KRAMATORSK, Ukraine—Pro-Russia rebels in eastern Ukraine raised the stakes in their conflict with Kiev on Sunday by parading Western military observers as hostages and showing images of three bloodied Ukrainian intelligence officers the militants separately said they had detained.

The rise in the number of prisoners being held by the militants—whose power base has emerged in the southeast city of Slovyansk—has given the anti-Kiev uprising the appearance of an armed conflict zone, despite the Kremlin's description of the activists in the east as everyday "citizens driven to desperation."

The militants demand a referendum on the southeast Donetsk region's future and denounce as illegitimate the pro-Europe authorities in Kiev that toppled President Viktor Yanukovych, a Donetsk native, in late February. The Kremlin also refuses to recognize the new Kiev authorities and describes them as perpetrators of an armed coup.

On Sunday, the self-appointed, pro-Russia rebel mayor of Slovyansk, Vyacheslav Ponomaryov, trotted out seven Western military inspectors from Germany, Poland, Denmark, Sweden and the Czech Republic and their translator, all seized late Friday at a makeshift checkpoint in nearby Kramatorsk. One of the inspectors was later released.

The inspectors are members of their home countries' militaries and part of an inspection team that arrived in Ukraine under an Organization for Security and Cooperation in Europe pact called the Vienna Document, which sets out guidelines for exchanging military information and hosting inspections. They aren't part of the OSCE special monitoring mission, which is made up of civilians and also operates in southeast Ukraine.