Ukraine, Rebels Swap Prisoners As Part Of Cease-Fire Deal

Update at 8:45 a.m. ET

Ukrainian forces and pro-Russia separatists conducted a 3 a.m. prisoner swap, exchanging dozens of captured fighters as part of a shaky cease-fire that is now entering its second week.

It comes as new European Union sanctions go into effect against Moscow for its role in the conflict that has engulfed eastern Ukraine and threatened to split the former Soviet satellite.

Regarding the prisoner swap, The Associated Press says:

"The transfer took place in the dark outside of the main rebel stronghold of Donetsk under the watch of international observers.

"Thirty-six Ukrainian servicemen were released after negotiations, Ukrainian President Petro Poroshenko said. Ukrainian forces handed over 31 pro-Russian rebels detained over the five-month conflict, some of them Russian citizens."

NPR's Eleanor Beardsley, reporting from Donetsk, says the swap was monitored by international observers from the Organization for Security and Cooperation in Europe, or OSCE.

Eleanor says an official from the rebels' Donetsk People's Republic in Donetsk told a news conference that the separatist prisoners were in bad shape.

"She said half of the prisoners had to go to the hospital, where they're being given infusions because they've starved them for the past two weeks," Eleanor says.

Meanwhile, the latest European sanctions, aimed at punishing the Kremlin — which NATO says still has about 1,000 troops in eastern Ukraine — are meant to block European loans to some of Russia's biggest banks and curtail EU business with Russian oil and defense firms.

Teri Schultz, reporting for NPR from Brussels, says the sanctions were approved on Monday, but their implementation was delayed over concerns they might jeopardize the cease-fire deal. Teri says Russia has vowed to retaliate by closing some airspace to European flights.

The BBC reports:

"The EU sanctions will block the export of services and deep-water technology for Russia's oil industry.

"Three major Russian state oil firms are targeted: Rosneft, Transneft and Gazprom Neft, the oil unit of gas giant Gazprom.

"Their access to financial markets will be restricted — a serious matter for Rosneft, which last month asked the Russian government for a $42bn (£25.2bn) loan.

"Big Russian state-owned banks will be barred from getting loans with a maturity longer than one month, and from getting other financial services in the EU."

Russia's central bank published a policy document on Friday that said it expected Western sanctions to have long-term consequences for the economy.

"The impact from already imposed sanctions, including limiting access to foreign financial markets for Russian companies, will have a prolonged effect," the central bank said in its annual monetary policy strategy document quoted by Reuters. "This will constrain economic growth in 2015."