NATO has told the Kremlin to pull Russian troops back from Ukraine and stop supplying separatists with “arms, fighters and funds”.
As western leaders staged a show of support for the Ukrainian government at a Nato summit in Wales, the military alliance’s secretary-general, Anders Fogh Rasmussen, said: “We call on Russia to end its illegal and self-declared annexation of Crimea. We call on Russia to pull back its troops from Ukraine and to stop the flow of arms, fighters and funds to the separatists. We call on Russia to step back from confrontation and take the path of peace.”
The European Union and the United States are set to unveil a fresh package of sanctions targeting Russian companies.
British Government sources said that the EU would unveil measures in Brussels today. They are believed to include a bar on Russia’s state-controlled oil companies raising funds on European capital markets, while curbs would be applied to Russian defence companies.
The sanctions will also look to strengthen existing measures against state-owned banks and extend controls on the sale of military equipment to cover dual-use civilian/military kit.
It is expected that the White House will announce similar measures against Moscow.
One source said the sanctions were designed to force Russian president Vladimir Putin “to the negotiating table and off the battlefield” in eastern Ukraine.
Prime Minister David Cameron, US president Barack Obama and other senior Nato leaders held talks with Ukrainian president Petro Poroshenko at the alliance summit in Wales yesterday, amid signs that a ceasefire in the region could be close. Mr Cameron said existing sanctions were already hurting the Russian economy.
He said: “It is making a difference. The Russian economy was growing; it is now shrinking. Russian banks – some of them are getting short of money. The Russian stock market, the rouble, have suffered.
“What Russia needs to understand is that if they continue with this approach in Ukraine, this pressure will be ramped up. The Ukrainians know that they have our support and this sanctions pressure is the right way to tell the Russians that what they are doing is unacceptable.”
Deputy Prime Minister Nick Clegg said he was “fully in favour” of the extension of sanctions on Russia.
He said: “It is essential that every time Putin thinks he can carry on with impunity, he understands that there is a reaction in terms of further sanctions being applied.”
Eastern European and Baltic states led by Polish president Bronisław Komorowski pushed for the alliance to focus its resources on its “eastern borders” and there were talks about accelerating Ukraine’s membership application to the alliance.
Mr Poroshenko has said he would order a ceasefire today, provided a planned meeting went ahead in Minsk, of envoys from Ukraine, Russia and security watchdog the Organisation for Security and Co-operation in Europe (OSCE).
Speaking at a news conference at the summit, Mr Poroshenko voiced “careful optimism” about the meeting. The rebels also said they were ready to declare a truce if an agreement with Ukraine is reached on a political settlement for the Russian-speaking region.
Mr Poroshenko discussed the outlines of a deal with Mr Putin on Wednesday and they both voiced optimism about reaching an agreement in Minsk.
A White House official said Mr Obama and other Nato leaders attending the summit expressed solidarity with Ukraine and agreed Russia should be punished.
US deputy national security advisor Ben Rhodes said: “The leaders reiterated their condemnation of Russia’s continued flagrant violation of Ukraine’s sovereignty and territorial integrity, and agreed on the need for Russia to face increased costs for its actions.”
Mr Poroshenko was meeting later with the heads of state and government from all 28 Nato member states, even though Nato officials have made clear that membership for Ukraine is not in the cards any time soon.
In Moscow, Russian foreign minister Sergey Lavrov warned that reports Ukraine was seeking to join Nato were “a blatant attempt to derail all the efforts” to seek a peaceful solution.
Meanwhile, the Scottish Government last night criticised the sanctions on Russia because of the impact on mackerel fishermen in Scotland. Richard Lochhead, secretary for rural affairs and food, is set to push for the pelagic fish sector to be a priority for EU-wide action in the face of Russian trade sanctions.
He will today attend an extraordinary meeting of the EU Agrifish Council in Brussels which has been convened to discuss the impact of the Russian ban on European food exports.
Scotland currently exports around £45 million of food and drink to Russia annually – and £22m of this total is of food products affected by the ban.
The Scottish mackerel industry is expected to be most directly affected with up to 20 per cent of mackerel processed in Scotland going directly to Russia.
Mr Lochhead said: “I have asked to address the council directly so that my European counterparts can hear first-hand the significant impact this ban is having on Scotland’s pelagic sector.”