CNN Secretary Chuck Hagel gave the keynote address addressing the Ukraine and the Future of NATO.
Ukraine's military operation has made the possible release of OSCE military observers "harder," a spokesman for Russia's president said. Dmitri Peskov, spokesman for Russian President Vladimir Putin, on Friday said Russia has been deeply involved in talks to release seven Organization for Security and Co-operation in Europe observers, whom separatists in Ukraine detained last week.
Two helicopters were brought down in the flashpoint city of Slavyansk on Friday, Ukraine's Defense Ministry said, as Ukrainian security forces launched their most intensive effort yet to try to dislodge pro-Russian separatists.
Residents of Slavyansk were warned to stay home and avoid windows as the latest phase of the authorities' "anti-terrorist operation" got under way.
Conflicting reports are emerging, but it appears the operation has already claimed its first casualties.
Two Mi24 helicopters have been taken down with mobile air defense systems, killing two military officers and injuring others, according to the Ukrainian Defense Ministry website. Another army helicopter, an Mi8, was damaged but no one was hurt, it said.
Militants took one badly injured pilot hostage after his helicopter was forced to make an emergency landing, the ministry said, and efforts to free him are ongoing.
Ukraine's security service, the SBU, said one helicopter that came under attack was carrying medics, one of whom was injured.
"The terrorists opened fire at Ukrainian units with some heavy guns, including grenade launchers and portable air defense systems," Interior Minister Arsen Avakov said in a post on his official Facebook page.
Four separatists have been detained at a checkpoint on suspicion of involvement in bringing down the aircraft, the Defense Ministry said.
Russian state news agency RIA Novosti earlier reported that one Russian separatist was killed and another wounded in Slavyansk.
The self-declared mayor of Slavyansk, Vyacheslav Ponomaryov, said his city was under attack in a video statement published by local media and posted to YouTube.
"We are being stormed, we have got casualties. I'm asking children, women and the elderly not to leave their homes and I ask armed men to provide us all the assistance they can," he said. "I think we will be able to successfully stand up for our city. Thank you for your attention, thank you for your assistance, we will win."
The operation, also targeting the town of Kramatorsk, appears to be the most significant yet by the Ukrainian military against pro-Russian militia groups that have taken effective control of swaths of eastern Ukraine.
What's not yet clear is whether the escalating violence may prompt a response by Russia, which has previously said it has the right to intervene in Ukraine to protect Russian speakers.
Russia slams 'punitive' operation
The Russian Foreign Ministry blamed ultranationalist Ukrainian groups for what it called a punitive military operation in Slavyansk. It called Kiev's use of its military criminal, and described calls by the government to launch a national dialogue as "hypocrisy."
Russian President Vladimir Putin's spokesman, Dmitry Peskov, also told CNN that Ukraine's military operation was "totally unacceptable."
He said it was "the last nail in the coffin" of an international deal agreed to last month in Geneva, Switzerland, which called for illegal militia groups to disarm and vacate seized buildings.
Putin has been kept fully informed of unfolding events in eastern Ukraine by Russian intelligence agencies and regards the situation with "grave concern," Peskov said.
He added that Russia has been "deeply involved" in negotiations to secure the release of captured OSCE military observers and that the Ukrainian operation had made this "harder."
Pro-Russian activists have held the seven Western observers from the Organization for Security and Co-operation in Europe captive in Slavyansk for the past week.
Going forward, Peskov said Russia was using its influence to prevent further casualties and expected Western countries to do the same. "The West is quick to blame Russia, but it is now high time they condemn Kiev's actions," he said.
Russian state news agency ITAR-Tass cited Peskov as saying Moscow was unable to get in touch with a special presidential envoy, Vladimir Lukin, in southeastern Ukraine. Lukin was sent there Thursday to negotiate a possible release of the military observers, he said. Russian news agency Interfax reported that Lukin was fine and not in danger.
Human shield allegation
In his Facebook post, Avakov said nine checkpoints that were under control of pro-Russian separatists in Slavyansk have been taken back by Ukrainian forces, who now encircle the town.
The operation is being conducted by the Interior Ministry, the national guard and the army, he said.
Avakov urged residents not to go outside and to be careful at windows while the operation continues. The separatists are hiding among the civilian population and "shoot from the windows of residential apartments," he said, aware that the Ukrainian forces have been told not to fire toward homes.
Ukraine's security service also accused separatist leaders of ordering activists to use residents as human shields in the city and at checkpoints.
The service said the downing of a military helicopter indicated that those shooting were "highly professional foreign military, rather than peaceful residents with hunting guns, as the Russian leadership says."
A CNN team north of Slavyansk saw Ukrainian armored personnel carriers on the road, and heard the sound of two explosions that may have been rocket-propelled grenades.
A contingent of Ukrainian forces at a bridge on the outskirts of the city encountered a hostile crowd of locals who vowed not to let them pass. They were angered that an armored personnel carrier had injured an elderly man.
The local population's antipathy toward the authorities in Kiev will probably make the Ukrainian security forces' task harder as they seek to regain control.
As part of efforts to isolate the town, trains will be blocked and road traffic is being kept to a minimum, Avakov said.
What the Ukrainian authorities want from the separatists has not changed, he said -- release the hostages, turn in weapons, vacate seized administrative buildings and allow the normal functioning of the city.
Previous phases of the "anti-terror operation" by the Ukrainian forces have not resulted in any significant gains, despite official claims of success.
On Thursday, pro-Russian activists and Ukrainian riot police clashed at the prosecutor's office in the eastern city of Donetsk as simmering tensions escalated into violence.
At least one police officer was injured as the separatists seized control, the Ukrainian Interior Ministry said. The regional health authority said 26 people were injured, four of them with gunshot wounds.
Earlier in the day, crowds marched through Donetsk, demanding greater autonomy for the restive eastern region.
Many in the region view the interim government in Kiev as a "junta" that seized power thanks to backing from ultranationalist groups, and they are angered by its actions.
Separatist leaders want to hold a referendum on May 11 on Ukraine becoming a federal state.
Eastern Ukraine was a heartland of support for pro-Moscow President Viktor Yanukovych, ousted in February after months of protests by people upset that he had turned away from Europe in favor of Moscow.
The crisis has sparked deep divisions in Ukraine. Many also want to see the country remain united, but unhappiness about government corruption and ineffectiveness runs deep.
The interim government has said it'll look at constitutional reforms ahead of national elections due on May 25.
IMF approves $17.1 billion bailout
Acting Ukrainian President Oleksandr Turchynov acknowledged this week that the central government has effectively lost control of the country's Donetsk and Luhansk regions to the pro-Russian separatists.
He signed a decree introducing military conscription Thursday in a bid to beef up Ukraine's military, citing "real and potential threats to Ukraine."
Besides the threat from pro-Russian separatists, NATO estimates that Russia has some 40,000 troops massed near Ukraine's border.
In a key sign of international support for the Kiev authorities, the International Monetary Fund approved a $17.1 billion bailout for Ukraine on Thursday.
IMF chief Christine Lagarde also said that "clearly there have been consequences" for the Russian economy as a result of its intervention in Ukraine.
Russia annexed Ukraine's southeastern Crimea region in March after a controversial referendum. Its actions have prompted fears that it may seek also to intervene directly in eastern Ukraine, which has a large Russian-speaking population.
CNN's Nick Paton Walsh reported from Slavyansk and Victoria Butenko from Kiev, while Laura Smith-Spark wrote and reported from London. CNN's Arwa Damon in Donetsk, Claudia Rebaza in Kiev, and Matthew Chance and Alla Eshchenko in Moscow contributed to this report. CNN's Boriana Milanova also contributed.
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