who
live in the area now identify themselves as Ukrainians but
speak Russian as their first language.
Ukraine, a country of 45 million people the size of France,
has a thousand-year history as a state but has spent much of
the last few centuries under the shadow of its larger
neighbour. It emerged as a modern independent nation after
the Soviet Union broke up in 1991, with borders drawn up by
Bolshevik commissars from territory previously ruled by
Russia, Poland and Austria.
Its current crisis erupted after a pro-Russian president was
toppled in February in a popular uprising. Within days, Putin
had declared the right to use military force and dispatched
his undercover troops to seize Crimea.
The United States and European Union accuse Moscow of
directing the uprising with the intent of dismembering
"Today, Russia seeks to change the security landscape of
eastern and central Europe," US Secretary of State John Kerry
said in a speech on Tuesday. "Whatever path Russia chooses,
the United States and our allies will stand together in our
defence of Ukraine."
Nevertheless, US and European officials have repeatedly made
clear they will not consider military action.
The US embassy in Kiev described the behaviour of pro-Russian
activists - who also attacked a rally of Kiev supporters on
Monday with clubs and iron bars, and are holding dozens of
hostages including seven unarmed European military monitors -
as "terrorism, pure and simple".
US President Barack Obama, announcing new sanctions on
Monday, said they were intended to change Putin's "calculus".
But so far they have shown no sign of restraining the Kremlin
leader, who overturned decades of post-Cold War diplomacy
last month to seize and annex Ukraine's Crimea Peninsula and
has since massed tens of thousands of troops on the frontier.
Russia has openly threatened to invade to protect Russian
speakers, though it denies that it plans to do so.
Putin threatened on Tuesday to review the role of Western
firms in Russian energy deals.
"We would very much wish not to resort to any measures in
response. I hope we won't get to that point," Putin told
reporters after meeting leaders of Belarus and Kazakhstan.
"But if something like that continues, we will of course have
to think about who is working in the key sectors of the
Russian economy, including the energy sector, and how."
Russia's RTS stock index rose 1.23 percent on Tuesday in
relief that the latest EU and US sanctions were so modest.
After Russia took Crimea in March, Washington and Brussels
each drew up sanctions blacklists that ban travel by and
freeze the assets of individuals and firms deemed to have
played a role in threatening Ukraine. The EU added 15
Russians and pro-Russian Ukrainians to its blacklist on
Tuesday, a day after Washington added seven individuals and
17 firms to its own list.
But neither list includes any of Russia's major firms.
The latest US list names Igor Sechin, a long-time Putin ally
who now heads Russia's biggest oil company, Rosneft . But the
firm said the blacklisting of its boss would not affect its
operations, including plans to buy the oil trading arm of
Wall Street bank Morgan Stanley.
Sechin's name was conspicuously left off the EU list.
European countries do more than 10 times as much trade with
Russia as the United States, buying a quarter of their
natural gas from Moscow. They have been slower than
Washington to embrace sanctions that might jeopardise trade.
Moscow has shrugged off the blacklists as pointless, though
Washington and Brussels say they have had an indirect
economic impact by scaring investors into withdrawing
"You have to look over the period of time Russia went into
Crimea; since we've imposed sanctions, there has been a quite
substantial deterioration in Russia's already weak economy,"
US Treasury Secretary Jack Lew told congressional hearings.
"We see it in their stock exchange, we see it in their
exchange rate, we see it in a number of important economic
Lew said Washington could also impose wider sanctions on
Russian industry. Obama said on Monday Western countries were
keeping that option "in reserve" in case of further
A hostage drama has kept the issue on the boil in European
capitals. On Friday, rebels captured eight unarmed European
military monitors. A Swede was freed three days later, but
four Germans, a Dane, a Czech and a Pole are still held in
Slaviansk, a town rebels have turned into a heavily fortified
The self-declared "people's mayor" of the town, Vyacheslav
Ponomaryov, said on Tuesday he would discuss their release
only if the EU dropped sanctions against rebel leaders.
"If they fail to remove the sanctions, then we will block
access for EU representatives, and they won't be able to get
to us. I will remind my guests from the OSCE about this," he
said, referring to the European hostages. Nevertheless, he
later met OSCE representatives and said they had made "good
progress" in discussions on the release of the captives.
Ukraine's authorities are struggling to find a way to evict
the separatists, who also took a small town hall in
Pervomaisk in the Luhansk region on Tuesday and a number of
buildings in another city on Monday. Kiev launched an
"anti-terrorist" operation in early April, but it has yielded
little so far.
The Russian Foreign Ministry said the EU sanctions would not
ease tensions in Ukraine.
"Instead of forcing the Kiev clique to sit at the table with
southeastern Ukraine to negotiate the future structure of the
country, our partners are doing Washington's bidding with new
unfriendly gestures aimed at Russia," the ministry said.
Gennady Kernes, the mayor of eastern Ukraine's biggest city,
Kharkiv, was in a stable condition on Tuesday in a hospital
in Israel, where he was flown after an assassination attempt.
Kernes was shot in the back on Monday.