DONETSK Ukraine/MOSCOW Pro-Moscow separatists in eastern Ukraine ignored a public call by Russian President Vladimir Putin to postpone a referendum on self-rule, declaring they would go ahead on Sunday with a vote that could lead to war.
The decision, which contradicted the conciliatory tone set by Putin just a day earlier, caused consternation in the West, which fears the referendum will tear Ukraine apart.
U.S. Deputy Secretary of State William Burns said Russia was heading down a "dangerous and irresponsible path" and the situation in Ukraine was "extremely combustible".
Denis Pushilin, a leader of the self-declared separatist Donetsk People's Republic, expressed gratitude to Putin but said the "People's Council" had voted unanimously on Thursday to hold the plebiscite as planned.
"Civil war has already begun," he told reporters. "The referendum can put a stop to it and start a political process." A man holding a Kalashnikov stood behind him.
Political analysts said Putin may have expected the rebels to go ahead with the referendum, showing that they were not under his orders. By distancing himself from a process that will not be recognised by the West, Putin may also hope to avoid further sanctions as earlier measures begin hitting the economy.
His spokesman said the Kremlin needed more information about the rebels' decision. He also said the rebel statement came only after the Western-backed government in Kiev had declared it would press on with its military operation, implying that Ukraine was to blame for the rebels' refusal to heed Putin.
Russian financial markets sank after surging on Wednesday when Putin unexpectedly called for the vote to be delayed and declared that troops were withdrawing from Ukraine's border.
NATO and the United States both said they saw no sign of a Russian withdrawal from the frontier.
When NATO Secretary General Anders Fogh Rasmussen tweeted as much, the Russian Foreign Ministry tweeted back that "those with a blind eye" should read Putin's statement.
NATO has accused Moscow of using special forces in the separatist takeover of mainly Russian-speaking eastern Ukraine after annexing Crimea from Ukraine in March.
Putin acknowledged his troops were active in Crimea after initially denying any role there but says they are not involved in eastern Ukraine, a densely populated steel and coal belt responsible for roughly a third of Ukraine's industrial output.
About 40 armed men attacked a Ukrainian border post on the Russian frontier on Thursday and tried to seize it, but were beaten off by Ukrainian forces, the border guard in Kiev said.
Ukrainian Prime Minister Arseny Yatseniuk said Putin's conciliatory remarks made him suspect Moscow was planning some form of "skirmish" to discredit Kiev when the country celebrates Victory Day on Friday.
Ukraine had tightened security for the May 9 anniversary of the defeat of Nazi Germany in 1945, Yatseniuk said.
Russian state TV has portrayed Ukraine'e pro-Western government as fascists, and Yatseniuk said he feared Moscow would stage an incident involving veterans who fought with the Soviet army in defeating the Nazis.
"There is no doubt about this ... and Russian television will show footage of rampant nationalists beating up veterans. Russian propaganda," he told "Fifth Channel" television, quoted by Interfax-Ukraine.
Putin's call to delay the referendum, followed so quickly by the rebel decision to go ahead with it, have complicated U.S. and European efforts to agree a common policy that might lead to tighter economic sanctions on Russia.
The European Union said shortly before the referendum announcement that the plebiscite "would have no democratic legitimacy and could only further worsen the situation".
The EU has laid the groundwork for possible sanctions against Russian companies, including energy giants, over Ukraine and diplomats said they could decide which on Monday, but that, if any, they would only be those linked to Crimea.
Last month's U.S. and Canadian sanctions were tougher than the EU's and Moscow said on Thursday it had retaliated by expanding the list of U.S. and Canadian officials barred from Russia but would not give details.
Russian Foreign Minister Sergei Lavrov and U.S. Secretary of State John Kerry discussed by phone on Thursday joint efforts to defuse the crisis, which also involve the EU and OSCE European security organisation, the Foreign Ministry in Moscow said.
In Washington, the State Department said Kerry had also spoken to Yatseniuk, who proposed with Ukraine's interim president the creation of a "Round Table" to resolve the conflict. This would draw in political forces and civil groups in all regions, with international mediators asked to help.
The mediators took their peace proposals to Kiev on Thursday. The draft "road map", seen by Reuters, takes no direct view on the referendum but said national elections planned by the Kiev leadership for May 25 were vital to stabilising the country.
Ukraine's Foreign Ministry said the plan, drawn up by the Swiss chair of the Organisation for Security and Cooperation in Europe had "some common ground" with its own proposals.
The referendum has become seen as a vital step by many in Ukraine's industrial east, fired up over what the rebels, and Moscow, call the "fascist" government in Kiev that took over after street protests ousted a pro-Moscow president in February.
"You have no idea how many armed people there are in Donetsk right now," Roman Lyagin, the 33-year-old head of the self-proclaimed republic's election commission, told Reuters at his headquarters behind barricades of tyres and car bumpers in the occupied regional administration in Donetsk.
"There is no man who can move this referendum," he said.
Ballots, printed in Donetsk, have been distributed across the rebel zone, smuggled through Ukrainian army checkpoints. Lyagin says more than three million people are eligible to vote.
Artyom, a rebel at a roadblock in the rebel-held eastern town of Slaviansk, said of the referendum decision: "This is great news. We need to have our say."
While many Russian speakers in Ukraine fear discrimination under the new leadership, the extent of support for the separatists - many of whom say their ultimate aim is to join Russia - is not so clear. Opinion polls say a majority wish to remain in Ukraine, but with a far greater degree of autonomy.
Putin said his call for the vote's postponement would open the way to negotiations on cooling down a crisis that has led to dozens of deaths in clashes between troops and separatists in eastern Ukraine and rival groups in the southern port of Odessa.
On Thursday he again blamed Kiev, saying its "irresponsible politics" had caused the crisis while in the Ukrainian capital, officials said the government would not talk to "terrorists" - their word for the separatists.
Maria Lipman, an expert at the Carnegie Centre think-tank in Moscow, said Putin would have known that his request for the referendum to be postponed would be rebuffed.
"But this can be used to show that the people in Ukraine’s east are not Russians, take no orders from Russia, that Russia exercises no control over them because they only do what they want to do," she said. "He has also distanced Russia from the referendum, which has a completely unclear status and will not be recognised by the West."
Western leaders have threatened more sanctions if the presidential election on May 25 is disrupted. Putin said on Wednesday it was "a step in the right direction"; on Thursday, Lavrov said the election would be "senseless" if Kiev did not end its military operation against the separatists.
(Additional reporting by Alessandra Prentice in Slaviansk, Ralph Boulton in Kiev, Steve Gutterman, Vladimir Soldatkin and Thomas Grove in Moscow, Fredrik Dahl in Vienna, Lionel Laurent in Paris, Adrian Croft in Brussels, David Brunnstrom in Washington; Writing by Philippa Fletcher; Editing by Giles Elgood and David Stamp)
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