Ukraine crisis: Armed pro-Russian separatists release observer on medical grounds after parading hostages in front of world's media

Three bloodied and restrained Ukrainian agents among those shown

One of the eight European military observers held prisoner by pro-Russia insurgents in eastern Ukraine has been freed.

Major Thomas Johansson, of Sweden, was "released on humanitarian grounds as he has a mild form of diabetes," said Stella Khorosheva, a spokeswoman for the city's mayor.

Earlier, he and seven other unarmed military observers captured by pro-Russia separatists in Ukraine have been paraded before the media at a news conference in Slovyansk, where they are being held as the “guests” of the city’s self-proclaimed mayor.

Appearing nervous, the officials were escorted in and out by armed men wearing camouflage fatigues and black balaclavas.

The observers say they were on a diplomatic mission working with the Organisation for Security and Cooperation in Europe, but were taken hostage on Friday and accused of spying for Nato.

They are among a growing group of people detained by the armed separatists, including journalists and pro-Ukraine activists, and no indications have been given that they will be freed soon.

On Sunday the separatists also handed pictures to Russian journalists that showed three captured Ukrainian security service officers, bloodied and blindfolded with packing tape.

The Security Service, the Ukrainian equivalent to MI5, said that its officers had been seized while on a mission to detain a Russian citizen suspected of killing a Ukrainian member of parliament.

At the press conference in Slovyansk, Colonel Axel Schneider from Germany spoke for the observers when he said they were being treated as well as possible under the circumstances.

He described himself and his colleagues as “diplomats in uniforms, not fighters”, and said they were all in good health.

“The mayor of this city granted us his protection and he regarded us as his guests,” Schneider told journalists in Slovyansk. “I can tell you that the word of the mayor is a word of honour. We have not been touched.”

Schneider said he no information about when they would be released and that this was a matter for the diplomats of their respective countries. In addition to three officers and a civilian interpreter from Germany, the group also includes officers from Poland, Sweden, Denmark and the Czech Republic.

The German colonel said he understood that the self-proclaimed mayor, Vyacheslav Ponomarev, could use the observers as a bargaining chip.

He said: “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. It's logical in the eyes of Mayor Ponomarev that he can use us to present his positions.”

On Saturday the mayor suggested that he would be willing to release the observers in a prisoner exchange with jailed pro-Russia activists.

Mr Ponomarev refused to specify how many Ukrainian journalists and activists his forces have detained, but he suggested it was several dozen.

Meanwhile, Britain, the US and the G7 have announced plans to impose additional economic sanctions on Russia in response to its actions in Ukraine. The EU also is planning more sanctions, with ambassadors to meet on Monday in Brussels to revise the list of Russian officials who have been hit by asset freezes and travel bans.

William Hague, the Foreign Secretary, told Sky News on Sunday: “The more names we add to that list the more they do bite in the Russian economy. 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.”

Asked about any potential damage to the British economy, he said: "It would be a price worth paying if this situation continues to deteriorate.

"The European Commission has done a lot of work on this already so that all European nations would share in the sacrifices that would be involved.

"There would be some price to pay for this country and our allies of such measures.

"But there is a huge price to pay for allowing aggressive bullying behaviour to continue, for a European nation invading another European nation as has already happened in Crimea, breaking all aspects of international law in that regard.