SLOVYANSK, Ukraine -- Pro-Russian militants in camouflage fatigues and black balaclavas paraded captive European military observers before the media on Sunday, hours after three captured Ukrainian security guards were shown bloodied, blindfolded and stripped of their trousers and shoes, their arms bound with packing tape.
The provocative displays came as the increasingly ruthless pro-Russian insurgency in the east turns to kidnapping as an ominous new tactic.
Dozens of people are being held hostage, including journalists and pro-Ukraine activists, in makeshift jails in Slovyansk, the heart of the separatists' territory, as the pro-Russian insurgents strengthen their control in defiance of the interim government in Kiev and its Western supporters.
Speaking in deliberate and clipped phrases, Col. Axel Schneider of Germany, speaking on behalf of the observers, insisted they were not NATO spies, as claimed by the insurgents, but a military observation mission operating under the auspices of the Organization of Security and Cooperation in Europe.
"We are not fighters, we are diplomats in uniform," he said, noting that his unarmed team included an officer from Sweden, which is not a NATO member.
The observers appeared nervous as they were escorted by the masked armed men into the Slovyansk city hall for the news conference.
Referring to himself and his team as "guests" under the "protection" of the city's self-proclaimed mayor, Schneider said they were being treated as well as possible under the circumstances.
"The mayor of this city granted us his protection and he regarded us as his guests," Schneider told journalists. "I can tell you that the word of the mayor is a word of honor. We have not been touched."
Schneider said his group, which was detained by pro-Russian militiamen outside Slovyansk on Friday, was initially kept in a basement before being moved Saturday.
"Since yesterday, we have been in a more comfortable room, which has been equipped with heating. We have daylight and an air conditioning unit," he said, "All our officers, including the interpreters, are healthy and well."
The spectacle of accredited diplomats being presented to the media as what Slovyansk's insurgency-appointed mayor, Vyacheslav Ponomarev, has described as "bargaining chips" provoked disgust in European capitals.
German Foreign Minister Frank-Walter Steinmeier condemned it as "revolting" and a violation of the men's dignity. Four members of the team are German.
One of the observers, Swedish officer Maj. Thomas Johansson, was released later in the day "on humanitarian grounds as he has a mild form of diabetes," said Stella Khorosheva, a spokeswoman for the Slovyansk mayor. The officer got into a car with OSCE representatives outside city hall and drove off with them.
Schneider, who was speaking before the Swede was freed, said he had no information about when they would be released and that this was a matter for diplomats of their countries. The group also includes officers from Poland, Denmark and the Czech Republic.
The German colonel said he understood that the Slovyansk mayor could use the observers as a bargaining chip.
"Our presence here in Slovyansk is for sure a political instrument for the decision makers here in the region and the possibility to use it for negotiations," Schneider said. "It's logical in the eyes of Mayor Ponomarev that he can use us to present his positions."
Ponomarev said Saturday the European observers could be released in exchange for jailed pro-Russia activists.
Overnight Saturday, the insurgents captured three Ukrainian security guards, who were shown to Russian journalists in the security service headquarters in Slovyansk. Barely concious and showing signs of sustained beating, they sat with their heads bowed.
In footage obtained by The Associated Press, Russian reporters could be heard haranguing the officers, who were able to reply only in faintly audible monosyllables.
Igor Strelkov, who has been identified as the commander of the armed insurgents, said the three Ukrainian officers were on a mission to seize leaders of the pro-Russia force when they were captured.
Ukraine's Security Service confirmed that its officers had been seized by armed men and said they were on a mission to detain a Russian citizen suspected in the killing of a Ukrainian parliament member.
Also on Sunday, several hundred pro-Russia activists stormed the television broadcasting center in Donetsk, the regional capital of eastern Ukraine, to demand that Russian state channels be put back on the air. The Kiev government last month blocked broadcast of the Russian channels, which serve as propaganda tools for the Kremlin.
The crowd included several dozen men wearing camouflage fatigues and face masks, the standard uniform of the pro-Russia forces that have seized government buildings in at least 10 cities in eastern Ukraine.
The Ukrainian government and the West have accused Russia of using covert forces to encourage the unrest in eastern Ukraine, and Strelkov has been identified as a Russian security services operative by Ukraine's government.
In what appeared to be a closely vetted interview to Russian media, Strelkov did not directly deny the accusation, saying the uprising in Ukraine was being carried out by opponents of the "Kiev junta" -- language similar in tone to that adopted by the Kremlin leadership.
The U.S. and other nations in the Group of Seven have announced plans to impose additional economic sanctions on Russia in response to its actions in Ukraine. The European Union also is planning more sanctions, with ambassadors from the bloc's 28 members to meet Monday in Brussels to add to the list of Russian officials who have been hit by asset freezes and travel bans.
New penalties expected this week against Moscow for its actions against Ukraine will include high technology exports to the Russian defense industry and the companies controlled by those closest to President Vladimir Putin, a White House aide said Sunday.
Deputy National Security Adviser Tony Blinken said the U.S. and its allies will designate new sanctions against people in Putin's inner circle and the companies they control that have "a significant impact on the Russian economy."
"We'll be looking at taking steps as well with regard to high technology exports to their defense industry. All of this together is going to have an impact," Blinken said, without providing details. He made his comments on CNN's "State of the Union," CBS' "Face the Nation" and NBC's "Meet the Press."
Earlier Sunday, President Barack Obama said in Malaysia that the U.S. would be in a stronger position to deter Putin once Putin sees the world is unified in punishing Russia.
British Foreign Secretary William Hague echoed the sentiment. "The more names we add to that list, the more they do bite in the Russian economy," Hague said on Sky News. "But we are also working on more far-reaching measures of economic, trade and financial sanctions. ... We will go ahead with them if necessary, if Russia continues to escalate this crisis."