Russia's ambassador to the United Nations, Vitaly Churkin, spoke in an emergency session of the Security Council after an address from Ukraine's interim Prime Minister Arseniy Yatsenyuk (pictured above with UN Secretary General, Ban Ki-moon).

Ahead of a referendum in Ukraine's Crimea region on Sunday, when it will vote on becoming part of Russia, Yatsenyuk expressed optimism that a diplomatic solution could still be reached - with conditions.

One of those would be Moscow agreeing to withdraw its forces from Crimea. The military situation between the two sides appeared to escalate on Thursday, with Russia conducting military exercises near its border with Ukraine, while Kyiv's parliament voted to create a national guard of defense volunteers.

"This aggression has no reasons and no grounds. This is entirely unacceptable in the 21st Century to resolve any conflict with tanks, artillery and boots on the ground," Yatsenyuk told the Security Council.

"We want to have talks. We don't want to have any kind of military aggression," he continued.

Yatsenyuk said he was convinced that "Russians do not want war," and at one point switched from English to Russian, directly asking Churkin if this was the case.

In his speech, Churkin replied that "Russia does not want war and nor do the Russians, and I'm convinced that Ukrainians don't want this either."

String of UN meetings

The Security Council is holding its sixth meeting on Ukraine in less than two weeks. With Russia as a permanent member, with veto power, it has been unable to take any action over the ongoing crisis.

Churkin defended Crimea's right to hold a referendum. He said the situation arose because of a legal vacuum brought about by the "unconstitutional overthrow of the government in Kyiv last month," referring to the ouster of Ukraine's former pro-Kremlin president, Viktor Yanukovych.

Churkin's statement came a day after leaders of the Group of Seven industrialized nations warned Russia that they would not recognize the outcome of Sunday's referendum, and that the vote would have no legal effect.

Western leaders have called the referendum illegal and have accused Russian President Vladimir Putin of stoking ethnic tensions for his own gain in the majority Russian-speaking territory. Minority ethnic groups - some of which were persecuted by Russia in the past - have said they want to remain part of Ukraine and say the referendum is not legitimate.

Violent clashes in Donetsk

At least one person was stabbed and killed in Ukraine's eastern city of Donetsk late on Thursday, when pro-Kyiv demonstrators were allegedly attacked by a pro-Russia group.

"According to preliminary conclusions by doctors, he has been stabbed," the local branch of Ukraine's health ministry told the AFP news agency. At least 16 people were wounded in the clashes, with 13 of those receiving serious injuries.

Russia agrees to observer mission

On Thursday, the Kremlin reportedly agreed to support an observer mission in Crimea. A Swiss diplomat said Moscow dropped its opposition to the deployment of a 100-person international observer mission in the region.

"The Russian Federation supported the idea of a rapid approval and rapid deployment of a special monitoring mission for Ukraine," said Thomas Greminger, Switzerland's ambassador to the Organization for Security and Cooperation in Europe (OSCE). He was speaking to reporters in Vienna.

Greminger labelled the apparent shift a “big step forward."

Merkel warns of 'catastrophe'

German Chancellor Angela Merkel on Thursday issued her strongest condemnation yet of Moscow's intervention in Crimea, calling it a clear breach of international law.

“If Russia continues down the course of the past weeks, it would not only be a catastrophe for Ukraine,” Merkel told the German parliament, the Bundestag.

“It would not only change the relationship of the European Union as a whole with Russia,” Merkel said, "No, this would also cause massive damage to Russia, economically and politically."

Western powers have ruled out military intervention against Moscow, but Washington and the European Union are preparing a number of measures, understood to include sanctions such as visa bans and asset freezes.

jr/lw (AP, AFP, dpa, Reuters)