Russian President Vladimir Putin is calling on Ukraine to immediately start talks on a political solution to the crisis in eastern Ukraine.
His comments come as Moscow and Kiev traded troops and Mariupol, the next large Ukrainian city in the path of pro-Russian separatists, prepared for battle.
On national TV network Channel 1, Putin said Ukraine should 'hold substantive, meaningful talks, not about technical issues but about the question of the political organization of society and statehood in southeast Ukraine, with the goal of safeguarding the legitimate interests of those people who live there.'
Ukrainian President Petro Poroshenko released a peace plan in June that proposed an unspecified level of decentralization of executive powers and budgetary matters.
Rebels have rejected any talks unless Ukrainian forces halt their offensive.
'If anybody believes that in a situation where the cities and villages of east Ukraine come under direct fire that the militiamen will have no reaction to that, but will simply wait for the promised talks, then these people are prisoner to some illusions,' Putin said.
Last week, after his first extensive meeting with Poroshenko, Putin rejected any suggestion that Russia could be involved in negotiating a cease-fire in the conflict, which has killed nearly 2,600 people according to the United Nations.
NATO claims there are at least 1,000 Russian troops in Ukraine.
On Sunday, Col. Andriy Lysenko, a spokesman for the national security council, said nine soldiers had been returned to Russia in exchange for 63 Ukrainian servicemen. Earlier in the week, Ukraine said it seized 10 Russian soldiers well inside the country.
'Ukraine has made a step forward,' Lysenko said of the release. 'This is one of the major steps towards the Russian Federation - they were not taken to court, they were transferred.'
Meanwhile, the European Union is giving Russia a one-week ultimatum to scale back its intervention in Ukraine or face additional economic sanctions.
Still, in apparent fear of an economic backlash, EU leaders meeting in Brussels on Saturday shied away from immediately imposing tougher sanctions. Russia is the EU's No. 3 trading partner and one of its biggest oil and gas suppliers.
'Sanctions are not an end in themselves,' but are a way to discourage Russia from further destabilizing its neighbor, EU Commission President Jose Manuel Barroso said before an EU leaders' summit. 'Russia should not underestimate the European Union's will and resolve to stand by its principles and values.'
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