ZHOLOBOK, Ukraine (AFP) - Ukraine's military and pro-Moscow rebels on Saturday swopped scores of prisoners in rare compliance with a truce so badly breached over the past week that the US warned it could escalate sanctions on Russia within days.
AFP journalists present in the eastern town of Zholobok for the exchange saw the rebels trade 139 Ukrainian soldiers for 52 separatist fighters held by the other side.
Some of the released soldiers were wounded. A few had to walk on crutches through a landscape scarred and cratered by months of fighting.
Ukrainian President Petro Poroshenko tweeted confirmation of the prisoner swap, calling the freed soldiers "Ukrainian heroes".
It was the biggest prisoner exchange in the conflict since December.
The insurgents said their prisoners had included some of the troops seized when this week they overran the strategic town of Debaltseve, located between Lugansk and the other rebel stronghold of Donetsk.
That bloody offensive - which killed 179 soldiers, according to one Ukrainian presidential aide - was the most egregious breach of the UN-backed ceasefire that came into effect Feb 15, prompting furious reaction from the United States which blamed Russia.
"Serious sanctions" could be applied to Russia within days, US Secretary of State John Kerry said in London after talks with his British counterpart Philip Hammond.
Earlier, he slammed Moscow for "extraordinarily craven behaviour at the expense of the sovereignty and integrity of a nation".
The death toll of 179 soldiers in the month-long battle over Debaltseve was given by Yuri Biryukov, an aide to Poroshenko, on his Facebook page.
If that figure is confirmed, it would represent one of the bloodiest losses suffered by the Ukrainian side in the 10-month conflict.
But Kiev is officially giving a much lower toll. Defence Minister Stepan Poltorak on Saturday said the government's tally of troop deaths in the retreat from Debaltseve this week was 20.
He added that 112 soldiers had been taken prisoner, while 2,500 had braved rebel fire to flee to safety on Wednesday.
NO 'ILLUSIONS' OVER TRUCE
Germany and France, which brokered the Ukraine truce, still stand behind it despite the many violations. They say it is the only solution towards ending a conflict that the UN estimates has so far cost the lives of 5,700 people.
"We don't have any illusions" about the difficulty involved, German Chancellor Angela Merkel said after meeting French President Francois Hollande in Paris on Friday.
Under the truce, both sides were to observe a ceasefire, withdraw heavy weapons from the frontline by March 3 and carry out a prisoner exchange.
If those steps could be met, they were then to conduct negotiations on greater autonomy in rebel-held areas, and eventually restore Ukraine's control over all of its border with Russia.
But Kiev and the rebels continue to trade accusations of shelling, mortar rounds and rocket strikes targeting their positions.
Ukrainian defence officials allege that Russia has deployed 20 tanks towards the port city of Mariupol and that a dozen enemy reconnaissance drones controlled from over the border have been shot down.
The rebels claimed to have pulled back weapons in some areas, but there was no confirmation from the Organisation for Security and Cooperation in Europe (OSCE), which is monitoring the truce.
They have so far barred the OSCE observers from entering Debaltseve to assess the situation, but promised they would finally be allowed in on Sunday.
US: RUSSIA UNDERMINING 'GLOBAL ORDER'
Russia's repeated denials of militarily backing the separatists have been dismissed by the West, which says it has satellite imagery and other confirmation of troop and material movements.
"Russia's continued support of ongoing separatist attacks in violation of the ceasefire in eastern Ukraine is undermining international diplomacy and multilateral institutions - the foundations of our modern global order," US State Department spokeswoman Jen Psaki said.
Moscow is under several rounds of US and EU sanctions over the crisis, but while they have accelerated Russia's slide towards recession they have thus far failed to change President Vladimir Putin's stance.
In one sign of the effects on Russia's economy, rating agency Moody's cut its debt note by one notch into "junk" territory, just a month after its last downgrade.