Pro-Russian crowd seizes control of state buildings in Horlivka, while Donetsk looks likely to declare autonomy after May vote

Ukraine's beleaguered government appears to have lost control of law and order in the east of the country as pro-Russian separatists seized control of state buildings in Horlivka, almost unopposed by police.

The town of almost 300,000 people sits just north of Donetsk, where mainly Russian-speaking separatists have declared a 'People's Republic' and plan a referendum on secession on 11 May.

"They've taken them. The government administration and police," a police official in Donetsk told Reuters.

On Tuesday, 3,000 activists – some in masks and military fatigues – stormed the regional government HQ in the eastern city of Luhansk. Police supposed to guard the building let the crowd inside. A pro-Russian militia had occupied the security service office in Luhansk, a town of 465,000, just 20 miles (32km) from the Russian border.

The unwillingness of security structures to defend public buildings from separatist occupation has been a theme in eastern Ukraine since early April. Supporters of the "Donetsk People's Republic" have taken over a string of city halls and police stations. An armed unit from Crimea – led by an alleged Russian colonel – has also established a de facto military capital in the town of Slavyansk.

But in recent days Kiev's tentative grip on local law enforcement in the east appears to have slipped completely. In Luhansk riot police stood passively in a courtyard, kettled in by separatists armed with bats and hammers. "The regional leadership does not control its police force," Stanislav Rechynsky, an aide to the interior minister in Kiev, told Reuters. "The local police did nothing."

In a statement on Tuesday, Ukraine's interim president, Oleksandr Turchynov, said: "The vast majority of law enforcement officials in the east are not able to fulfil their obligation to protect our citizens."

John Kerry, the US secretary of state, said the events represented a "wake-up call". He called on Russia to "leave Ukraine in peace" and warned that Nato would not accept efforts by the Kremlin to reshape the region's security landscape.

On Monday in Donetsk another contingent of riot police in full battle gear looked on as pro-Russian thugs attacked a peaceful pro-unity rally. The separatists beat Ukraine supporters with iron rods. Fourteen people needed hospital treatment. Two were seriously injured. The mob also took five hostages, supporters of the city's Shakhtar Donetsk football team who had formed a protective cordon at the front of the rally. The five were taken to an office near Donetsk's occupied regional administration. They were eventually released on Tuesday.

Later on Tuesday, seven or eight police officers in light blue uniforms stood outside the office where the hostages had been kept. The scene was peaceful. A few feet away volunteers from the "Donetsk People's Republic", dressed in military fatigues, guarded the entrance. They wore orange and black ribbons, the symbols of the "republic's" anti-Kiev revolution. The two groups appeared to be on friendly terms.

Asked if the police had gone over to the separatists, the captain in charge, Yevgeny, said: "Among the police there are different opinions. Obviously our job is to uphold the law and apply it neutrally."

The "republic" has announced its own referendum on the region's future, to be held on 11 May. "I don't make any secret of the fact that I'm for a referendum," Yevgeny added. Another policeman chipped in: "We'll take part. Personally I'm for Russia".

The police were reluctant to talk about the bloody events of the previous night, when they failed to protect civilians from attack. But one officer who was there said: "This situation is all Kiev's fault. They say we in the east are slaves, half-humans. They revere people like Stepan Bandera [the second world war Ukrainian nationalist leader] who shot our brothers. We are normal citizens like everyone else."

Standing next to their patrol car, still striped with Ukraine's blue and yellow colours, the officers reeled off a list of grievances. These included low pay – $200-$250 (£120) a month. (One policewoman, Svetlana, said: "I'm supposed to give my life for this. Who is going to come to my mother afterwards and say "thanks for your daughter?") They also complained that a mistrustful Kiev had confiscated their service revolvers three weeks ago. "I can't exactly defend myself," Yevgeny said, showing off his empty holster.

The captain said he was one of 400 Donetsk region police officers sent to the capital to deal with anti-Yanukovych demonstrations, which began last November. The experience had left him bitterly disillusioned. He had nothing but contempt for the new government, part-formed from the protest movement, he said. Other officers who had not been in Kiev repeated claims made by Russian TV that the Maidan protesters were paid narco-maniacs, and unemployed "fascists".

The police even had sympathy for pro-Russian gunmen in Slavyansk, who are holding 40 people prisoner, including seven European military observers. One officer said: "Kiev started all this by arresting our activists. They [in Slavyansk] are merely defending their rights."

The US embassy in Kiev said on Tuesday the abduction of the OSCE inspectors and the attack on demonstrators by pro-Russian thugs in Donetsk on Monday were acts of terrorism.

"There is no place for these examples of inhuman behaviour in a modern, democratic society. This is terrorism, pure and simple," it said in a statement.

On Tuesday the EU followed the US in widening sanctions, naming a further 15 people it is targeting because of their roles in the Ukraine crisis. The list included General Valery Gerasimov, chief of the Russian general staff and first deputy defence minister, and Lieutenant General Igor Sergun, identified as the head of GRU, the Russian military intelligence agency.

The Russian foreign minister, Sergei Lavrov, dismissed the new sanctions. "We reject the sanctions … imposed by the United States and the European Union against all common sense, in relation to the events in Ukraine."

Russian president Vladimir Putin said Moscow saw no need for counter sanctions against the west, but could reconsider the participation of western companies in its economy, including energy projects.

"We would very much wish not to resort to any measures in response. I hope we won't get to that point," he told reporters after meeting the leaders of Belarus and Kazakhstan. "But if something like that continues, we will of course have to think about who is working in the key sectors of the Russian economy, including the energy sector, and how."

THe US secretary of state John Kerry accused Moscow of accelerating the crisis in Ukraine instead of sticking to an agreement to ratchet back tensions, and said Nato partners should step up efforts to lessen Europe's energy dependence on Russian oil.

Speaking at the Atlantic Council think-tank, Kerry said Nato is facing a defining moment in the strength of its alliance. He pledged anew that Nato partners including those that border Ukraine or Russia would be defended to the hilt if their sovereignty is threatened. "Nato territory is inviolable," Kerry said in his 20-minute speech. "We will defend every single piece of it."

One pro-Russian activist, 39-year-old Igor Vasilyovich, said at least half of the local police supported the cause. "They understand that without Russia we can't live properly," he said. Igor admitted that not everybody in Donetsk – population one million – was an enthusiast for the new unelected "republic". "We're the active minority. We'll lead the passive majority," he said. But what if the "republic" didn't succeed? "Then we'll start a partisan war," he replied.

Serhiy Taruta, the new governor sent by Kiev to head the Donetsk region, admits that the police and security services in the east are not doing their job. His officials attribute this to what they call "post-Maidan syndrome".

Many were sent to the capital, and were told that the protesters in Kiev were their enemies. Now back in the east, the same enemies are running the country. They are also unsure whether Viktor Yanukovych – the president who fled to Russia – might come back again.

One official said: "They [the police in the east] feel a mental fight over who is their master. The problem is they are not sure if it is Kiev, or Yanukovych and his family. We've had a lot of conversations with commanders and officers. They are people from here, and they feel angry and afraid."

The official said the Donetsk police were acutely aware that the Russian police salary was $2,000 – 10 times higher than their own. They also regarded the Berkut riot police – disbanded for their alleged role in the shooing of Maidan protesters – as local heroes. The Donetsk police chief Konstantin Pozhidaev was doing all he could, the official said, conceding: "It will take more time to achieve meaningful order."

With a separatist referendum looming, Donetsk's pro-Kiev administrators have little time left. Much of the region is unlikely to vote in this "poll", but that will probably not deter the "People's Republic" from declaring an overwhelming victory. One self-appointed "deputy", Anatoly Aneshenko, said on Tuesday the oblast or region was certain to declare autonomy.

What would happen to those who opposed this outcome? "Well, they can leave," he said.