Ukrainian President Petro Poroshenko called an emergency meeting of his security chiefs for Tuesday to discuss new ways of dealing with the separatist challenge in the east after rebel elections that were denounced by Kiev and the West.
The rogue votes, which Kiev says Russia encouraged, could create a new "frozen conflict" in post-Soviet Europe and further threaten the territorial unity of Ukraine, which lost control of its Crimean peninsula in March when it was annexed by Russia.
Organizers of the twin ballots said insurgent leaders had emerged victorious in both Donetsk and Luhansk -- two Russian speaking areas of eastern Ukraine -- throwing down the gauntlet to Poroshenko, who vehemently opposed the election.
In a statement, the Ukrainian president denounced the vote as an "electoral farce," repeating that it violated a bedrock deal struck in the Belarusian capital Minsk on Sept. 5 intended to pave the way for a settlement of the separatist problem.
His sentiments were echoed by the White House, which condemned what it called "illegitimate, so-called 'elections'" and warned economic penalties on Russia "will rise" if Moscow continues to violate the Minsk deal.
"We are concerned by a Russian Foreign Ministry statement today that seeks to legitimize these sham 'elections,'" Bernadette Meehan, spokeswoman for the White House National Security Council, said in a statement on Monday.
Calling for "adjustments" to be made in the way he handled the east, Poroshenko said he intended to scrap a law that would have offered "special status" to areas in the east including those controlled by the rebels.
This would be among points to be discussed on Tuesday in a meeting of Ukraine's security and defense council, he said.
The "special status" law envisaged allowing the Donetsk and Luhansk regions to run their own affairs and also offered separatist fighters freedom from prosecution.
Kiev says the Minsk agreement provided only for election of local officials under Ukrainian law, and not for separatist ballots aimed at bringing in leaders of breakaway entities who seek close association or even union with Russia.
Instead, Alexander Zakharchenko, a 38-year-old former mining electrician, easily won election as head of the "Donetsk People's Republic," an entity proclaimed by armed rebels last April. In a similar vote in Luhansk, a smaller self-proclaimed pro-Russian entity further east, Igor Plotnisky won more than 63 percent of the vote, a rebel representative said.
Kiev and the West will now be looking to see if Russian President Vladimir Putin will formally recognize the validity of the election, despite their entreaties to him not to do so.
A Russian deputy foreign minister, Grigory Karasin, made no mention of formal recognition but said the newly elected leadership in eastern Ukraine now had a mandate to negotiate with Kiev.
Up to now, Kiev's leaders have refused to hold direct talks with the separatists, whom they refer to as "terrorists" and "bandits."
But the options have clearly narrowed for Poroshenko too.
Poroshenko committed to a ceasefire from Sept. 5 to give chances of a settlement, involving Russia and the separatist leaders, to be worked out.
He has ruled out trying to take back the region by force after big battlefield losses in August. But after a parliamentary election on Oct. 26, he is now supported by a pro-Western power structure, determined to stop the break-up of Ukraine, and he may come under pressure to take a firmer line.
One big question is what the next diplomatic step will be to resolve the crisis with the apparent collapse of the Minsk agreement which brought together the Organization for Security and Cooperation in Europe (OSCE), Russia and Ukraine.
PUTIN'S FIRST WORD?
Putin's first word on the weekend election could come on Tuesday when he is due to appear at a Red Square ceremony in Moscow marking National Unity day.
"The central election commission deems Alexander Zakharchenko to be the elected head of the Donetsk People's Republic," an election official, Roman Lyagin, told journalists in Donetsk, the separatists' stronghold. Numbers of ballots cast for him appeared to show he had won 79 percent of the vote.
"Plotnitsky got the majority of the votes in the Luhansk People's Republic elections," a spokesman said.
The elections were the latest twist in a geopolitical crisis that began with the popular overthrow of Ukraine's Moscow-backed leader, Viktor Yanukovich last February.
Russia denounced Yanukovich's ousting as a coup by a "fascist junta" and the following month annexed Crimea and subsequently backed the separatist rebellions that sprang up in the east.
Kiev says that only direct intervention by Russian troops stopped Ukrainian government forces routing the separatists, though Russia, despite what the West says is incontrovertible proof, denies sending troops across the border.
More than 4,000 people have been killed in the conflict, which has led to U.S. and European Union sanctions against Russia.
Chancellor Angela Merkel's spokesman said on Monday Germany found it incomprehensible that "official Russian voices" were talking of recognizing the election in eastern Ukraine.
Current developments in east Ukraine ruled out any premature lifting of EU economic sanctions against Russia and if the situation worsened, further sanctions may be necessary, spokesman Steffen Seibert said.
The Sept. 5 ceasefire has brought an end to full-scale clashes between government forces and the separatists, though sporadic shelling particularly in the airport area of Donetsk, continues to exert pressure on the truce.
Though the city was generally quiet early on Monday, artillery fire from the direction of the airport began to pick up later in the day.
The OSCE said that one of its four drones operating on observation missions in the south-east had been fired on by separatists using an anti-aircraft gun near the port of Mariupol on Sunday. It was not hit and returned to base intact.
(Additional reporting by Natalia Zinets and Alessandra Prentice)