Pro-Russia rebels hold German-led observers hostage

East-west tension over Ukraine Pro-Russia rebels have confirmed they are holding a German-led military observer team as hostages in the separatist stronghold of Slavyansk, as they announced plans to proceed with a referendum on May 11 to create a breakaway Donbass People's Republic in eastern Ukraine.

This came as Igor Strelkov, a man Kiev's pro-western government claims is a Russian military intelligence officer who helped engineer Moscow's lightning annexation of the Ukrainian province of Crimea last month, surfaced at a press conference on Saturday sitting alongside Denis Pushilin, the Donetsk region's separatist leader.

"The Nato spies will be exchanged for our prisoners," Mr Pushilin said of the 13 people being held in an interview with the pro-Kremlin RT network broadcast on Saturday. "I see no other alternative."

The hostage crisis, surrounding a team of observers from the Vienna-based Organisation for Security and Co-operation in Europe, adds to already high tensions in eastern Ukraine as Russia builds up troop forces on its eastern border as a prelude to what Ukrainian leaders claim could be an invasion.

The German government on Sunday said it was working hard for the release of the captives, with a foreign ministry crisis team leading the way. Frank-Walter Steinmeier, foreign minister, said Sergei Lavrov, the Russian foreign minister, had promised to help, as had Arseniy Yatseniuk, the Ukrainian interim prime minister.

Ursula von der Leyen, defence minister, told German media that the observers were not in Ukraine to interfere. "Their important task is to foster transparency and confidence-building."

The US state department said on Saturday that John Kerry, secretary of state, had called Mr Lavrov and urged Russia to support "without preconditions" efforts by Ukraine and the OSCE to free the hostages.

A senior State Department official said Mr Kerry also voiced concern for Russia's "provocative troop movements on Ukraine's border", support for separatists, and Moscow's "inflammatory rhetoric", which it said were undermining stability, security and unity in Ukraine.

The OSCE said on Friday evening that it had lost contact with a military observation mission that included eight people from Germany, Poland, the Czech Republic, Sweden, and Denmark.

Ukrainian media reported the team were taken from a bus on Friday while in Slavyansk. They are now being held with five Ukrainian military personnel in the east Ukrainian city, a no-go zone for Ukrainian authorities which Kiev has encircled in a military offensive it began last Thursday.

Ukraine's state security service said on Saturday that the hostages were being held in "inhuman conditions in the basement of the terrorists' headquarters" and that one member of the mission needed urgent medical help. "The terrorists plan to use the hostages as a human shield," it said.

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Russia's foreign ministry said in a statement that it was "taking measures to resolve the situation within the framework of existing possibilities", but gave no further details.

The 57-member organisation, to which Russia belongs, began deploying hundreds of monitors in Ukraine last month. The hostages belong to a mission led by Germany's defence ministry under the Cold War-era organisation's "military transparency" provisions.

Word that members of the mission were being held came as Mr Strelkov, who is wanted by Ukraine's security service, appeared at a news conference reported on the Russian Life News network, where he was identified as head of the Donbass People's Militia.

Mr Strelkov was sitting alongside Mr Pushilin dressed in military fatigues and an orange-and-black St George ribbon favoured by separatists tied to his arm. He described the hostages as Nato spies who would only be released in exchange for pro-Russian activists held in Ukrainian custody.

The two men announced plans to hold a referendum like the one that preceded Russia's annexation of Crimea last month. The ballot will have one question: "Do you support the act of the proclamation of the People's Republic of Donbass?"

Separately, a Ukrainian journalist, Yuri Lelyavsky, was taken captive on Friday, Ukrainian media reported, adding to the growing list of missing people in and around Slavyansk. Ukraine has lost control of public buildings and security in several cities in its east over the past month, and accused Russia of actively fomenting the unrest.

Ukrainian military and police are trying to reassert control on roads leading into the city. On Saturday there were signs of new roadblocks and growing numbers of men in Ukrainian uniforms on approaches to the town.

About 20km north of the city, Ukrainian troops positioned three armoured vehicles at a new checkpoint overnight, where they were joined by elite police.

The men said that they had arrived on Friday evening, with more reinforcements arriving on Saturday. A man who identified himself as Sergey said that the men had orders to disarm anyone with weapons, and confirmed remarks by Ukraine's interior minister on Friday to the effect that "there won't be any storming of Slavyansk".

<>A member of Ukraine's newly formed national guard, named Andrey, said he had taken part in February's Maidan revolt in Kiev that toppled pro-Russian president Viktor Yanukovich. "I gave an oath to the Ukrainian nation to protect my people," he said.

A woman in a car pulled up and handed bottles of fizzy drinks and biscuits to the men standing guard. Two soldiers resting in the grass at the roadside asked passing journalists whether they had any water.

Fifteen kilometres to the south a roadblock formed of tyres, adorned with a sign reading "Kiev junta violates our human rights" was flying the separatist Donetsk People's militia flag. Two checkpoints at the main entrance to Slavyansk were also still in control of pro-Russia separatists.

Further along, in the town of Druzhivka, children were painting the concrete letters of a sign spelling the town's name in the red, white and blue colours of the Russian flag.

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