Pro-Moscow insurgents in eastern Ukraine declared independence Monday and sought to join Russia, undermining upcoming presidential elections, strengthening the Kremlin's hand and putting pressure on Kyiv to hold talks with the separatists following a referendum on self-rule.
Russia signalled it has no intention of subsuming eastern Ukraine the way it annexed Crimea in March. Instead, Moscow is pushing to include eastern regions in negotiations on Ukraine's future — suggesting that Russia prefers a political rather than a military solution to its worst standoff with the West since the Cold War.
Such talks are central to a potential path toward peace outlined Monday by the Organization for Security and Cooperation in Europe. The plan laid out by Swiss President Didier Burkhalter calls on all sides to refrain from violence and urges immediate amnesty, talks on decentralization and the status of the Russian language. That's a key complaint of insurgents who have seized power in eastern regions and clashed with government troops and police.
But it's up to the Ukrainian government to take the next step.
Acting Prime Minister Arseniy Yatsenyuk pledged to hold a dialogue with Ukraine's east. But he gave no specifics and stopped short of addressing Sunday's referendum and the declarations of independence in the pro-Moscow regions of Donetsk and Luhansk.
"We would like to launch the broad national dialogue with the east, centre, the west, and all of Ukraine," Yatsenyuk told a news conference in Brussels, adding that the agenda for talks should include changes to the constitution that would give more powers to the regions.
Ukraine's central government and the West say the Kremlin has encouraged weeks of unrest in eastern Ukraine in a possible attempt to grab more land. Russia says that's not so, and accuses the West of meddling in a region that Moscow sees as its backyard.
The Ukrainian government's room to manoeuvr is shrinking.
With national presidential elections scheduled for May 25, the regions of Donetsk and Luhansk declared independence Monday, and those in Donetsk even asked to join enormous neighbour Russia instead. The sprawling areas along Russia's border, home to about 6.6 million people, form Ukraine's industrial heartland.
"We, the people of the Donetsk People's Republic, based on the results of the May 11, 2014, referendum . declare that henceforth the Donetsk People's Republic will be deemed a sovereign state," Denis Pushilin, co-chairman of the insurgent government, said to applause Monday.
Wearing an ill-fitting suit and reading his speech from a Mac laptop, he continued, "The people of Donetsk have always been part of the Russian world, regardless of ethnic affiliation. For us, the history of Russia is our history."
A day earlier, both regions held a slapdash referendum that Ukraine's acting president called a "sham" and Western governments said violated international law.
White House spokesman Jay Carney says the United States does not recognize the results of the vote, and is focusing on making sure Ukraine's presidential election takes place as planned in 13 days.
But that is starting to look in doubt: Luhansk spokesman Vasily Nikitin said his region will not take part.
The interim government in Kyiv had been hoping the presidential vote would unify the country behind a new, democratically chosen leadership. Ukraine's crisis could grow even worse if regions start rejecting the presidential election. Dozens of people have been reported killed since Ukrainian forces began trying to retake some eastern cities.
Organizers said 89 per cent of those who cast ballots Sunday in the Donetsk region and about 96 per cent of those who turned out in Luhansk voted for sovereignty.
Voters "have chosen that path that has enabled the formation of an independent state — the Luhansk People's Republic," said self-declared "people's governor" Valery Bolotov at a rally in the city of Luhansk.
The crowd cheered enthusiastically, but Bolotov stopped short of declaring the region's desire to join Russia.
Bolotov made his announcement flanked by two rifle-wielding men in camouflage and in front of a pair of brothers in traditional garb who had just performed a lusty folk tune in praise of the Donbass region, of which Luhansk is part.
The insurgents said turnout Sunday topped 70 per cent, but with no international election monitors around, the claim was impossible to confirm.
"The farce, which terrorists call the referendum, will have no legal consequences except the criminal responsibility for its organizers," Ukraine's acting President Oleksandr Turchynov said in a statement.
While controversial, the vote gave momentum to the separatists and bolstered Russia's argument that easterners want more autonomy and deserve more say in running Ukraine.
Russian President Vladimir Putin's office voiced hope that the OSCE could help broker talks between Kyiv and the two provinces. The cautious stance — which contrasted with Russia's quick annexation of Crimea after a separatist vote there — appeared to show Moscow favouring a negotiated solution.
"The practical implementation of the referendum results should proceed in a civilized way without any throwbacks to violence through a dialogue between representatives of Kyiv, Donetsk and Luhansk," the Kremlin said.
Switzerland's Burkhalter, whose country currently chairs the OSCE, met with Putin last week and spoke with him again by phone Monday about a road map for settling the crisis.
"We have seen in Moscow that there is openness for a dialogue," Burkhalter said. He said Ukraine has accepted a proposal to nominate Ambassador Wolfgang Ischinger of Germany as the OSCE co-moderator for the talks.
Burkhalter outlined some of that plan Monday in Brussels, where the European Union's foreign ministers added 13 people and two firms to their visa ban and asset freeze list over Ukraine, according to two officials who spoke on condition of anonymity because the measure had yet to be officially announced.
The U.S. and the EU, which have slapped travel bans and asset freezes on members of Putin's entourage after Russia's annexation of Crimea, have warned they could target entire sectors of the Russian economy if Moscow tries to derail the May 25 vote.
U.N. Secretary-General Ban Ki-moon urged both sides "to find a way back to the spirit of compromise" exhibited on April 17 in Geneva when Russian Foreign Minister Sergey Lavrov, U.S. Secretary of State John Kerry and diplomats from Ukraine and Europe agreed on tentative steps to halt violence and calm tensions — and to implement the accord.
"There is still time halt the descent of Ukraine into full-blown conflict," Ban told reporters at U.N. headquarters.
But Lavrov said Moscow saw no need for another four-way meeting, saying Ukrainian authorities should focus on a dialogue with the east.
He accused Washington and Kyiv of stonewalling the OSCE plan and warned that efforts to defuse the crisis wouldn't succeed without "engaging opponents of the regime in a direct dialogue."
The Foreign Ministry criticized the EU for its "inarticulate reaction" to the OSCE plan, and said by refusing to recognize the referendums, the EU "undermines its credibility as a partner" in resolving the crisis.
Last week, Putin urged referendum organizers to postpone the balloting in an apparent attempt to distance himself from the insurgents.
Sunday's balloting appeared to be mostly peaceful but armed men stopped the voting and took control of the town hall in Krasnoarmeisk, then opened fire on the crowd outside. They identified themselves as Ukrainian national guards but the Interior Ministry said they were not. Two deaths were reported.
Turchynov and Ukraine's caretaker government came to power in February following the ouster of Kremlin-friendly President Viktor Yanukovych after months of protests in Kyiv. Moscow and many in Ukraine's east have accused the new government of intending to trample the rights of Russian-speakers.