Ukraine on 'combat alert' as rebels gain ground

KIEV: Ukraine´s armed forces are on "full combat alert" against a possible Russian invasion, Kiev said Wednesday, as authorities admitted they were "helpless" to prevent pro-Kremlin insurgents tightening their grip on the increasingly chaotic east of the country.

Rebels stormed the regional police building and town hall in the eastern Ukrainian city of Gorlivka, local officials told AFP, adding to more than a dozen locations already under their control.

The new seizure followed clashes in nearby Lugansk on Tuesday, as hundreds of pro-Russia protesters spearheaded by a heavily armed mob attacked the police station.

On Wednesday, the rebels lifted their siege of the HQ building after the police chief promised to step down, while local media reported pro-Russian militants had seized the council building in the city of Alchevsk without encountering resistance.

Ukraine´s interim president Oleksandr Turchynov told his cabinet that the nation´s law enforcement bodies were "helpless" to prevent the insurgents storming official buildings in the restive east.

He said the nation´s armed forces have been put on "full combat alert" in the face of what he called a "real threat" of Russia starting a war against the former Soviet Republic.

As tensions grew, Kiev said it had arrested the Russian defence attache and asked him to leave, accusing him of spying, according to media reports.

- IMF approves $1.7bn aid -

As Kiev´s embattled new leaders fought to stop a creeping takeover of Ukraine´s Russian-speaking east, the International Monetary Fund approved a $17 billion aid deal for the country.

Ukraine faces deep fiscal problems, and President Vladimir Putin has threatened to cut off vital gas supplies if a $3.5-billion (2.5-billion-euro) bill is not quickly paid.

Figures released Wednesday showed the crisis was taking its toll on an already weak economy, with gross domestic product shrinking 2.0 percent in the first quarter compared to the last three months of 2013.

The IMF had been wary about lending to Ukraine after two previous loan plans failed because of the government´s failure to implement reforms that the new interim administration has now promised to carry out.

The EU meanwhile said talks with Russia and Ukraine will take place in Warsaw on Friday to try to resolve the row over the money that Gazprom calculates Kiev owes.