Putin is rubbing it in over Ukraine

Vladimir Putin said on Tuesday pro-Moscow rebels should allow Ukrainian government forces safe passage out of an encircled town and accused the West of sending weapons to Kiev.

The Russian president did not hold back when asserting how Russian-backed rebels were clearly winning near the crucial railway hub of Debaltseve.

Speaking at a joint news conference in Budapest with Hungarian Prime Minister Viktor Orban, Putin said the fighting around Debaltseve was to be expected and that it was clear going into recent peace talks that Ukrainian soldiers were in trouble there.

The rebels and government forces were fighting in Debaltseve on Tuesday, dashing hopes that a European-brokered peace deal would end months of conflict.

Thousands of Ukrainian troops are surrounded there, their fate uncertain. The rebels said they had captured hundreds of them and would not let the rest escape unless they surrender.

"To lose is always painful. It's a hardship especially when you lose to yesterday's miners and tractor drivers. But life is life," the Russian president reportedly said.

Today's recap: Putin came to the EU, told Kiev it should let its soldiers surrender in Debaltseve, said it's hard to lose but "life is life"

- Paul Sonne (@PaulSonne) February 17, 2015

Putin also accused the West of supplying weaponry to Kiev's army, which he has called a proxy of NATO:

"According to our data, weapons are already being supplied [to Kiev]," Putin said. "This is not surprising. I am convinced that whoever is supplying the weapons, the number of victims may grow, but the outcome will not change. The vast majority of soldiers serving in the Ukrainian army have no motivation to participate in an internecine conflict away from home, while the Donbass militia have every reason to defend their families."

For its part, the US signaled that it has little desire to get directly involved by providing lethal assistance:

"Our belief here in the administration, and I would be surprised if others disagree, is that getting into a proxy war with Russia is not anything that's in the interest of Ukraine or in the interest of the international community," State Department spokeswoman Jen Psaki told reporters. "And certainly, as we weigh options, we weigh that as one of the factors."

On energy, Putin said that the South Stream gas pipeline, that was to have pumped Russian gas under the Black Sea and into southern Europe, was torpedoed by European objections.

The pipeline can't be resurrected in its original form, Putin said. He said though that if Brussels backs the idea, a spur could be built to connect Bulgaria, intended landing point for the South Stream route, to another pipeline Russia is planning.

(Reporting by Vladimir Soldatkin; Writing by Christian Lowe; Editing by Angus MacSwan)