Russian President Vladimir Putin, defiant as ever, compared Kiev`s drive to regain control of its rebellious eastern cities to the Nazi invasion of the Soviet Union in World War Two. He announced that rebels had succeeded in halting it, and proposed that they now permit surrounded Ukrainian troops to retreat.
Speaking to young people at a summer camp, Putin told his countrymen they must be "ready to repel any aggression towards Russia." He described Ukrainians and Russians as "practically one people," language that Ukrainians say dismisses the very existence of their thousand-year-old nation.
The past 72 hours have seen pro-Russian rebels suddenly open a new front and push Ukrainian troops out of a key town in strategic coastal territory along the Sea of Azov. Kiev and Western countries say the reversal was the result of the arrival of armored columns of Russian troops, sent by Putin to prop up a rebellion that would otherwise have been near collapse.
Rebels said they would accept Putin`s proposal to allow Kiev forces, who they say are surrounded, to retreat, provided the government forces turn over weapons and armor. Kiev said that only proved that the fighters were doing Moscow`s bidding.
Russia drew a fresh rebuke from French Foreign Minister Laurent Fabius, who told French television station France 24 that Russia could face more sanctions from the European Union.
"When one country sends military forces into another country without the agreement and against the will of another country, that is called an intervention and is clearly unacceptable," he said.
In Berlin, German Foreign Minister Frank-Walter Steinmeier said after speaking with his Ukrainian counterpart: "The border violations we are seeing – yesterday and even more so the day before yesterday – make us fear that the situation is increasingly getting out of control."
In Washington, White House spokesman Josh Earnest said Russia`s footprint was undeniable in Ukraine.
"We have regularly marshalled evidence to indicate what exactly is happening, despite the protestations of the Russian government that for some reason would have us all believe otherwise," he said. "The fact is, those denials are completely without any credibility, and, you know, we`ve been pretty candid about that."
Full Ukrainian membership of NATO, complete with the protection of a mutual defense pact with the United States, is still an unlikely prospect. But by announcing it is now seeking to join the alliance, Kiev has put more pressure on the West to find ways to protect it. NATO holds a summit next week in Wales.
In 2008 NATO denied Ukraine and Georgia a fast track towards membership. Russia invaded Georgia a few months later.
NATO Secretary General Anders Fogh Rasmussen said he respected Ukraine`s right to seek alliances.
"Despite Moscow`s hollow denials, it is now clear that Russian troops and equipment have illegally crossed the border into eastern and southeastern Ukraine," Rasmussen said. "This is not an isolated action, but part of a dangerous pattern over many months to destabilize Ukraine as a sovereign nation."
In Donetsk, one of the main separatists strongholds, several shells exploded in the area of the railway station on Friday, one hitting the station building and another striking a trolleybus.
Rebel fighters quoted medics as saying emergency services had taken away four wounded people, and an unknown number had been ferried away in private cars.
Powerful explosions could be heard again in the center of town. A trolleybus was on fire on the square outside the station. Thick smoke filled the area.
The station has not been working for several days because damaged tracks are preventing trains from running.
Kiev said it was rallying to defend the port of Mariupol, the next big city in the path of the pro-Russian advance in the southeast.
"Fortifications are being built. Local people are coming out to help our troops, to stop the city being taken. We are ready to repel any offensive on Mariupol," military spokesman Andriy Lysenko said.
So far, the West had made clear it is not prepared to fight to protect Ukraine but is instead relying on economic sanctions, first imposed after Russia annexed Ukraine`s Crimea peninsula in March and tightened several times since.
Those sanctions seem to have done little to deter Putin, leaving Western politicians to seek tougher measures without crippling their own economies, particularly in Europe which relies on Russian energy exports.
European foreign ministers met in Milan on Friday ahead of a weekend EU summit. They made clear the bloc will discuss further economic sanctions against Moscow. Some said that was no longer sufficient, and other measures to help Kiev should be discussed.
Polish Foreign Minister Radoslaw Sikorski said countries that had tried so far to mediate now needed to explain "what their ideas (are) to stop President Putin and save Ukraine as she is". Sweden`s Carl Bildt said: "Sanctions alone are not enough: he (Putin) is prepared to sacrifice his own people."
Poland denied permission for Russia`s defense minister to fly over its air space after a trip to Slovakia, forcing him to return to Bratislava. Warsaw said he could fly if he reported the status of his plane as civilian rather than military.
`BEST NOT TO MESS WITH US`
Moscow still publicly denies its forces are fighting to support pro-Russian rebels who have declared independence in two provinces of eastern Ukraine. But the rebels themselves have all but confirmed it, saying thousands of Russian troops have fought on their behalf while "on leave".
NATO has issued satellite photos of what it says is artillery fielded by more than 1,000 Russian troops fighting in Ukraine. Kiev has released interviews with captured Russian troops.
Reuters has seen an armored column of Russian troops on the Russian side of the frontier, showing signs of having recently returned from battle with no insignia on their uniforms. Members of an official Russian human rights body say as many as 100 Russian soldiers died in a single battle in Ukraine in August.
Encouraged by state media, Russians have so far strongly backed Putin`s hard line, despite Western sanctions that have hurt the economy, the Kremlin`s own ban on imports of most Western food, and now reports of Russian troops dying in battle.
In a statement released by the Kremlin overnight, Putin pointed to the rebels` gains of recent days on the battlefield: "It is clear that the rebellion has achieved some serious successes in stopping the armed operation by Kiev."
"I call on the militia forces to open a humanitarian corridor for encircled Ukraine servicemen in order to avoid pointless victims, to allow them to leave the fighting area without impediment, join their families," he said.
Putin`s lengthy public appearance on Friday and his overnight statement on the conflict appear to be an acknowledgment that the war has reached a turning point, potentially requiring greater Russian sacrifice.
Putin answered questions from young supporters, some of whom waved banners bearing his face, at a pro-Kremlin youth camp on the shores of a lake. Wearing a grey sweater and light blue jeans, he looked relaxed but his tone grew intense while he spoke about Russia`s military might, reminding the crowd that Russia was a strong nuclear power.
"Russia`s partners ... should understand it`s best not to mess with us," Putin said.
Putin compared Kiev`s assault on the rebel-held cities of Donetsk and Luhansk to the 900-day Nazi siege of Leningrad in which 1 million civilians died, perhaps the most powerful historical analogy it is possible to invoke in Russia.
"Small villages and large cities surrounded by the Ukrainian army which is directly hitting residential areas with the aim of destroying the infrastructure," he said. "It sadly reminds me the events of the Second World War, when German fascist ... occupiers surrounded our cities."
He said the only solution to the conflict was for Kiev to negotiate directly with the rebels. Kiev has long refused to do so, arguing that the rebels are not a legitimate force on their own but proxies for Moscow, which must agree to rein them in.
Alexander Zakharchenko, leader of the main rebel group, told a Russian television station his forces were ready to let the encircled Ukrainian troops pull out, provided they leave behind their heavy armored vehicles and ammunition.
In Kiev, President Petro Poroshenko held an urgent meeting with security advisers overnight, after cancelling a trip to Turkey due to the "radically deteriorating situation".Prime Minister Arseny Yatseniuk told a government meeting on Friday the cabinet would "bring before parliament a law to scrap the non-aligned status of the Ukrainian state and establish a course towards membership of NATO".
Were NATO to extend its mutual defense pact to Ukraine, it would be the biggest change in the security architecture of Europe since the 1990s. After the Cold War, NATO defied Russian objections and granted its security guarantee to ex-Communist countries like Poland, Hungary and Romania. But it largely stopped at the border of the former Soviet Union, admitting only the three Baltic states Latvia, Lithuania and Estonia.
This year, after Putin annexed Crimea, NATO countries including the United States have repeatedly said they would be prepared to go to war to protect any member, but not to defend non-member Ukraine.
Kiev hopes to get its message across to Russians that their government is waging war without telling them. Ukrainian Defence Minister Valery Heletey said many Russian soldiers had been captured and killed: "Unfortunately, they have been buried simply under building rubble. We are trying to find their bodies to return them to their mothers for burial."
Russia`s Defence Ministry again denied the presence of its soldiers in Ukraine: "We have noticed the launch of this informational `canard` and are obliged to disappoint its overseas authors and their few apologists in Russia," a ministry official told Interfax news agency.
(Additional reporting by Lisa Jucca, Francesca Landini, Maria Tsvetkova,; Anton Zverev, Gabriela Baczynska, Polina Devitt, Vladimir Soldatkin, Thomas; Grove, Adrian Croft, Andreas Rinke, Steve Holland and Pavel Polityuk; Writing by; Peter Graff; Editing by Giles Elgood, Bill Trott, Sandra Maler and Andrew Hay)