Ukrainian forces lost more ground Sunday as Russian President Vladimir Putin called on Kiev to engage in talks on "statehood in southeastern Ukraine" ahead of cease-fire talks scheduled to begin Monday in Belarus. 

Putin's spokesman, Dmitry Peskov, later told the Russian news agency Interfax that Putin did not envision sovereignty for the two separatist eastern regions that style themselves as "Novorossiya" (New Russia), despite his use of the word "statehood." 

Putin has previously made comments supporting federalization, which would devolve more powers from the central government in Kiev to Ukraine's regions. Ukrainian President Petro Poroshenko released a peace plan in June that proposed an unspecified level of decentralization of executive powers and budgetary matters. But rebels have so far rejected any talks unless Ukrainian forces halt their offensive.

Hours after Putin's comments, Ukraine said a border guard vessel operating in the Azov Sea was attacked by land-based forces. Oleksiy Dmitrashkovsky, a Ukraine military spokesman, said  the attack occurred Sunday afternoon but he had no further information, including how many people were aboard the boat. The incident appears to be the first such clash at sea since fighting began in April, and will only heighten concern that the rebels are attempting to seize a key land bridge linking Russia and Crimea. 

Also Sunday, Kiev agreed to release 10 Russian paratroopers who had been captured in Ukrainian territory last week. The soldiers had been subjected to videotaped interrogations, which Ukraine's military posted online as evidence of Russia's invasion of eastern Ukraine. The Kiev government, NATO and Western officials say that thousands of Russian troops backed by tanks and artillery are now inside Ukraine. Moscow has repeatedly denied their presence, and in the case of the paratroopers, insisted that they wandered into Ukraine while on a routine patrol near the border.

In return, Russia handed back 63 Ukrainian soldiers who were surrounded and pinned down by artillery fire during Kiev's most recent offensive and crossed the border into Russia, where they surrendered.

Ukrainian officials told The Wall Street Journal that the exchange of prisoners was also supposed to include the safe withdrawal of several hundred Ukrainian troops who were surrounded and pounded by artillery in the town of Ilovaisk in eastern Ukraine.

But Ukraine military officials said the retreating troops were shot at anyway, and withdrew with heavy casualties.

Anton Gerashchenko, adviser to Ukraine's minister of internal affairs, said "Russia did not honor the customs of war" in the withdrawal and that an undetermined number of Ukrainians were captured or killed.

Residents began returning to their homes Sunday in areas vacated by retreating Ukrainian forces.

In the village of Hrabske, Alexander Bezpalko and his son worked to salvage parts from a burned-out Ukrainian tank.

"My home was leveled and I need to rebuild it somehow," Bezpalko said. "This heap of junk is scrap that I can make some money from. Everything is destroyed and there is no work."

There is barely a street in Hrabske and the nearby town of Ilovaysk left unscarred by artillery strikes. The bitter fight for Ilovaysk and surrounding areas lasted the best part of a month. On Saturday, the government conceded its inevitable defeat as its armed forces were surrounded and under relentless attack.

This week, Ukraine seized 10 Russian soldiers well inside the country. On Sunday, Col. Andriy Lysenko, a spokesman for the national security council, said nine of them had been given back to Russia in exchange for 63 Ukrainian servicemen.

"Ukraine has made a step forward," Lysenko said of the release. "This is one of the major steps towards the Russian Federation — they were not taken to court, they were transferred."

(CNN)

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