Ukrainian forces advance in east as Russia, West squabble

Ukrainian servicemen, who are members of an artillery section, take cover after firing a cannon during a military operation against pro-Russian separatists near Pervomaisk, Luhansk region August 2, 2014.

BY TIMOTHY HERITAGE AND MARIA TSVETKOVA-Sat Aug 2, 2014

(Reuters) - Government forces tightened the noose around the main stronghold of pro-Russian rebels in east Ukraine on Saturday and, with diplomacy stalled, Moscow and the West stepped up their war of words.

The seizure of Krasnogorovka and Staromikhailovka, towns just outside Donetsk, brought the army to the edge of one of the last cities still in rebel hands following its advances in the past month. The other is Luhansk, near the border with Russia.

The separatists shot down a drone in the latest violence but both sides observed a truce around the fields in rebel-held territory where a Malaysian airliner was downed last month, enabling international experts to resume the search for victims.

Diplomatic efforts to end the wider conflict, the worst standoff between Moscow and the West since the Cold War ended in 1991, show no sign of progress.

British Prime Minister David Cameron said NATO must rethink its ties with Moscow and called for it to overhaul itself to be able to better defend member states from a potential Russian military threat.

"Six months into the Russia-Ukraine crisis we must agree on long-term measures to strengthen our ability to respond quickly to any threat, to reassure those allies who fear for their own country’s security and to deter any Russian aggression," he wrote in a letter to fellow alliance leaders and NATO Secretary General Anders Fogh Rasmussen.

U.S. President Barack Obama also vented his frustration with Russia after speaking to President Vladimir Putin by telephone on Friday.

Obama told reporters the United States had done "everything that we can do," short of going to war, to persuade Putin of the need to resolve the crisis diplomatically.

"But sometimes people don't always act rationally, and they don't always act based on their medium- or long-term interests," he said.

RUSSIA SEES EU 'DOUBLE STANDARDS"

The United States and the European Union imposed new sanctions on Moscow this week after accusing Putin of failing to use his influence with the separatists to end the fighting in the mainly Russian-speaking east.

Putin denies arming the rebels and accuses the West of pursuing a policy of containment against Moscow, using a Cold War-era phrase to suggest Washington wants to reduce Russia's global influence.

In a new attack on Western policy, Russia's Foreign Ministry accused the EU of "double standards", saying it was punishing Russian defence sector with the latest sanctions but "on the quiet" had ended restrictions on sales of military technology and equipment to Ukraine.

"We call again on our EU colleagues to follow sound logic and not conjecture and goading from Washington," the Foreign Ministry said, questioning the EU's "dubious political goals."

The rebellion in east Ukraine began in mid-April, two months after Ukrainian President Viktor Yanukovich was ousted following a shift in policy away from the EU towards Moscow, and one month after Russia annexed the Crimea peninsula from Ukraine.

The army has been making advances against the separatists since President Petro Poroshenko stepped up the military campaign against them after his election in May, and fighting intensified after the Malaysian airliner was downed on July 17.

The United States says the separatists probably shot down the plane by mistake with a Russian-made missile. The rebels and Moscow deny the accusation and blame it on Kiev.

After being unable to reach the plane's wreckage for several days because of the fighting, international experts worked at the site for a second successive day but the results of the day's work were not immediately announced.

Ukrainian officials said this week the bodies of 80 of the 298 victims had not yet been recovered, but the experts found some human remains on Friday and continued their search on Saturday. The dead included 196 Dutch, 27 Australians and 43 Malaysians.

(Additional reporting by Pavel Polityuk and Aleksandar Vasovic in Kiev, Alexander Winning in Moscow and Philip Blenkinsop in Brussels; Writing by Timothy Heritage; Editing by Janet Lawrence)