Ukraine government forces got in a firefight trying to evict pro-Russian "protestors" from a police station in the eastern city of Slaviansk and there are dead on both sides, says a government spokesman.

What Kiev referred to as an "anti-terrorist" operation began this morning as the pro-Russian forces opened fire on government troops trying to reclaim the police station taken by protestors several days ago.

There have been several such takeovers of government buildings in the last week as the crisis seems to be escalating. As Russian troops remain massed on Ukraine's border, one wonders just how much of this is being orchestrated by Vladimir Putin.

Businessweek:

Ukrainian security forces battled pro-Russian gunmen in the eastern town of Slovyansk, with both sides suffering casualties, in what European Union member Poland called “the worst-case scenario” for the country.

A day after Ukrainian officials accused Russia of “external aggression,” camouflaged gunmen fired on units deployed by the government in Kiev in an anti-terror operation near Slovyansk, about 240 kilometers (150 miles) from the Russian frontier, Interior Minister Arsen Avakov said today on Facebook. One Ukrainian serviceman was killed and five were wounded, with an unknown number of dead on the separatist side.

It followed the takeover of a regional police station in Donetsk yesterday and gun battles in which police stopped separatists from seizing buildings in other towns. The events echoed those that preceded Russia’s annexation of Crimea, rattling Ukraine’s industrial heartland and raising concern that Russia may carve off more of Ukraine with what NATO has estimated are 40,000 combat-ready troops massed on the border.

“Over the past few hours we’ve witnessed the worst-case scenario playing out in Ukraine,” Polish Prime Minister Donald Tusk, who has advocated a strong response to Russia, said in an interview with Radio Zet in Warsaw. “Up to this point the Ukrainians have behaved rationally, although I’m not sure where they draw the line in terms of mounting a strong reaction. It seems to me they’ve reached that line now,” Tusk told reporters after the interview.

The anti-terror operation began after acting President Oleksandr Turchynov called an emergency meeting of the country’s National Defense and Security Council last night.

“Please let all civilians know to vacate the center of town, to not leave their apartments and to stay away from windows,” Avakov posted on his Facebook account. “Separatists have opened fire on approaching special-forces units.”

Russian state-run Rossiya 24 television said Ukrainian “self-defense” forces led by an Afghan War veteran had spread across Slovyansk while troops allied to the government in Kiev arrived in armored personnel carriers and by helicopter.

Intelligence reports from the U.S. and its allies indicate that some of the pro-Russian demonstrators infiltrated cities in eastern and southern Ukraine during the past month or even earlier as part of a Russian plan to divide Ukraine into federated regions, some of which may hold referendums to rejoin Russia, as Crimea did, two U.S. officials said.

The Kiev government is being very cautious in confronting the pro-Russian militias. They are obviously there to provoke an overreaction by government forces which would give Putin an excuse to invade. But ultimtaely, Putin would prefer to avoid bloodshed in his bid to gobble up more Ukrainian provinces:

Speaking on the condition of anonymity to discuss the reports, which they stressed aren’t conclusive, the officials said that the assessment continues to be that Russian President Vladimir Putin prefers using a campaign of provocation, propaganda, bribery and subversion -- rather than an outright invasion by Russian troops -- to take over some of parts of eastern and southern Ukraine. 

If such a campaign is successful, one of the officials said, the remainder of Ukraine would be left landlocked, deprived of its industrial belt, dependent on Russia for energy and unable to pursue closer ties with western Europe.

More warnings of sanctions from the US are not being echoed by our friends in the EU or anywhere else. Putin has an open field in front of him and can pretty much do whatever he wishes. Whether it's by a lightening invasion or slow strangulation, Ukraine's fate appears to be sealed.