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Ukrainian soldiers inside and unidentified gunmen outside an infantry base in Privolnoye, Ukraine. Photo by AP

SIMFEROPOL - Ukraine mobilized for war on Sunday, after Russian President Vladimir Putin told the Russian parliament he had the right to invade, creating the biggest confrontation between Moscow and the West since the Cold War.

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"This is not a threat; this is actually the declaration of war on my country," said Ukraine's Prime Minister Arseny Yatseniuk, head of a pro-Western government that took power when Russian ally Viktor Yanukovych fled last week.

Meanwhile, the new head of Ukraine's navy defected from his post and swore allegiance to Russia on Sunday, just a day after he was appointed. Ukraine's security council announced shortly after the 'defection' that it would launch criminal proceedings against Rear Admiral Denis Berezovsk and charge him with treason.

Putin told German Chancellor Angela Merkel on Sunday that Russian citizens and Russian-speakers in Ukraine faced an "unflagging" threat from ultranationalists, and that the measures Moscow has taken were completely fitting given the "extraordinary situation", the Kremlin said.

In a telephone conversation during which Merkel expressed concern about developments in Ukraine, she and Putin agreed that Russia and Germany would continue consultations in bilateral and multilateral formats to seek the "normalisation" of the situation, a Kremlin statement said.

Merkel accused Putin on Sunday of breaching international law with "unacceptable Russian intervention" in Ukraine, a German government spokesman said on Sunday.

Russian forces have bloodlessly seized Crimea - an isolated Black Sea peninsula with a majority of Russian speakers and where Moscow has a naval base.

"The chancellor called upon the Russian President again to respect Ukraine's territorial integrity," deputy government spokesman Georg Streiter said in a statement after a phone call between the two leaders.

Putin accepted Merkel's proposal to establish a "fact-finding mission" like a contact group, possibly under the leadership of the Organisation for Security and Cooperation in Europe (OSCE), to start a political dialogue, the spokesman said.

Putin obtained permission from his parliament on Saturday to use military force to protect Russian citizens in Ukraine, spurning Western pleas not to intervene.

Russian forces have already bloodlessly seized Crimea, an isolated Black Sea peninsula where Moscow has a naval base. On Sunday they surrounded several small Ukrainian military outposts there and demanded the Ukrainian troops disarm. Some refused, although no shots were fired.

Ukrainian border guard vessels from the Crimean ports of Kerch and Sevastopol have been moved to Odessa and Mariupol, the guard said in a statement.

Ukraine's security council has ordered the general staff to immediately put all armed forces on highest alert, the council's secretary Andriy Parubiy announced.

The Defence Ministry was ordered to conduct a call-up of reserves - theoretically all men up to 40 in a country with universal male conscription, though Ukraine would struggle to find extra guns or uniforms for significant numbers of them.

Ukraine's tiny armed forces would be no match against the might of its superpower neighbor. Britain's International Institute of Strategic Studies estimates Kiev has fewer than 130,000 troops under arms, with planes barely ready to fly and few spare parts for its single submarine.

Russia, by contrast, has spent billions under Putin to upgrade and modernize the capabilities of forces that were dilapidated after the breakup of the Soviet Union. Moscow's special units are now seen as equal to the best in the world.

In Crimea, Ukraine's tiny contingent made no attempt to oppose the Russians, who bore no insignia on their uniforms but drove vehicles with Russian plates and seized government buildings, airports and other locations over the past three days. Kiev said its troops were encircled at least three places.

So far there has been no sign of Russian military action outside Crimea, but Kiev officials accused Moscow of being behind the pattern of violent protests in eastern cities.

Pro-Moscow demonstrators flew Russian flags atop government buildings in cities including Kharkiv, Donetsk, Odessa and Dnipropetrovsk Saturday and Sunday. In some places they clashed with anti-Russian protesters and guards defending the buildings.