Russia said Saturday it had taken "full control" of the eastern Ukrainian city of Avdiivka, hours after Kyiv said it had pulled out of the former stronghold to save soldiers' lives.
Russian Defense Minister Sergei Shoigu had informed President Vladimir Putin of the advance, said a defense ministry statement.
Putin "congratulated our military and fighters on such an important victory," Kremlin spokesman Dmitry Peskov told state media.
Facing ammunition shortages and outnumbered on the battlefield, Ukrainian forces announced they had withdrawn in the early hours of Saturday.
It followed months of pressure after Russian forces stepped up efforts to capture the eastern industrial hub in October, devastating the city and causing mass casualties.
The capture of Avdiivka represents Russia's biggest victory in the war since May.
Earlier Saturday, Ukrainian President Volodymyr Zelensky told a security conference in Munich: "The ability to save our people is the most important task for us. In order to avoid being surrounded, it was decided to withdraw to other lines."
"This does not mean that people retreated some kilometres and Russia captured something," he added. "It did not capture anything."
'Congressional inaction'
Earlier, Ukraine's newly appointed Commander-in-Chief Oleksandr Syrskyi said he had "decided to withdraw our units from the city and switch to defense on more favorable lines."
A number of Ukrainian servicemen were captured in the operation, several military officials said.
It was Syrskyi's first major decision since his appointment, at a time when Ukraine faces mounting pressures in the east because of ammunition shortages, with a $60 billion U.S. military aid package held up in Washington.
U.S. National Security Council spokeswoman Adrienne Watson put some of the blame for Kyiv's latest setback on Congress.
Zelensky nevertheless remained optimistic after speaking with U.S. President Joe Biden by telephone from Munich.
"I am grateful to have President Biden's full support," he said. "I also believe that the U.S. Congress will make a wise decision."
Biden too, remained upbeat.
"I spoke with Zelensky this afternoon to let him know that I was confident we're going to get that money," Biden told reporters after attending church in Delaware.
Failure to vote through new military aid would be "absurd" and "unethical," he said, adding: "I'm going to fight to get them the ammunition they need."
'Nowhere to go'
On the eastern front line, one Ukrainian serviceman told AFP that withdrawing was "the right decision given the lack of weapons and artillery shells, because if we don't save the lives of the soldiers, we will soon have no one left to fight."
Avdiivka lies in the Donetsk region of Ukraine, which the Kremlin has claimed to be part of Russia since a 2022 annexation that remains unrecognized by nearly all United Nations members.
In July 2014, it briefly fell into the hands of pro-Russian separatists before returning to Ukrainian control.
But the Ukrainian army faced renewed Russian assaults including in the eastern Donetsk region.
"I'm used to the sound of shelling," said Viktor, in the village of Progres, some 30 kilometres west of Avdiivka. "It's been ongoing since 2014 already, but now much more tense — and louder."
The pensioner was cycling to the last open shop to buy bottles of fresh water before it closed for good, having been hit by shelling early that morning.
Speaking over rounds of incoming and outgoing artillery fire, Viktor said his neighbour had moved away.
"But I've got nowhere to go," he said.
'No longer exists'
AFP journalists nearby saw Ukrainian troops building new defensive lines with shovels and construction equipment.
The city has important symbolic value, and Moscow hopes its capture will make Ukraine's bombing of Donetsk city more difficult, but its strategic value has been questioned.
"I doubt that Russia, after such staggering losses, has the capacity to turn limited local successes into a major breakthrough," said Mykola Bielieskov of Ukraine's National Institute for Strategic Studies.
The battle for Avdiivka, less than 10 kilometres north of the Russian-controlled city of Donetsk, has been one of the bloodiest of the nearly two-year war.
Many compare it to the battle for Bakhmut, in which tens of thousands of soldiers were killed.
Bielieskov said holding Avdiivka would grant no advantage to Russia, whose positions in the city of Donetsk "even with the ruins of Avdiivka, wouldn't be fully secured".
Avdiivka had around 30,000 inhabitants before the Russian invasion. Most of the city has since been destroyed and fewer than 1,000 residents remain, say local officials.
"I am surprised that Avdiivka has held out for two years," Oleksii, a 50-year-old sergeant in the Donetsk region, told AFP on the phone.
Russian forces "destroy everything, level it to the ground," Oleksii said.
"You can't hold the city because it no longer exists," he said.
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