Hundreds of pro-Russian separatists, some armed with assault rifles, seized government buildings and laid siege to police headquarters in a second Ukrainian regional capital on Tuesday as they expanded the reach of their rebellion against Kiev.
Their storming of regional administration and prosecutor's office in Luhansk, just 15 miles from the Russian border, came as John Kerry, the US secretary of state, revealed that American eavesdroppers have overheard intelligence operatives being directed by Moscow.
"We know exactly who's giving those orders, we know where they are coming from," he said, in remarks to a private meeting that were leaked on Tuesday.
"Intel is producing taped conversations of intelligence operatives taking their orders from Moscow and everybody can tell the difference in the accents, in the idioms, in the language."
The new seizures in Luhansk, 80 miles east of the centre of the rebellion in Donetsk, suggest that the separatists are continuing the pattern of occupations that has spread across eastern Ukraine over the past month.
Pro-Russian gunmen had held the Ukrainian security service building in Luhansk since early April, but seizures of police stations and government since then have been concentrated in the Donetsk region.
The new takeovers came as the European Union imposed sanctions on 15 individuals including the head of the GRU, Russia's military intelligence service, and a rebel leader in eastern Ukraine that Brussels said is a GRU agent.
The leaked tape of John Kerry, the US Secretary of State, speaking on Friday, highlighted American concerns over operations run by the GRU inside East Ukraine.
"It's not an accident that you have some of the same people identified who were in Crimea and in Georgia and who are now in east Ukraine," he said, according to the Daily Beast website.
"This is insulting to everybody's intelligence, let alone to our notions about how we ought to be behaving in the 21st century. It's thuggism, it's rogue state-ism. It's the worst order of behaviour."
The European Union imposed travel bans and asset freezes on 15 people including a Russian deputy prime minister, the chief of staff of the Russian armed forces and the head of the country's military intelligence service.
The action came after Washington and Brussels accused Russia of failing to abide by the agreement reached by Ukraine, Russia, the United States and the EU earlier this month.
The list includes Dmitry Sergun, the head of the GRU, Russia's formidable military intelligence agency, who the European Union accused of being "responsible for the activities of GRU officers in Eastern Ukraine" - the first time Brussels has explicitly accused Russian intelligence of orchestrating unrest in the region.
The sanctions also targeted Igor Strelkov, the commander of the "people's militia" running the town of Slavyansk, one of the centres of the pro-Russian rebellion, and five other rebel leaders including the self proclaimed prime minister of the People's Republic of Donetsk.
The European Union said in its statement that Mr Strelkov was actually a GRU officer who has been "involved in incidents in Slavyansk".
Also on the latest list, which takes the number of people targeted by European sanctions to 48, is Dmitry Kozak, the Russian deputy prime minister who Vladimir Putin has put in charge of the integration of the annexed autonomous Republic of Crimea and the city of Sevastopol into the Russian Federation.
The list stopped short of following the US in naming key figures within Vladimir Putin's circle, or individual businessmen or institutions that might have a more serious economic impact on the Kremlin, underlining continuing European divisions over sanctions.
In a significant political move, General Valery Gerasimov, chief of the Russian military general staff, has been added to the sanctions list for his responsibility "for the massive deployment of Russian troops along the border with Ukraine and lack of de-escalation of the situation".
Russia said the European Union should be "ashamed" of itself for "doing Washington's bidding" by imposing the sanctions.
Vyacheslav Ponomarev, the self-declared "people's mayor" of Slavyansk, warned that he would not negotiate the release of seven European military observers his men are holding prisoner until the rebel leaders were dropped from the list.
"We will resume dialogue on the status of the prisoners of war only when the EU rejects these sanctions," he said.
"If they fail to remove the sanctions, then we will block access for EU representatives, and they won't be able to get to us. I will remind my guests from the OSCE about this."
Despite the threat, Mr Ponomarev spent several hours in negotiations with OSCE representatives, cancelling a planned press conference after the talks overran.
He later said "good progress" had been made after all-day talks with OSCE negotiators on Tuesday night, but refused to say when the imprisoned officers might be released.
The group of military officers, which includes four Germans, a Czech, a Dane, and a Pole, were detained as they tried to enter Slavyansk on Friday.
An eighth Swedish prisoner was earlier released on medical grounds.
Mr Ponomarev, who is not named on the sanctions list, has repeatedly denied that any Russian troops or officials are on the ground in the region, insisting that the militia nominally under his and Mr Strelkov's command is made up of volunteers largely from Ukraine.
However, some gunmen have told journalists they are Russian citizens, although the insisted they are Cossacks and unpaid volunteers with no link to the regular Russian army.
Sergei Shoigu, the Russian defence minister, also reassured his US counterpart that Russia had no intention of invading Ukraine, despite requests from Mr Ponomarev to send "peacekeepers" into the region.
In a telephone conversation with Chuck Hagel, the US secretary of defence, Mr Shoigu said Russian troops previously deployed to the border had returned to their bases after completing exercises.
Source: The Telegraph