THE G7 has agreed to impose new sanctions on Russia over Ukraine, accusing Moscow of flouting the deal struck to defuse the crisis.
The group of nations said the “costs” for Russian president Vladimir Putin of action in the east of Ukraine were already “significant” and would now increase.
Prime Minister David Cameron, US President Barack Obama and their counterparts from Germany, France, Italy, Japan and Canada expressed “deep concern at the continued efforts by separatists backed by Russia to destabilise eastern Ukraine”.
They praised the “restraint” of the new government in Kiev and the efforts it had made to implement the agreement struck in Geneva earlier this month.
In contrast, Moscow had taken “no concrete actions in support of the Geneva accord” and had not condemned pro-Russia militants or urged them to leave buildings they have been occupying.
The G7 described the annexation of Crimea – which Putin says is now part of the Russian Federation – as “illegal”.
It said: “We reiterate our strong condemnation of Russia’s illegal attempt to annex Crimea and Sevastopol, which we do not recognise.
“We will now follow through on the full legal and practical consequences of this illegal annexation, including but not limited to the economic, trade and financial areas.
“We have now agreed that we will move swiftly to impose additional sanctions on Russia. Given the urgency of securing the opportunity for a successful and peaceful democratic vote next month in Ukraine’s presidential elections, we have committed to act urgently to intensify targeted sanctions and measures to increase the costs of Russia’s actions.”
The standoff has had an impact on the Russian economy and has led to heavy capital flight, prompting Standard & Poor’s to cut Russia’s credit rating on Friday.
That forced the central bank to raise its key interest rate to reverse a drop in the rouble.
The soaring prosperity that has been a cornerstone of Putin’s popularity had already been heading for a slowdown before the Ukraine crisis hit, as Russian oil and gas exports decreased and the country’s reliance on extractive industries remained high.
The move follows an intense round of diplomacy on Friday, including a conference call between Obama and the European leaders.
Public exchanges between East and West have been becoming increasingly bitter, with Moscow’s foreign minister Sergey Lavrov accusing western nations of plotting to control Ukraine.
He said pro-Moscow insurgents in the south-east of Ukraine would lay down their arms only if the Ukrainian government cleared the Maidan Square protest camp in the capital, Kiev.
He added: “The West wants – and this is how it all began – to seize control of Ukraine because of their own political ambitions, not in the interests of the Ukrainian people.”
But US Secretary of State John Kerry said: “For seven days, Russia has refused to take a single concrete step in the right direction.
“Not a single Russian official, not one, has publicly gone on television in Ukraine and called on the separatists to support the Geneva agreement, to support the stand-down, to give up their weapons, and get out of the Ukrainian buildings.”
Ukrainian prime minister Arseniy Yatsenyuk has accused Russia of wanting to start “a third world war”.
The agreement struck between Moscow and Ukraine in Geneva on 18 April was hailed as a breakthrough, and called for all parties to down arms and vacate public buildings.
Pro-Russian militia have been occupying government buildings in more than ten cities in eastern Ukraine while the nationalist Right Sector movement is still in control of two public buildings in Kiev.
The crisis escalated on Friday after armed pro-Russia separatists seizing a bus carrying international mediators near the city of Slovyansk in eastern Ukraine.
Vyacheslav Ponomaryov, a separatist and self-declared mayor of Slovyansk, said that the mediators were being held because they were believed to have a spy amongst them from the pro-western government in Kiev.