In Donetsk's main square, Ukraine's communist leader, Petro Symonenko, was giving an impromptu address to the party faithful. "Dear comrades," he began. Behind him, the city's statue of Lenin loomed over colourful tents of pro-Russian groups. A yellow-and-blue Ukrainian flag hung limply from a monument dedicated to the great Bolshevik. Someone had tried unsuccessfully to rip the flag down.

According to Symonenko, "fascists" had seized power in Kiev. Only the communists could stop further disaster from befalling Ukraine.

"Russia help us!" cried one old lady in a woolly hat.

Another shouted: "We need Russian peacekeepers!"

A third: "Boycott the presidential elections!'

Symonenko's audience comprised a motley group of pensioners – the grey-haired men wearing black caps – and a few younger communists in leather jackets and camouflage trousers. After speaking for 10 minutes, Symonenko exited the square, strolling briskly past one temple to modern capitalism, Donetsk's branch of McDonald's.

Since the revolution in Kiev and the installation of a new, pro-European government, the insurrectionary mood in Russian-speaking eastern Ukraine has grown. Sentiment here was always pro-Moscow. Previously this had been expressed in support for the Party of Regions, the political bloc of Ukraine's fugitive ex-president, Viktor Yanukovych.

Now pro-Russian feelings have acquired a distinctly separatist tinge. Symonenko's elderly supporters have demonstrated peacefully in the city's Lenin Square. Communist symbols in Donetsk – a sleek and modern city of 1 million people,– are still everywhere. One street is called 50th Anniversary USSR. There is even a bust to Felix Dzerzhinsky, founder of Lenin's secret police.

But as well as those nostalgic for the Soviet Union, there are other, younger, more radical pro-Russian activists prepared to use violent methods. They have repeatedly seized the city's government buildings, raising the Russian flag. They have also attacked Ukrainian nationalists – on 13 March, stabbing 22-year-old Dmitry Chernyavsky to death. Thirty others were wounded.

On Saturday a peaceful crowd of 5,000 took part in a pro-Yanukovych, anti-Kiev rally. The participants were locals united by a feeling that life had gone downhill since the demise of the USSR.

They marched to the regional administrative building – guarded by riot police – but didn't try to storm it. "Yanukovych may have been a crook, but he was our legitimate president," one protester said.

"We want Russia," added Sergey Samoshkin, who participated in a previous occupation of Donetsk's regional administration and prosecutor's office. Samoshkin currently lives in Moscow. He said he had returned to his native Donetsk two weeks ago.

"There's no democracy in Europe," he told the Observer. "I've been to Germany. They give porno lessons in schools. It's homosexual fascism. They impose their values on others."

Samoshkin said southern and eastern Ukraine should join the Russian Federation, just like Crimea. He said the 1925 vote by a group of communists to include Donetsk, Kharkiv, Lugansk and other industrial eastern cities in the Ukrainian Soviet Socialist Republic was "illegal". "This is Russian territory," he declared. Moreover, Russia offered superior social benefits, he added – free education and medicine, and an $800-a-month salary for policemen.

According to Igor Todorov, a professor of international relations, those favouring union with Russia are still a minority in Donetsk – 33% according to the most recent poll. The more educated middle-class were in favour of Ukraine's territorial integrity, he said. But there was a dispossessed underclass who backed secession – not for ideological reasons, but because they believed Russia offered them better opportunities.

Intriguingly, he suggested, Putin's annexation of Crimea had stiffened support for Ukraine. "Many of my friends and acquaintances were pro-Putin. Even my wife viewed my Ukrainian position somewhat ironically," he said. "But when Putin spoke on TV she said: 'Turn it off!' She's become a [Ukrainian] nationalist."

Of Putin's address, he said: "It was the voice of a small indignant child. The message was: 'The west has insulted me so I'm taking Crimea.'"

Todorov said Russia and its spy agencies had undoubtedly "activated" the recent unrest in Donetsk. Those who took part included "tourists" from across the border, as well as youths from small, depressed mining towns in the Donetsk region, he said. He added: "Typically they are paid around 400 hryvnia (£25) a day." It is unclear who is funding them. Some suggest that Yanukovych's billionaire son Oleksandr – also in hiding somewhere – is responsible.

Putin's intentions remain opaque. Over the next week, it may become clearer whether organised protests in the east of the country continue or begin to abate, following US and EU sanctions on Moscow. Todorov fears that Putin still intends to absorb the south and east of his country – a wide arc of territory stretching to Russian-speaking Odessa on the Black Sea. "I don't rule out expansion all the way to Kiev, to the border with Galicia," he predicted.

Separatist politicians, meanwhile, have been calling for a referendum on the status of the Donetsk region. (These regional deputies include communists, the pro-Russian faction of the Party of Regions and other pro-Moscow blocs.) A referendum on "federalisation" could lead towards formal union with Russia. Under Ukrainian law such a poll is illegal. Arseniy Yatsenyuk, Ukraine's interim prime minister, has offered greater autonomy to the east, as well as reassurances over the status of the Russian language. So far these overtures do not appear to have worked.

Ukraine's richest man, Donetsk-based Rinat Akhmetov, declined the post of provincial governor. Instead, Kiev has recruited another local oligarch, Serhiy Taruta, to take control.

With protesters rampaging through Donetsk, the city police and security agencies have played an ambiguous role. They have made little effort to stop the violence. According to Serhiy Tkachenko, the head of a civil rights organisation in Donetsk, senior figures are "sabotaging" orders from Kiev. "Most are supporters of the old regime. They know that as soon as there is a strong central government, there will be an investigation against them and their corrupt schemes," he said.

Tkachenko claimed Russian propaganda had shaped negative attitudes towards the uprising in Kiev. Most residents watch pro-Kremlin Russian TV, he said. Russia's state media has called the revolution in Kiev a fascist coup. "People are not thinking with their heads. They don't analyse. They are living in a world of stereotypes and myths," he said.

Under Yanukovych, he added, independent journalism in Ukraine was virtually wiped out. He and his news website team, working out of a small flat, have just produced two issues of a new pro-democracy freesheet.

Since Putin's annexation of Crimea, Yanukovych has said nothing. On Friday, his Party of Regions, which in Kiev has gone into opposition, met in a Donetsk hotel, and several attendees expressed feelings of betrayal.

The session started with the Ukrainian national anthem. Everybody stood. Nikolai Levchenko, one of the party's rising stars, acknowledged that Yanukovych "had practically removed himself" from the president's job. "This was a month ago. We felt panic and abandonment. Now we have to assess the situation soberly," he told delegates.

Listening to the speech from the back of the hall was Maxim Rovinsky, head of public relations for Donetsk city council. Rovinsky said his party favoured "decentralisation" rather than federalisation.

Would Russia grab eastern Ukraine? "I hope we don't get little green men," he said, a reference to the balaclava-wearing gunmen who popped up in Crimea following Russia's invasion. "We love our country. We see it as indivisible."

He added: "Donetsk is not Crimea. We don't have an autonomous parliament. People here are not so energised by Russia." Rovinsky was doubtful that Ukraine would get Crimea back, though. "Now it's a tragedy," he said, adding glumly: "Later it will be a haemorrhoid."