KIEV - Ukraine’s embattled leaders launched round-table talks Wednesday as part of a Western-backed push to prevent the country falling apart, vowing they would not bow to “blackmail” by pro-Russian rebels waging an insurgency in the east.

The so-called national unity discussions - which crucially do not involve the insurgents - are being held barely two weeks before Ukraine holds a presidential election that the West is scrambling to keep alive.

European leaders have been working to bring Kiev and pro-Moscow separatists together under a roadmap sponsored by pan-European security body the OSCE.

But shortly before the talks started, Russia bluntly warned that the former Soviet republic was already on the brink of civil war and demanded that the insurgents be invited to the negotiating table.

Ukraine’s interim President Oleksandr Turchynov opened the discussions saying Kiev was ready to negotiate but that the rebels must first lay down their arms.

“Those with weapons in hand who are waging a war against their own country and dictating the will of a neighbouring country will answer before the law. We will not yield to blackmail,” he said.

“We are ready to listen to the people of the east but they must not shoot, loot or occupy government buildings.”

The east of Ukraine remains on edge, with deadly violence erupting often as government troops battle against the separatists who have seized over a dozen towns and cities since early April.

Dozens have been killed in fighting in the east and in an inferno in the southern port city of Odessa, with the Ukrainian army losing seven soldiers in a rebel ambush on Tuesday. And the crisis showed no signs of easing despite the flurry of diplomatic efforts following hotly disputed weekend independence referendums in the eastern industrial regions of Donetsk and Lugansk that raised fears of partition.

“When Ukrainians kill Ukrainians I believe this is as close to a civil war as you can get,” Russian Foreign Minister Sergei Lavrov said in an interview with Bloomberg television. “In east and south of Ukraine there is a war, a real war,” he said.

“And if this is conducive to free and fair elections then I don’t recognise what free and fair is.” But he said Moscow had no intention of sending in troops to eastern Ukraine as it did while annexing Crimea in March, a move that outraged Kiev and the West.

European leaders had called for Wednesday’s talks to be as inclusive as possible.

German Chancellor Angela Merkel had said Tuesday the talks offered a “good possibility” of finding a way out of the worst crisis between Moscow and the West since the Cold War, but said they needed to be “representative”.

The roadmap drawn up by Organisation for Security and Cooperation in Europe calls for “restraint from violence, disarmament, national dialogue, and elections”.

EU leaders had ramped up the pressure on Russia with new sanctions Monday, and warned of further “far-reaching” punitive measures if the election fails.

But while voicing support for the plan, Russia has accused Ukraine’s authorities of refusing “real dialogue” with the separatists.

It says Kiev must halt its so-called “reprisal raids” if rebels are to comply with the peace initiative, and insists on negotiations over regional rights before the presidential vote.

Russia has however rolled back its vehement opposition to the election, called by Kiev’s new leaders after the ouster of pro-Kremlin president Viktor Yanukovych in February, the climax of months of sometimes deadly pro-EU protests.

The speaker of the lower house State Duma, Sergei Naryshkin, described the vote as “the lesser of two evils”.

Fears for Ukraine’s very future have been heightened following the independence votes in the eastern industrial regions, home to seven million of the country’s 46 million people.

The referendums were rejected as illegal and a farce by Kiev and the West, fearful that President Vladimir Putin would move quickly to annex the territories as he did with Crimea.

Putin said last week that Russia had withdrawn its estimated 40,000 troops from the border, but the West says it has seen no sign of a major pullback.

Turchynov charged Wednesday that the loss of the strategic Black Sea peninsula had cost Ukraine’s struggling economy $100 billion.

There was also a stark warning from the European Bank for Reconstruction and Development about the wider fallout from the deep economic gloom in both Ukraine and Russia.

In a bleak assessment of the impact of the crisis, the EBRD warned that Ukraine risked plunging deeper into recession with the economy forecast to shrink seven percent this year while Russian growth would be flat.

The bank, founded to help ex-Soviet bloc countries make the transition to free-market economies, said the crisis could extend to the wider EBRD region.

The economic woes are adding to European concerns about the vital supply of Russian gas, much of which flows through Ukraine.

Yatsenyuk Tuesday accused Russia of “stealing” Ukraine’s gas and threatened to take Russia to court if it rejected proposals to settle their dispute over gas contracts.

Russia has threatened to cut supplies from June 3 if Ukraine does not pay a $1.66 billion bill.