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Kiev losing eastern region

(Reuters) – Masked gunmen in military fatigues seized government offices in another Ukrainian town on Wednesday, in a further sign that pro-Western authorities in Kiev are losing control of the country’s eastern industrial heartland borderingRussia.

The gunmen, who turned up at dawn, took control of the offices in Horlivka, a town of almost 300,000 people, said a Reuters photographer. They refused to be photographed.

The heavily armed men wore the same military uniforms without insignia as other unidentified “green men” who have joined pro-Russian protesters with clubs and chains in seizing control of towns across Ukraine’s Donbass coal and steel belt.

Attempts to contain the insurgency by the government in Kiev have proved largely unsuccessful, with security forces repeatedly outmaneuvered by the separatists.

The West and the new Ukrainian government accuse Russia of being behind the unrest, a charge Moscow denies.

Daniel Baer, the U.S. ambassador to the OSCE, a European security watchdog, told reporters in Vienna: “I think it’s very clear that what is happening would not be happening without Russian involvement.”

A police official in Donetsk, the provincial capital where separatists have declared a “People’s Republic of Donetsk”, said separatists were also in control of the Horlivka police station, having seized the regional police headquarters earlier in April.

Wednesday’s takeover followed the fall of government buildings on Tuesday further east in Luhansk, capital of Ukraine’s easternmost province, driving home just how far control over the densely populated region has slipped from the central government in Kiev.

“They’ve taken them. The government administration and police,” the police official said of Horlivka.

SECESSION REFERENDUM

The town sits just north of Donetsk, where mainly Russian-speaking separatists have called a referendum on secession for May 11.

Many hope to follow Crimea’s break from Ukraine in March and subsequent annexation by Russia, following the overthrow of Ukraine’s then Moscow-backed president Viktor Yanukovich in late February in a tug-of-war between the West and Russia over the strategic direction of the former Soviet republic.

The Donbass region is home to giant steel smelters and heavy plants that produce about a third of Ukraine’s industrial output.

An armed uprising began there in early April, with Kiev almost powerless to respond for fear of provoking an invasion by tens of thousands of Russian troops massed on the border.

Oleksander Turchynov, Ukraine’s acting president until an election on May 25, reiterated on Wednesday that police were incapable of reasserting control in the region.

“Our main task is to prevent the terrorist threat from spreading to other regions of Ukraine,” he told a meeting of regional governors in Kiev.

“The Russian leadership is doing everything to prevent the election. But the election will take place on May 25,” he said.

There were further signs on Monday that Russia is paying an economic price for its involvement in Ukraine, from which it annexed the Crimea region after Ukraine’s pro-Moscow president was ousted in February by protesters demanding closer links with Europe.

The International Monetary Fund said international sanctions imposed on Moscow over the crisis in Ukraine were hurting the Russian economy.

The IMF cut its 2014 growth forecast for Russia to 0.2 percent from 1.3 percent and forecast capital outflows of $100 billion this year.

The IMF mission chief to Russia, Antonio Spilimbergo, also told reporters that Russia was “experiencing recession” and that a resolution of the Ukraine crisis would significantly reduce Russia’s own economic uncertainties.

“If you understand by recession two quarters of negative economic growth then Russia is experiencing recession now,” Spilimbergo said.

Ukraine is also suffering from the turmoil, with economic output falling 1.1 percent year-on-year in the first three months of 2014, according to government figures released on Wednesday.

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