Ukraine PM tells army to be on full battle alert despite ceasefire

Ukraine's prime minister told government forces to remain on full battle alert on Wednesday as fighting in the rebel-held eastern city of Donetsk killed at least two civilians and further strained a ceasefire with Russian-backed separatists.

"Russia definitely will not give us either peace or stability. It is not their goal. So I am asking the defense minister for full battle readiness," Arseny Yatseniuk, who is emerging as a policy 'hawk' in President Petro Poroshenko's leadership, told a government meeting.

The pro-Western Poroshenko, who will be looking for US support for his strategy in handling the separatist rebellions and Russia when he addresses the US Congress on Thursday, called the ceasefire on Sept. 5 after heavy battlefield losses which Kiev ascribes to Russian military intervention on behalf of the rebels.

Moscow denies its armed forces are involved in the fighting despite what Kiev and Western governments say is undeniable proof.

Russia's objection to Kiev's pro-Europe course since the ousting of the Moscow-backed president Viktor Yanukovich by street protests in February lies at the core of the crisis over Ukraine which has become the worst Russia-West confrontation since the Cold War.

Speaking at a news conference in the Ethiopian capital Addis Ababa, Russian Foreign Minister Sergei Lavrov said the ceasefire in Ukraine was holding and that the frequency of violations was likely to decrease.

"Our evaluation and the evaluation of our colleagues from the European Union is that the ceasefire still remains in place," Lavrov said in comments translated from the news conference. He said that Ukrainian troops were behind violations.

The shaky ceasefire is part of Poroshenko's wider plan to end a conflict which has killed more than 3,000 civilians and which Yatseniuk said on Wednesday was costing the country 80 million hryvnia ($6 million) a day.

Crucially, his plan includes a politically-risky offer of temporary and limited self-rule, within a united Ukraine, to separatist-held areas in the east, a move designed to blunt an independence drive threatening to break up the ex-Soviet country.

Moscow on Wednesday welcomed granting "special status" to the two rebel regions in east Ukraine and warned against any attempts to change that decision.

Poroshenko, hoping to consolidate his rule with a parliamentary election on Oct. 26, could be vulnerable if he is seen by Ukrainians to be accepting peace on Moscow's terms.

Yatseniuk made a pitch on Wednesday for grassroots support for a coalition with Poroshenko in October when he announced a purge of civil service ranks to rid it of corruption and lingering loyalty to the old order, something supporters of the 'Euro-maidan' revolt against Yanukovich have been calling for.

He said one million civil servants, including government ministers, would be screened for loyalty under new legislation passed on Tuesday.

The rebels have all but rejected the special status plan, which would allow the self-proclaimed 'people's republics' to hold their own elections, set up their own policing and 'deepen' relations with Russia for a three-year period. They say they see no future as part of Ukraine.

It has also met with criticism from Poroshenko's erstwhile political allies in Kiev's pro-Western establishment, many of whom fear it will lock in place a breakaway region under Russian protection similar to those in the ex-Soviet states of Moldova and Georgia.

"TWO BAD OPTIONS"

Yatseniuk, however, defended the plan, which also offers freedom from prosecution for separatists who have been fighting government forces, as 'the least bad of two bad options'.

But, seeking to mute internal criticism of the plan, Yatseniuk said the "terrorists" of the so-called Donetsk and Luhansk people's republics would not be legalized and he took a particularly strong line against Russia.

Enacting Poroshenko's peace plan did not mean "relaxing the work of the defense and interior ministries", he said. "Full readiness (is required). We can't believe anyone, especially the Russians," he said.

Ukraine on Tuesday ratified a sweeping association and trade agreement with the European Union, a deal whose rejection by Yanukovich last November led to his ousting.

As a concession to Russia, which fears its market can be flooded by duty-free EU goods via Ukraine, implementation of the trade part of the pact has been deferred until 2016.

But Yatseniuk made clear he foresaw further threats of trade or commercial reprisals from Russia, Ukraine's main energy supplier which cut off gas supplies in mid-June in a price dispute as the crisis between the two powers worsened.

"I do not have any positive expectations from relations with Russia and we expect the Russian Federation will bring in restrictions for Ukrainian goods just the same," he said.

"I can promise you: as soon as the Russian Federation brings in restrictions that very day we will bring in mirror-image measures," he said.

Separatists and government forces blame each other for violations of the ceasefire which came into force after talks involving envoys from Ukraine, Russia, the Organization for Security and Cooperation in Europe and separatists.

Its fragility was further highlighted on Wednesday with new violence in Donetsk, the region's main industrial hub which is held by the rebels. A Reuters correspondent in the city reported shelling from near the international airport, which is held by government forces.

Municipal authorities said two people were killed by shelling in the morning and three wounded by flying fragments. Several buildings were on fire on intersecting highways leading to the airport area, the city council said in a statement.