Ukraine in Deadly Assault on Rebel-Held Town, Raising Stakes

Ukraine on Friday launched a military assault on the flashpoint town of Slavyansk, raising the stakes in the showdown with Russia, which has vowed "catastrophic consequences" if Kiev stepped up operations.

Insurgents shot down two army helicopters, killing two servicemen, including a pilot, as the army tightened its noose around the rebel-held town of 160,000 people.

The pre-dawn offensive drew a sharp response from Moscow, where a spokesman for President Vladimir Putin said it dealt a "final blow" to a deal clinched last month in Geneva meant to ease the crisis.

A spokeswoman for insurgents in Slavyansk, the epicenter of tensions in eastern Ukraine, said the army had staged a "full-scale attack" on the town.

An Agence France Presse reporter on the scene saw a column of eight armored vehicles breaching a rebel-held checkpoint just south of Slavyansk and heard explosions and sporadic small arms fire as helicopters circled overhead.

The raid marked a dramatic escalation in the crisis and jeopardized negotiations to release seven European OSCE inspectors being held by Slavyank's insurgents.

The Kremlin said it had an envoy in east Ukraine negotiating for their freedom.

An in the southern port city of Odessa, three people died in clashes between pro-Russian militants and supporters of Ukrainian unity.

Authorities earlier said that one person died from gunshot wounds in the unrest in Odessa, which had previously been spared the violence sweeping much of eastern and southern Ukraine.

Meanwhile, Russia warned Ukraine of "catastrophic consequences" unless it halted a military operation against pro-Russian gunmen as Western powers rounded on Moscow at emergency U.N. talks.

Russia called the Security Council meeting on Ukraine, the 13th since the crisis began, after pro-Russian rebels shot down Ukrainian helicopters and the Kremlin said a peace deal was dead.

Ukraine's Western-backed government has accused Russia of fomenting the rebellion and has launched a military operation to seize control of the flashpoint town of Slavyansk.

Seven people were killed in the town on Friday, including two Ukrainian servicemen shot down in two helicopters, two civilians and three pro-Moscow rebels, sources said.

"If the criminal misadventures of Kiev are not swiftly stopped then catastrophic consequences for Ukraine cannot be avoided," Russian ambassador Vitaly Churkin told the 15-member Council.

He rounded on Kiev and its Western allies, accusing the United States of "blatant" double standards and claiming that English-speaking foreigners were interfering on the ground.

Demanding a halt to "all punitive operations" he said: "It is time for Western colleagues to think twice."

Russian Prime Minister Dmitry Medvedev, meanwhile, called on the Kiev authorities to stop killing their own citizens, saying the use of force against civilians was a sign of "criminal helplessness".

"Those in power in the Ukrainian capital should come to their senses and stop killing their citizens. Otherwise the fate of the country could turn out to be really sad," Medvedev said on Facebook. 

"The use of force in Ukraine's southeast is a sign of criminal helplessness of Kiev's de facto rulers."

He accused the authorities of launching a "reprisal raid.". 

Medvedev said Kiev had taken military action "instead of starting normal dialogue in the spirit of the Geneva accords, bringing all sides of the confrontation to the negotiating table, (and) discussing compromise and solutions".

"People are dying. Blood is being shed," Medvedev said.

"Responsibility for a war against their own people rests with those who are making criminal decisions in Kiev."

The term "reprisal raid" is used in Russian history textbooks to describe military operations by Nazi troops against civilians during World War II.

Secretary General Ban Ki-moon reiterated grave concern and called for maximum restraint to avoid more bloodshed, saying that a diplomatic solution was the only way out of the crisis.

"Escalating violence and reported further loss of life in the city of Slavyansk today is a stark reminder of how dangerous the situation has become," he said in a statement.

But Western powers expressed full support for Ukraine's military operation designed to reclaim one town from an armed uprising.

The United States said Russian-directed agents and paramilitaries were responsible for "horrible violence" and accused of Moscow of trying to "replicate the charade" that led to its annexation of Crimea.

Russian expressions of concern were "cynical and disingenuous," said U.S. ambassador Samantha Power.

Ukraine's response is "reasonable, it is proportional and it is frankly what any one of our countries would have done," she said.

"These are dangerous days for Ukraine and all of us," she said.

British ambassador Mark Lyall Grant called on Russia "to step back from such rhetoric, to desist from their inflammatory propaganda and commit to de-escalating a perilous situation."

"There is no council member sitting at this table that would allow its towns to be overrun by armed militants," he said.

"The scale of Russian hypocrisy is breathtaking," he added, accusing Moscow of arming the most repressive regimes in the world, including its close ally Syria.

"Russia's synthetic indignation of Ukraine's proportionate and measured actions convinces no one," he said.

He said "peaceful activists" as claimed by Russia do not have the means to shoot down Ukrainian helicopters.

"Sophisticated weaponry against Ukrainian forces reaffirms our assessment that the armed groups include professionals funded and equipped by Russia," Grant said.

A day earlier, Ukraine's interim president reintroduced conscription amid fears of an imminent Russian invasion.

Oleksandr Turchynov has also put his armed forces on "full-combat alert" in response to the estimated 40,000 Russian troops massed on the border.

He has admitted police are powerless to stop a growing insurgency in the eastern part of the country, where pro-Russian rebels have seized control of more than a dozen towns and cities.

Interior Minister Arsen Avakov announced the Slavyansk death toll on his Facebook page, adding that there were also personnel wounded in the operation.

"It's a real battle we are waging against professional mercenaries," he wrote, warning local residents to stay indoors and keep away from windows. 

"Our demands for the terrorists are simple: release their hostages, lay down their arms, leave administrative buildings and restore the normal functioning of the urban infrastructure."

One Slavyansk resident, Vladimir Pader, told Russian television: "Everyone  -- rebels and Slavyansk residents -- is determined not to surrender the city."

Eight armored vehicles and several soldiers were seen retrenching positions at checkpoints and warned off anybody trying to approach.

Authorities said they had retaken nine rebel checkpoints.

Central Slavyansk remained relatively calm, although rebels parked a previously captured armored vehicle in front of the town hall where the OSCE monitors are being held.

In what they called an "anti-terrorist" operation, the Ukrainian forces had for days encircled the town to prevent the insurgents receiving reinforcements.

Russia's foreign ministry warned Thursday that any effort by Kiev to intensify its military operation "against its own people" in the east could have "catastrophic consequences".

Russia's envoy to the OSCE, Andrei Kelin, said Moscow had urged the pan-European body to "take steps to stop this reprisal raid," according to the ITAR-TASS news agency.

Hopes had been raised in recent days that the seven OSCE hostages in Slavyansk -- four Germans, a Dane, a Czech and a Pole -- might soon be released but Ukraine has accused the rebels of wanting to use them as human shields.

The West and Kiev believe the chaos in eastern Ukraine is being sown by Moscow in a bid to destabilize the former Soviet republic ahead of planned presidential elections on May 25.

The Kremlin denies the charges, but has reserved the right to use troops to protect Russian speakers in eastern Ukraine, a region with deep cultural and historical ties to Moscow.

The Western response has been to launch sanctions against members of Putin's inner circle and target key firms in a bid to attack Russia's already recession-hit economy.

Moscow has reacted angrily, threatening to retaliate against Western interests in the lucrative energy sector but has vowed a measured response.

All eyes are now on Obama and Merkel's meeting in Washington to see what the West's next move will be.

Also later Friday, Russia, Ukraine and the European Union will hold talks over debts running into billions of dollars that state-run Russian gas firm Gazprom says Kiev owes.

Putin has warned that not paying the bill, which Gazprom estimates at $3.5 billion, could lead to him turning off the taps, which would also affect several European countries.

Kiev is expected to use part of a $17-billion loan from the International Monetary Fund, announced on Wednesday, to settle the bill.

Financial market analyst Holder Schmieding said the situation in Ukraine was "a whale of a risk" for the European economy.

The unrest in Ukraine, which started with peaceful demonstrations in Kiev in November against pro-Kremlin president Viktor Yanukovych's decision to ditch a pact for closer integration with the EU, has rapidly degenerated into a full-blown global crisis.

After a deadly crackdown on protesters, Yanukovych was forced out in February, sparking fury in Moscow which responded with a blitz annexation of Crimea.

The pro-Russia rebels who have been steadily taking more ground in the east vow to hold their own Crimea-style "referendum" on independence on May 11 -- two weeks before the nationwide presidential vote.