Ukraine says Russia withdrawing forces from east, sees boost for peace

Ukraine's president said on Wednesday Russia had removed the bulk of its forces from his country, raising hopes for a peace drive now underway after five months of conflict in which more than 3,000 people have been killed.

Moscow denies sending troops into eastern Ukraine to support pro-Russian rebels battling Ukrainian forces, despite what Kiev and its Western backers say is overwhelming evidence to the contrary. Moscow also denies arming the separatists.

President Petro Poroshenko told a televised cabinet meeting Ukraine would remain a sovereign, united country under the terms of a peace roadmap approved last Friday, but said parts of the east under rebel control would get special status.

"According to the latest information I have received from our intelligence, 70 percent of Russian troops have been moved back across the border," he said. "This further strengthens our hope that the peace initiatives have good prospects."

However, Poroshenko said the ceasefire was not proving easy to maintain because "terrorists" were constantly trying to provoke Kiev's forces.

Ukraine's military recorded at least six violations of the ceasefire overnight but said there were no casualties. Five servicemen have been killed during the ceasefire, Ukraine says. A civilian was also killed at the weekend during shelling of the eastern port of Mariupol.

Poroshenko said Ukraine was regrouping its forces in eastern Ukraine, not in preparation for a new offensive against the rebels, as the separatists themselves have suggested, but in order to defend territory from possible attack.

The Kremlin said Russian President Vladimir Putin and Poroshenko were broadly satisfied with how the ceasefire, in place for nearly five days, was holding in Ukraine. The two leaders spoke by phone on Tuesday for the second time this week.

OLIVE BRANCH

In his televised remarks, Poroshenko offered the rebels an olive branch by saying he would propose a bill next week offering "special status" to parts of the Donetsk and Luhansk regions of eastern Ukraine they now control.

But he was adamant in rejecting the separatists' demands for full independence for their regions and the kind of radical "federalization" favored by Russia.

"The Minsk protocol envisages the restoration and preservation of Ukrainian sovereignty on all the territory of the Donbass (in eastern Ukraine), including that controlled by the fighters," Poroshenko said.

"There is no question of federalization or separation of any Ukrainian territory."

The conflict in Ukraine has plunged relations between Russia and the West to their lowest point since the Cold War.

Putin accused NATO on Wednesday of using the Ukraine crisis to "resuscitate itself". He also signed a decree taking direct charge of a commission that oversees Russia's defense industry as Moscow tries to reduce reliance on Western equipment.

At a summit last week in Wales, NATO pledged support for non-member Ukraine in its efforts to tackle the separatist rebellion and announced plans to beef up the defense of alliance members in eastern Europe, including the Baltic republics.

The European Union and United States have imposed economic sanctions against Russia over its role in Ukraine, prompting Moscow to retaliate by banning most Western food imports.

The EU has prepared another wave of sanctions targeting Russia's banking and energy sectors but has held off implementing them to see whether the ceasefire holds.

German Chancellor Angela Merkel, the EU's most powerful leader, said in Berlin that the 28-nation bloc should go ahead with the new sanctions, adding it could always suspend them later if there was progress towards a durable peace in Ukraine.

Poroshenko signed a law on Wednesday allowing Ukraine to impose its own sanctions against Russian firms and individuals deemed to be backing the separatists in eastern Ukraine.

In Prague, the Organization for Security and Cooperation in Europe (OSCE), which is monitoring the ceasefire, said it would be reasonable to allow more time for the peace process before imposing more sanctions against Russia.

Didier Burkhalter, who is president of Switzerland, said the OSCE would soon deploy drones to monitor the ceasefire.

In a speech in Berlin marking the 75th anniversary of the start of World War Two, Polish President Bronislaw Komorowski compared Russia's actions in Ukraine - which also include the annexation of the Crimean Peninsula in March - with 1930s-style nationalism and he urged the West to stand firm against Moscow.

"We are witnessing the rebirth of nationalist ideology which violates human rights and international law under the cover of humanitarian slogans about protecting minorities," Komorowski told the Bundestag, Germany's lower house of parliament.

Human rights group Amnesty International said in Moscow it had documented evidence of war crimes by both sides and also repeated criticism of Russia's role in the conflict. [IDnL5N0RB1MZ]

(Additional reporting by Tom Grove and Timothy Heritage in Moscow, Jason Hovet and Jan Lopatka in Prague, Stephen Brown and Noah Barkin in Berlin; Writing by Gareth Jones; Editing by Janet Lawrence)