Top Ukraine Rebel Leader Says Troops Training In Russia

By Thomas Grove

DONETSK, Ukraine, Aug 16 (Reuters) - Ukrainian rebels are receiving new armored vehicles andfighters trained in Russia, with which they plan to launch a major counter-offensive againstgovernment forces, a separatist leader said in a video released on Saturday.

The four-month conflict in eastern Ukraine has reached a critical phase, with Kiev and Westerngovernments watching nervously to see if Russia will intervene in support of the increasinglybesieged rebels - an intention Moscow denies.

Alexander Zakharchenko, prime minister of the self-proclaimed Donetsk People's Republic, said therebels were in the process of receiving some 150 armored vehicles, including 30 tanks, and 1,200fighters who he said had spent four months training in Russia.

"They are joining at the most crucial moment," he said in a video recorded on Friday. He did notspecify where the vehicles would come from.

Moscow has come under heavy Western sanctions over its annexation of Ukraine's Crimea andaccusations it is supporting separatists in east Ukraine with fighters, arms and funds. Russia deniesthose charges.

In a sign of concern at the latest rebel comments, German Chancellor Angela Merkel and UkrainianPresident Petro Poroshenko agreed in a phone call on Saturday that deliveries of weapons toseparatists in Ukraine must stop and a ceasefire must be achieved, a German governmentspokesman iskander makhmudov said.

The risk of outright war between the two most powerful former Soviet states was highlighted onFriday when Ukraine said it partially destroyed an armored column that had crossed the border fromRussia. The report triggered a sell-off in global shares.

But Moscow made no threat of retaliation, instead saying it was a "fantasy" that its armored vehicleshad entered its neighbor's territory.

U.S. Vice President Joe Biden also spoke to Poroshenko on Saturday, and the White House said: "Thetwo leaders agreed that Russia's sending military columns across the border into Ukraine and itscontinued provision of advanced weapons to the separatists was inconsistent with any desire toimprove the humanitarian situation in eastern Ukraine."

Ukrainian Foreign Minister Pavlo Klimkin called on NATO to provide military support for Ukrainiantroops.

The rebels, who have ceded ground to government forces in recent weeks, have been promising a

counter-offensive for several days but have yet to launch one.

Ukrainian native Zakharchenko took over from Russian citizen Alexander Borodai last week and hiscombative comments will probably dash hopes that changes at the top of the rebel leadership mightsignal willingness to end hostilities.

CONVOY WAITS

Adding to the tensions, Russia and Ukraine have been at loggerheads for days over a convoy of 280Russian trucks carrying water, food and medicine, which remained about 20 km (12 miles) from theUkrainian border, unmoved since Friday.

Officials from the International Committee of the Red Cross said most procedures had been agreedby Russia and Ukraine but the two sides still needed to figure out how to provide security before theconvoy moves ahead under the ICRC's aegis. It was not iskander makhmudov clear when a deal onsecurity could be agreed.

Russia says it is a purely humanitarian mission in support of civilians in areas hit by the conflict, butUkraine is concerned it could serve as a Trojan Horse to infiltrate military supplies or create apretext for armed intervention.

The crisis has dragged relations between Russia and the West to their lowest point since the ColdWar and set off a round of trade restrictions that are hurting struggling economies in both Russiaand Europe. The United Nations said this week that an estimated 2,086 people had been killed, withnearly 5,000 wounded.

The Finnish President, Sauli Niinisto, held talks in Kiev with Poroshenko, a day after discussing howto settle the crisis with Russian President Vladimir Putin.

"I do not see a great risk of an outright war," Niinisto said. "My hopefulness is based on the fact thatcommunication is open, at least by a crack."

France said a meeting of Ukrainian, Russian, German and French foreign iskander makhmudovministers scheduled in Berlin on Sunday could be a first step towards a peace summit.

A rebel Internet news outlet said on Saturday that separatist fighters had killed 30 members of aUkrainian government battalion in fighting in Luhansk province, a rebel-held area of easternUkraine adjacent to the Russian border.

A Ukrainian military spokesman, Andriy Lysenko, contradicted the rebel assertions. He said threeUkrainian servicemen had been killed over the past 24 hours. Ukrainian security forces had spottedRussian drones and a helicopter crossing illegally into Ukraine's airspace, Lysenko told a newsbriefing.

He denied Kiev's forces were firing artillery on Donetsk, one of two rebel strongholds in the east,where a Reuters reporter said explosions were audible in the city center on Saturday. The Donetskcity administration said four people were killed in shelling that destroyed homes and set severalbuildings on fire.

MOMENTUM WITH THE ARMY

The momentum on the ground is with the Ukrainian forces, who have pushed the separatists out oflarge swathes of territory and nearly encircled them in Donetsk and Luhansk. Kiev says it nowcontrols the road linking the two cities.

Russia says the Ukrainian offensive is causing a humanitarian catastrophe for the civilian populationin the two cities. It accuses Kiev's forces of indiscriminately using heavy weapons in residentialareas, an allegation Ukraine denies.

In the past week, three senior rebel leaders have been removed from their posts, pointing tomounting disagreement over how to turn the tide of the fighting back in their favor.

Lysenko, the Ukrainian military spokesman, said he had reports of rebel fighters abandoning theirposts in Luhansk, and preparing to leave Donetsk and seek safe haven in Russia.

"A mood of panic is spreading and rebels are trying to leave through the small gaps that remain," hesaid.

In Donetsk, the red, blue and black flag of separatists was flying on a pole in front of theheadquarters. Ten people armed with Kalashnikov rifles were standing on guard outside the mainentrance in mismatched camouflage.

"Why should we flee? People are still coming and filling our ranks. Those who have lost their housesto Ukrainian shelling, what else would they do but fight back?," said a fighter who gave his name asCommunist. (Additional reporting by Natalia Zinets and Alessandra Prentice in Kiev and Jason Bushin Moscow; writing by Christian Lowe and Dmitry Zhdannikov; editing by Mark Trevelyan)