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 With the uprising and Russia's annexation of Crimea poisoning
East-West relations, Moscow retaliated against U.S. sanctions by
hitting aerospace projects, including refusing to extend the life of
the International Space Station, a showcase of post-Cold War
cooperation.
In Kiev, Ukraine's defense ministry and state security service said
the troops were killed and seven others wounded when their armored
column was ambushed near the town of Kramatorsk, one of several hot
spots in the largely Russian-speaking east where the army has had
scant success against the rebels.
About 30 rebels, who had taken cover among bushes along a river,
attacked with grenade-launchers and automatic weapons near a village
20 km (12 miles) from Kramatorsk, the ministry said in a statement
on its website.
"In all, as a result of the prolonged fighting, six members of the
armed forces were killed. Eight soldiers were wounded, one of them
seriously," it said. The state security service (SBU) said later
that the seriously wounded soldier had died while being taken to
hospital.
Rebel leaders held referendums in two eastern regions on Sunday
which they said backed self-rule overwhelmingly. While Kiev and the
West denounced the votes as illegal, the rebels called on Monday for
their regions to become part of Russia. Moscow has stopped short of
endorsing their bid for annexation.
 Before the Kramatorsk incident, Defence Minister Mykhailo Koval said
a total of nine servicemen had been killed so far in the army's
"anti-terrorist" operation, which has been directed mainly against
rebels in the towns of Slaviansk and Mariupol.
The dead included five air crew, Koval said. They died when their
helicopters were downed by separatist fire.
Rebels have also suffered losses in the uprising, which began with
the seizure of public buildings in eastern towns and cities. Many of
the separatists hope to follow Crimea, which voted for union with
Russia before its formal annexation in March.
The United States says Russia is backing the rebels while the
Kremlin accuses Washington of having helped protesters to topple
pro-Moscow Ukrainian President Viktor Yanukovich in February.
RUSSIA RETALIATES
In the worst East-West crisis since the 1991 collapse of the Soviet
Union, Washington and the European Union have slapped sanctions on a
limited number of Russians and pro-Russian Ukrainians, and some
small firms. Washington has also said it would deny export licenses
for high-technology items that could help the Russian military.
Moscow retaliated on Tuesday, casting doubt on the long-term future
of the International Space Station, a $100 billion, 15 nation
project which was supposed to end the space race of the Cold War
era.
Deputy Prime Minister Dmitry Rogozin said Moscow would reject a U.S.
request to prolong the orbiting station's use beyond 2020. It would
also bar Washington from using Russian-made rocket engines to launch
military satellites.
"We are very concerned about continuing to develop high-tech
projects with such an unreliable partner as the United States, which
politicizes everything," Rogozin told a news conference. Washington wants to keep the space station in use until at least
2024. But since the end of the U.S. Space Shuttle program, Russia's
Soyuz spacecraft have been the only way to get there.
The U.S. space agency NASA is working with companies to develop
space taxis with the goal of restoring U.S. transport to the station
by 2017. The United States currently pays Russia more than $60
million per person to fly its astronauts up.
Moscow's response would affect NK-33 and RD-180 rocket engines which
Russia supplies to the United States. "We are ready to deliver these
engines but on one condition that they will not be used to launch
military satellites," Rogozin said.
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RD-180 engines are used to boost Atlas 5 rockets made by United
Launch Alliance, a partnership of Lockheed Martin and Boeing that
holds a virtual monopoly on launching U.S. military satellites.
ULA said it was not yet aware of any restrictions and hoped talks
would resolve any that did arise. It added that it can use other
launch vehicles and has a two-year supply of engines. Rogozin said
Russia would also suspend operation of GPS satellite navigation
system sites on its territory from June, unless an agreement could
be reached by September under which similar sites could be opened in
the United States for Russia's own system, Glonass.
"SANCTIONS ARE WORKING"
Investors have shifted large sums out of Russia since the crisis
erupted, and U.S. Assistant Secretary of State Victoria Nuland said
the Western sanctions were having an effect.
"We've seen the ruble devalue against the dollar by some 20 percent,
we've seen the Russian bond rating drop in recent months to just
above junk, we've seen the IMF declare that Russia is on the verge
of recession ... So sanctions are hurting," she told a news
conference on a visit to Estonia.
The standoff is straining business ties broadly. Around a dozen
chief executives and chairmen of major U.S. and European
corporations have withdrawn from President Vladimir Putin's flagship
economic conference on May 22-24. One firm said the decision to stay
away was because of the political tensions while most declined to
give a reason.
Germany's foreign minister Frank-Walter Steinmeier expressed hope on
a visit to Kiev that "round table" talks between politicians and
civil groups this week would help to disarm the separatists and
improve the atmosphere for presidential elections due later this
month.
 Chancellor Angela Merkel, speaking in Berlin, said the more
representative these talks are, the better. However, she added:
"Clearly, people are only welcome if they can credibly show that
they are prepared to reach their goals without violence." Kiev's handling of the crisis in the east caused angry scenes in the
Ukrainian parliament on Tuesday when deputies of the formerly ruling
Regions party and their communist allies attacked the government for
sending in the army - a move they said had alienated
Russian-speakers.
"The anti-terrorist operation has turned into a terrorist operation,
organized by the authorities against their own people," said Regions
deputy Mykola Levchenko.
When communist faction leader Petro Symonenko took a similar line,
acting president Oleksander Turchinov, who is also speaker, burst
out: "Liars have no place in parliament. Sit down."
(Additional reporting by Irene Klotz, Gabriela Baczynska, Megan
Davies and Steve Gutterman in Moscow, David Mardiste in Tallinn,
Stephen Brown and Andreas Rinke in Berlin, Tom Bergin in London;
Writing by David Stamp; Editing by Peter Graff)
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