The White House said Monday that Russian President Vladimir Putin is "losing" the war in Ukraine and that the European Union was set to target Moscow's economy with new sanctions, while Ukrainian troops advanced toward the site of the downed Malaysia Airlines jet in heavy fighting with pro-Russia rebels.
"On the battlefield itself, the Ukrainians are doing very well against the separatists in trying to regain the sovereignty of their entire country," said Tony Blinken, White House deputy national security adviser. "Russia's proxies are right now on the losing end of the fight."
Mr. Blinken said the war in Ukraine has been "a strategic loser for Russia" that has sent the Russian economy into a tailspin since its forces annexed the Crimea region from Ukraine in March.
"There is talk that Russia has ... 'won' Crimea. But the fact of the matter [is that] what's happened is it lost Ukraine," Mr. Blinken said. "Ukraine is more united in a Western orientation than ever before."
And in a phone call Monday, Vice President Joseph R. Biden told Ukrainian Prime Minister Arseniy Yatsenyuk that the U.S. will provide a total of $7 million for reconstruction in newly liberated areas of eastern Ukraine, including $1 million in new aid. The money will pay for clean drinking water and other small reconstruction projects.
The White House's rhetoric was typical of past taunts designed to get under Mr. Putin's skin, such as President Obama's comment in 2013 that the Russian leader resembled a "bored kid in the back of the classroom." Mr. Blinken acknowledged that the gradually increasing sanctions imposed by the West have not altered Mr. Putin's course to date in eastern Ukraine.
Instead, Moscow has built up its troops along the Ukrainian border, fired missiles at Ukrainian military units and supplied the rebels with heavy weapons.
For those reasons, administration officials said, the European Union will impose broader economic sanctions on Russia as early as Tuesday. President Obama held a video conference call Monday with the leaders of the United Kingdom, Germany, France and Italy on the subject.
European Union member states were expected to try to reach a final deal on Tuesday on stronger measures that would include closing the bloc's capital markets to Russian state banks, an embargo on future arms sales and restrictions on energy technology and technology that could be used for defense.
Germany, which had been reluctant to agree to tougher sanctions because of its trade links with Russia, said the downing of the airliner meant such measures were now necessary.
Russia played down the impact of sanctions.
"We can't ignore it. But to fall into hysterics and respond to a blow with a blow is not worthy of a major country," said Foreign Minister Sergei Lavrov.
French President Francois Hollande said in a statement that the leaders confirmed their intention to adopt new sanctions.
The office of Prime Minister David Cameron of Britain said the EU "should agree [on] a strong package of sectoral sanctions as swiftly as possible."
"They agreed that the EU and United States should continue to work together to exert pressure on Russia to change course and to engage in a political resolution to the crisis before more innocent lives are lost," Mr. Cameron's office said.
In London, an international court on Monday added to the economic and diplomatic isolation of Russia, ruling that Moscow must pay $50 billion for using tax claims to destroy Yukos, once the country's largest oil producer, and its Kremlin-critical CEO.
The Permanent Court of Arbitration, a body that rules on corporate disputes, said the Russian government owes the money — a huge sum, even for such an oil-rich nation — to the former majority shareholders in Yukos Oil Co. Moscow vowed to fight the decision.
Meanwhile, troops recaptured two rebel-held towns near the crash site and were trying to take the village of Snezhnoye, near where Kiev and Washington say rebels fired the surface-to-air missile that shot down the airliner, resulting in the loss of all 298 on board, Ukrainian officials said. But international investigators still haven't reached the site due to the fighting.
One pro-government militia said 23 of its men had been killed in fighting in the past 24 hours, while a rebel commander said he had lost 30 soldiers.
Analysis of black box flight recorders from the airliner showed it was destroyed by shrapnel from a missile blast which caused a "massive explosive decompression," a Ukrainian official said on Monday.
In a report on three months of fighting between government forces and separatist rebels who have set up pro-Russian "republics" in the east, the United Nations said more than 1,100 people had been killed. U.N. High Commissioner for Human Rights Navi Pillay said increasingly intense fighting in the Donetsk and Luhansk regions was extremely alarming, and the shooting down of the Malaysian airliner on July 17 may amount to a war crime.
Western leaders say rebels almost certainly shot the airliner down by mistake with a Russian-supplied surface-to-air missile. Russia has blamed Kiev for the downed airliner.
The U.N. report said at least 3,442 people had been wounded and more than 100,000 people had left their homes.
Panicky residents in an eastern Ukrainian town fled their homes Monday carrying a few possessions in plastic bags and small suitcases as shells exploded in the distance. The fighting also prevented an international police team from reaching the site of the Malaysia Airlines crash.
"Mom, hang in there," exclaimed a weeping woman who was fleeing Shakhtarsk with her mother. Associated Press reporters saw a high-rise apartment block in the town being hit by at least two rounds of artillery.
The fighting there and elsewhere in the area kept Dutch and Australian police for the second day from reaching the site of the plane crash, where they had planned to begin searching for remaining bodies and gathering forensic evidence.
The delay strained tempers among international observers.
"There is a job to be done," said Alexander Hug, the deputy head of a monitoring team from the Organization for Security and Cooperation in Europe. "We are sick and tired of being interrupted by gunfights, despite the fact that we have agreed that there should be a cease-fire."
A spokesman for Ukraine's Security Council, Andriy Lysenko, said Kiev was trying to close in on the crash site and force the rebels out of the area but was not conducting military operations in the immediate vicinity.
He said Ukrainian troops were now in the towns of Torez and Shakhtarsk, both formerly held by the rebels, while fighting was in progress for Snezhnoye and Pervomaisk. The towns are all located in rolling countryside near the wheat and sunflower fields filled with debris from the downed airliner.
Government troops were also readying an assault on Gorlovka, a rebel stronghold north of the provincial capital of Donetsk.
"The Ukrainian military is conducting an active assault on regions under temporary control of Russian mercenaries," Mr. Lysenko told a news conference in Kiev.
In Donetsk, local officials said artillery fire had damaged residential blocks, houses, power lines and a gas pipeline. The city, with a prewar population of nearly 1 million, has largely become a ghost town since rebels dug in for a stand in the face of advancing Ukrainian troops.
• This article is based in part on wire-service reports.
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