MOSCOW- Russian President Vladimir Putin on Sunday raised the stakes in the Ukraine conflict by calling for the first time for statehood to be discussed for the restive east of the former Soviet state.The remarks came just hours after the European Union gave Moscow - which the bloc accuses of direct involvement in the insurgency - a week to change course or face new sanctions.“We need to immediately begin substantive talks... on questions of the political organisation of society and statehood in southeastern Ukraine,” the Russian leader was quoted by Russian news agencies as saying. Moscow has previously only called for “federalisation” that would grant greater rights to the eastern regions of Ukraine, where predominantly Russian-speakers live.But Putin had long sparked speculation that he may be seeking to create a pro-Russian statelet when he began to employ the loaded Tsarist-era term “Novorossiya”, or New Russia, to refer to several regions in southeast Ukraine.His spokesman Dmitry Peskov said Sunday that the Russian leader was not talking about “Novorossiya’s” independence from Ukraine but “inclusive talks.” “Only Ukraine can agree with Novorossiya,” he was quoted as saying.Putin’s tough talk comes as rebels have begun to reject the concept of “federalisation” in recent weeks, calling for independence from Kiev, as they turned the tide on advancing Ukrainian troops by snatching a series of towns.Kiev has warned that it was on the brink of “full-scale war” with Moscow which Europe fears would put the continent at risk of conflict.The EU agreed to take “further significant steps” if Moscow did not rein in its support for the rebels, with new sanctions to be drawn up within a week.Kiev said the invigorated rebel push of the past days has included substantial numbers of Russian regular army contingents who are now concentrating forces in big towns across the region.“Terrorists and Russian soldiers continue to concentrate personnel and equipment in regional centres,” said security spokesman Andriy Lysenko.A ragtag mix of volunteer battalions were bracing for a desperate defence of Mariupol, a strategic port city on the Azov Sea coast, while activists were fundraising for army supplies and held a master class on how to shelter from bomb attacks. “We can hold them off, but for how long? We don’t have the strength to beat them,” said “Panther”, a tattooed fighter with the Azov battalion said to be one of the most radical nationalist groups in the area.Over 2,600 people have died in the Ukraine conflict since mid-April. NATO last week accused Moscow of sending at least 1,000 troops to fight alongside the rebels, sending artillery, tanks and armoured vehicles across the frontier. Lithuania’s President Dalia Grybauskaite, whose Baltic nation is wary of the resurgent power on its eastern border, warned that “Russia is practically in a state of war against Europe” and called for EU military assistance to Kiev.Ukrainian President Petro Poroshenko urged Brussels to take tougher steps against Russia’s “military aggression and terror” and warned that a “full-scale war” with Moscow is closer than ever. “Today we are talking about the fate of Ukraine, tomorrow it could be for all Europe.”Poroshenko said he expected the West to ramp up its arms supplies to Ukraine after discussions at a NATO summit in Wales on Thursday and Friday, where he is expected to meet with US President Barack Obama.Although Russia continues to deny direct involvement in the conflict, there have been media reports of secret military funerals for those sent to fight in Ukraine. Moscow admitted that Russian paratroopers had been captured in Ukraine, but alleged they crossed the border by accident.On Sunday Russian and Ukrainian officials confirmed that a prisoner swap had taken place on the northeastern border with Ukraine. “Nine Russian paratroopers were given to the Russian side” on Saturday evening, Lysenko said. A few hours later, 63 Ukrainian soldiers were handed over by Russia.Rebels have pushed a lightning offensive around Ukraine’s Azov Sea in the past week, prompting speculation of a possible attempt by Moscow to establish a corridor between Russia and the Crimean peninsula it annexed in March. The rebels have advanced swiftly along the coast, capturing the town of Novoazovsk last Wednesday, just one day after Poroshenko met with Putin for talks that failed to achieve any breakthrough.Alexander Zakharchenko, prime minister of the self-proclaimed Donetsk People’s Republic, spoke to Russian media Saturday about “preparing a second large-scale offensive.”At Mariupol, volunteers manning the barricades fear their trenches and barbed wire will be little match for the insurgents’ tanks, but recognise the importance of their task. “It is the last big town in the region under Ukrainian control, home to half a million people,” commander of Ukraine’s Azov battalion, Andriy Biletskiy told AFP.