European leaders have ordered officials to make urgent preparations for a toughening of measures, likely to target senior Kremlin figures as well as the defence, energy and financial sectors, amid concerns the crisis was reaching the “point of no return”.
The Russian president said Ukraine should begin “substantive, meaningful talks” about the future of the country’s eastern region, where pro-Moscow separatists have been clashing with forces loyal to the Kiev government. He said Ukraine should launch discussions with the separatists “not about technical issues but about the question of the political organisation of society and statehood in south-east Ukraine, with the goal of safeguarding the legitimate interests of those people who live there”.
Mr Putin’s officials insisted that despite the use of the word “statehood”, Mr Putin did not envision sovereignty for the two separatist eastern regions that style themselves as “Novorossiya” or New Russia.
UK Defence Secretary Michael Fallon insisted that sanctions were already having an impact on the Russian economy and called for Nato countries to match the UK in meeting their commitments to defence spending in order to combat the “threat now here on our own doorstep”.
He said: “The European leaders were very clear last night that if Putin does not stop the incursions that we have seen over the border now – there’s real evidence of troops and vehicles being moved across the border into Ukraine, into sovereign Ukrainian territory – if he does not stop those incursions then he is going to face further sanctions.”
Although Ukraine is not a member of Nato, its president Petro Poroshenko will join leaders of Nato nations at this week’s summit in Wales where Mr Fallon said efforts would be made to reassure the alliance’s eastern members.
British troops will take part in a series of large-scale exercises in former Eastern Bloc countries in an effort to demonstrate the alliance’s commitment to them.
Mr Fallon added: “The president of Ukraine will be at the Nato summit this week. Ukraine is not yet a member of Nato. They are now looking at whether they should join Nato.
“What we will be doing at the Nato summit is getting the other members of Nato to focus on what more can be done to reassure eastern members of Nato, particularly the Baltic states, Poland and Romania, by way of more large-scale exercises.
“I have authorised the deployment of an entire battle group in a new exercise from September right through to December in Poland. There are going to be over 3,000 British troops involved in these countries this year and next year. And we’ve also got to get the Nato countries to spend more on defence.”
Although the UK was meeting the commitment to spend 2 per cent of GDP on defence, other members of the alliance were falling short, he said.
“We simply can’t leave this to the Americans, this is a threat now here on our own doorstep.”
Prime Minister David Cameron said the EU summit in Brussels had taken “important steps” and the European Commission would present proposals for tougher sanctions within a week.
At a joint press conference with Mr Poroshenko in Brussels on Saturday, outgoing EC president Jose Manuel Barroso insisted it was not too late to find a political solution.
But he added: “We are in a very serious, I would say, dramatic situation . . . where we can reach the point of no return. If the escalation of the conflict continues, this point can come.”