Double blow for Putin as Ukraine rebels suffer setbacks, West prepares to levy more sanctions

Pro-Russia rebels in eastern Ukraine have reportedly suffered their biggest battlefield setbacks in months as the U.S. and European countries prepared to levy more sanctions against Moscow later this week. 

The Wall Street Journal reported that Ukraine army forces had made rapid gains near the site where Malaysia Airlines Flight 17 crashed July 17 and were apparently trying to split the territory held by the rebels into two parts between the major cities of Donetsk and Luhansk. Officials on both sides of the fighting also told the Journal that the Ukraine army was attempting to cut off supply lines from Russia to the rebels. 

Also on Monday, Igor Girkin, a Russian citizen who is the top defense official in the separatist Donetsk People's Republic, said more than 100 wounded separatist fighters had been evacuated to Russia because "I can't rule out the total siege of Donetsk from all sides." Meanwhile, the separatist republic's self-proclaimed Prime Minister Alexander Borodai, left the rebel-held territory for Moscow on Monday, triggering speculation that the rebels were fleeing the city. 

‪Another separatist official, Vladimir Antufeyev, said that Borodai  had gone to Russia to discuss "humanitarian aid," and planned to return soon.

U.S. officials say that Russia appears to be taking a more direct role in the fight between the Ukraine government and the separatist rebels. Tony Blinken, Obama's deputy national security adviser, told reporters Monday Moscow appeared to be using the international attention focused on the downed Malaysia Airlines plane as "cover and distraction" while it moves more heavy weaponry over its border and into Ukraine.

"We've seen a significant re-buildup of Russian forces along the border, potentially positioning Russia for a so-called humanitarian or peace-keeping intervention in Ukraine," Blinken said. "So there's urgency to arresting this."

The European Union is expected to move to restrict transactions with Russia's state banks and limit technology exports as early as Tuesday, as well as place an embargo on future arms sales. The U.S. has said it will follow suit. 

The sanctions were agreed upon in a rare video teleconference between President Obama, British Prime Minister David Cameron German Chancellor Angela Merkel, French President François Hollande, and Italian Prime Minister Matteo Renzi.

Europe, which has a stronger trade relationship with Russia than the U.S., has lagged behind Washington with its earlier sanctions package, in part out of concern from leaders that the penalties could have a negative impact on their own economies. But a spokesman for British Prime Minister David Cameron said following Monday's call that the West agreed that the EU should move a "strong package of sectoral sanctions as swiftly as possible."

French President Francois Hollande said in a statement that the Western leaders "regretted Russia has not effectively pressured separatists to bring them to negotiate nor taken expected concrete measures to assure control of the Russian-Ukrainian border."

Neither set of penalties is expected to fully cut off Russian economic sectors from the West, an options U.S. officials have said they're holding in reserve in case Russia launches a full-on military incursion in Ukraine or takes a similarly provocative step.