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Russian President Vladimir Putin has signed a huge gas supply contract with China during his visit to the Asian country.

The deal between Russia’s Gazprom and China National Petroleum Corp (CNPC) has been 10 years in the making. No official price has been given but it estimated to be worth over $400 billion.

Russia has been keen to find an alternative energy market for its gas as it faces the possibility of European sanctions over the crisis in Ukraine.

Shares in Gazprom rose 2% on the Russian market following the news.

Russian President Vladimir Putin has signed a huge gas supply contract with China during his visit to the Asian country

Russian President Vladimir Putin has signed a huge gas supply contract with China during his visit to the Asian country (photo Reuters)

The agreement is expected to deliver some 38 billion cubic meters of natural gas a year eastward to China’s burgeoning economy, starting around 2018.

The main argument has been over price and China is thought to have been driving a hard bargain.

Over the last ten years it has found other gas suppliers. Turkmenistan is now China’s largest foreign gas supplier, and last year it started importing piped natural gas from Myanmar.

Another sticking point has been the construction of pipelines into China.

Currently there is one complete pipeline that runs across Russia’s Far East to the Chinese border, called “The Power of Siberia”. The pipeline was started in 2007, three years after Gazprom and CNPC signed their initial agreement in 2004.

Financing the $22-30 billion cost of sending it into China has been central to the latest discussions.

China is Russia’s largest single trading partner, with bilateral trade flows of $90 billion in 2013.

China and Russia aim to double the volume to $200 billion in 10 years.

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The EU is imposing further sanctions over Russia’s actions in Ukraine after self-rule referendums in Donetsk and Luhansk.

Separatists in Donetsk and Luhansk regions say 89% and 96% respectively voted in favor of “self-rule”.

Earlier the head of the rebel Donetsk election commission, Roman Lyagin, said joining Russia “would probably be an appropriate step”.

The EU is imposing further sanctions over Russia's actions in Ukraine after self-rule referendums in Donetsk and Luhansk

The EU is imposing further sanctions over Russia’s actions in Ukraine after self-rule referendums in Donetsk and Luhansk

Two Crimean companies and 13 individuals have been added to the sanctions list – the names are likely to be announced officially within the next 24 hours.

The sanctions impose travel bans and asset freezes. EU ministers are also discussing what might trigger a broader package of sanctions against the Russian economy.

In a brief statement, the Kremlin described the referendums as “the will of the people” and noted the “high turnout”.

The Kremlin denounced what it claimed had been “attempts to disrupt the votes, with the use of force, including the use of heavy weapons, against civilians”.

The Russian authorities said they expected the results of the vote to be implemented in a civilized manner, without any repetition of violence and called for dialogue between Kiev, Donetsk and Luhansk.

Later Russia’s Foreign Minister, Sergei Lavrov, said there were no plans to hold fresh international talks on the crisis – he accused the West of an “information blockade” over events in Ukraine and of “shameless lies”.

German Foreign Minister Frank-Walter Steinmeier is to travel to Kiev on Tuesday to promote “dialogue” between the different parties.

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Ukrainian separatist leader Denis Pushilin is calling on Russia to “absorb” the eastern region of Donetsk after Sunday’s unofficial vote on its status.

The leader of the self-declared Donetsk People’s Republic said Moscow should listen to the “will of the people”.

Ukrainian separatist leader Denis Pushilin has called on Russia to absorb the eastern region of Donetsk

Ukrainian separatist leader Denis Pushilin has called on Russia to absorb the eastern region of Donetsk

Russia has called for dialogue and “implementing” the result, but Ukraine and the EU declared the poll illegal.

The EU is imposing further sanctions over Russia’s actions in Ukraine.

Separatists in Donetsk and Luhansk regions say 89% and 96% respectively voted in favor of “self-rule”.

Earlier the head of the rebel Donetsk election commission, Roman Lyagin, said joining Russia “would probably be an appropriate step”.

Russia has called for dialogue between the militants and Kiev with the participation of the Organization for Security and Co-operation in Europe (OSCE).

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Vladimir Putin is making his first visit to Crimea since Russia annexed it from Ukraine.

The Russian president told crowds marking the 1945 Soviet victory over the Nazis that Crimea had shown loyalty to a “historical truth” in choosing to be part of Russia.

The Kiev government protested at the visit, calling it a “gross violation of Ukraine’s sovereignty”.

Kiev also reported that more than 20 people had died in a security operation against separatists in Mariupol.

Ukrainian Interior Minister Arsen Avakov said that about 20 pro-Russian protesters and one Ukrainian security officer had been killed in the southern port.

Ukrainian forces and pro-Russian separatists had clashed at the police headquarters, which was set on fire.

Vladimir Putin is making his first visit to Crimea since Russia annexed it from Ukraine

Vladimir Putin is making his first visit to Crimea since Russia annexed it from Ukraine

In the Crimean port of Sevastopol, Vladimir Putin thanked the armed forces for their role in World War Two and hailed the incorporation of the peninsula into the Russian Federation.

He watched a fly-by of Russian aircraft and addressed seamen on naval vessels, as crowds gathered on cliffs overlooking the harbor.

Vladimir Putin said: “I am sure that 2014 will go into the annals of our whole country as the year when the nations living here firmly decided to be together with Russia, affirming fidelity to the historical truth and the memory of our ancestors.”

He earlier addressed thousands during a huge, hour-long military parade in Moscow’s Red Square, vowing to defend the “motherland”.

Vladimir Putin told the crowd that May 9, known as Victory Day in Russia, was a “day of grief and eternal memory” and stressed how the “iron will of the Soviet people” had saved Europe from slavery.

“It is a holiday when an overwhelming force of patriotism triumphs, when all of us feel particularly acutely what it means to be loyal to the motherland and how important it is to defend its interests,” he said.

NATO’s Secretary General Anders Fogh Rasmussen said Vladimir Putin’s visit to Crimea was “inappropriate”, adding: “We consider the Russian annexation of Crimea to be illegal, illegitimate and we don’t recognize it.”

US National Security Council spokesperson Laura Magnuson said: “We do not accept Russia’s illegal annexation of Crimea. Such a visit will only serve to fuel tensions.”

Ukraine’s interim authorities held subdued memorials to mark the Soviet victory.

A brief veterans’ ceremony was held in Kiev’s main park, in front of PM Arseniy Yatsenyuk and several former presidents.

The authorities feared pro-Russian activists would try to stoke violence if there were any higher profile celebrations.

Nazi Germany invaded the USSR – which included Ukraine – in June 1941 and advanced almost as far as Moscow before being driven back to Berlin.

Crimea was put under Ukrainian administration in 1954.

After the collapse of the USSR, Russia maintained a large military presence on the peninsula, and more than half of the region’s population identified themselves as ethnic Russian.

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Russia held a huge parade to mark 69 years since the Soviets defeated the Nazis, amid a surge of patriotism over the annexation of Crimea from Ukraine.

President Vladimir Putin said it was a day when an “overwhelming force of patriotism triumphs”, and vowed to defend the interests of the motherland.

Unconfirmed reports say Vladimir Putin will visit a parade in Crimea later.

Festivities in Ukraine will be muted amid fears of provoking further violence in the south and east.

Moscow denies fomenting pro-Russian separatist unrest in Ukraine.

Vladimir Putin did not mention Ukraine in his speech, instead stressing how the “iron will of the Soviet people” had saved Europe from slavery.

He told the crowd that May 9, known as Victory Day in Russia, was a “day of grief and eternal memory”.

Russia held a huge parade to mark 69 years since the Soviets defeated the Nazis

Russia held a huge parade to mark 69 years since the Soviets defeated the Nazis

“It is a holiday when an overwhelming force of patriotism triumphs, when all of us feel particularly acutely what it means to be loyal to the motherland and how important it is to defend its interests,” Vladimir Putin said.

German Chancellor Angela Merkel said it would be a pity if Vladimir Putin were to use the commemorations to visit Crimea.

The parade in Moscow traditionally features a display of military hardware and a show of patriotic fervor on Red Square.

The scope of this year’s event was bigger than usual:

  • The parade lasted 59 minutes, compared with its usual 45 minute running time
  • Fifty more military vehicles were on display compared with last year
  • The Sevastopol-based Black Sea Fleet played a larger role

Meanwhile, Ukraine’s interim authorities have discouraged public gatherings amid fears that pro-Russian activists might try to stoke violence.

“Roadblocks have been set up around our capital, where serious checks are being carried out, because we expect that provocative actions may occur on May 9,” said Ukraine’s acting President Oleksandr Turchynov.

A low-key wreath-laying ceremony is planned in Kiev.

In south and eastern Ukraine, pro-Russian separatists have said they will go ahead with independence referendums on Sunday.

Vladimir Putin had called for the referendums on autonomy to be postponed to create the conditions for dialogue.

Activists remain in control of many official buildings across the south and east despite a military operation by Kiev to remove them. Dozens of people have been killed in the unrest.

Ukraine is preparing for elections on May 25 following the ousting of pro-Russian President Viktor Yanukovych in February by pro-Western protesters.

Nazi Germany invaded the USSR – which included Ukraine – in June 1941 and advanced almost as far as Moscow before being driven back to Berlin in some of the fiercest fighting of the war.

Russia estimates that 26.6 million Soviet citizens were killed in the war, about 8.7 million of them members of the armed forces.

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Pro-Russian separatists in eastern Ukraine have decided to go ahead with an independence referendum on Sunday, despite a call from Russian President Vladimir Putin to postpone it.

The move was announced by separatist leaders after consulting supporters.

On Wednesday, Vladimir Putin called for a postponement to create the conditions necessary for dialogue.

Pro-Russian separatists in eastern Ukraine have decided to go ahead with an independence referendum on Sunday

Pro-Russian separatists in eastern Ukraine have decided to go ahead with an independence referendum on Sunday (photo Reuters)

Ukrainian authorities say they will disregard the results and that “anti-terror” operations will continue.

Millions of ballot papers have been prepared for the referendum.

The question put to voters is: “Do you support the act of proclamation of independent sovereignty for the Donetsk People’s Republic?”

The decision to press ahead with the vote was announced by separatist leaders in the regions of Donetsk and Luhansk.

The leader in Donetsk, Denis Pushilin, said the decision had been unanimous.

“We just voice what the people want and demonstrate through their actions,” he said.

A spokesman for the Kremlin said there was “little information” and that it needed to analyze the situation further.

Moscow has vowed to protect the rights of Ukraine’s Russian-speaking population against what it calls an undemocratic government in Kiev.

Ukrainian authorities have rejected activist demands for greater autonomy and troops have been battling to regain official buildings occupied by rebels in the east.

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The IMF has approved a $17.1 billion bailout for Ukraine to help the country’s beleaguered economy.

The loan comes amid heightened military and political tension between Ukraine and neighboring Russia.

The loan is dependent on strict economic reforms, including raising taxes and energy prices.

The money will be released over two years, with the first installment of $3.2 billion available immediately.

The head of the International Monetary Fund, Christine Lagarde, said the fund would check regularly to ensure the Ukrainian government followed through on its commitments.

The IMF has approved a $17.1 billion bailout for Ukraine to help the country's beleaguered economy

The IMF has approved a $17.1 billion bailout for Ukraine to help the country’s beleaguered economy

In March Ukraine put up gas prices by 50% in an effort to secure the bailout.

The government has also agreed to freeze the minimum wage.

The bailout had to be approved by the IMF’s 24-member board, which includes a Russian representative.

The IMF loan will also unlock further funds worth $15 billionn from other donors, including the World Bank, EU, Canada and Japan.

In December last year, Ukraine agreed a $15 billion bailout from Russia, but this was cancelled after protests forced out pro-Russian President Viktor Yanukovych.

On Wednesday, the IMF warned that Russia was “experiencing recession” because of damage caused by the Ukraine crisis.

The fund said $100 billion would leave Russia this year, partly caused by the US and EU sanctions.

The sanctions were imposed after Russia annexed the Crimea region from Ukraine last month.

The IMF bailout will also make available $1 billion in loan guarantees from the US, which was recently approved by Congress.

Earlier on Wednesday, an international conference in London ended with a commitment to help Ukraine recover tens of billions of dollars worth of assets which were allegedly stolen by the ousted President Viktor Yanukovych and his allies.

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New US sanctions have been imposed on seven Russian individuals and 17 companies it says are linked to President Vladimir Putin’s “inner circle”.

The White House said the move was a response to “Russia’s continued illegal intervention in Ukraine”.

Those targeted include Igor Sechin, head of oil giant Rosneft, and Sergei Chemezov of the hi-tech firm Rostec.

The announcement comes after the mayor of Kharkiv, a city in eastern Ukraine, was shot and critically wounded.

Hennadiy Kernes was recovering after an operation to repair damage to the chest and abdomen, but his life remained in danger, his office said.

Monday also saw pro-Russian separatists, whom Western nations accuse Moscow of supporting, seize a local government building in Kostyantynivka, a town in the eastern Donetsk region.

New US sanctions have been imposed on seven Russian individuals and 17 companies

New US sanctions have been imposed on seven Russian individuals and 17 companies

In Donetsk itself, pro-Russian activists armed with clubs and chains attacked a pro-unity rally, correspondents and eyewitnesses said. A number of people were injured in the clash.

Separatists were also continuing to detain about 40 people in the town of Sloviansk, including journalists, pro-Kiev activists and seven military observers linked to the Organization for Security and Co-operation in Europe (OSCE) as well as three members of Ukraine’s security service, officials in Kiev said.

At a special meeting of the OSCE’s permanent council in Vienna, Russian ambassador Andrei Kelin said Moscow was taking “steps” to secure the observers’ release. But the area around Sloviansk was very tense and it had been “extremely irresponsible” to send them there, he added.

The US and EU first imposed visa bans and asset freezes on a number of senior Russian officials and companies after Moscow annexed Crimea from Ukraine last month.

On Thursday, the White House said it was adding to its sanction list “in response to Russia’s continued illegal intervention in Ukraine and provocative acts that undermine Ukraine’s democracy and threaten its peace, security, stability, sovereignty, and territorial integrity”.

It accused Russia of “doing nothing to meet the commitments it made” at a meeting with Ukraine, the US and EU in Geneva on April 17, which it said had included refraining from violence or provocative acts.

Russian Deputy Foreign Minister Sergei Ryabkov said Moscow’s response would be “painful for Washington”.

He told the Interfax news agency that the Kremlin was “disgusted” by the sanctions, which he said showed the White House had “completely lost touch with reality”.

Most of the 17 companies targeted are linked to Arkady and Boris Rotenberg and Gennady Timchenko – individuals targeted in the previous sanctions list.

The latest measures also target some hi-tech exports that “could contribute to Russia’s military capabilities”.

Diplomats in Brussels also said European Union governments had reached a preliminary agreement to impose asset freezes and visa bans on another 15 people as part of expanded sanctions on Russia over its actions in Ukraine. The names are expected to be released on Tuesday, although more could still be added.

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The G7 powers have agreed to impose fresh sanctions on Russia over its actions in Ukraine.

A G7 statement gave no detail of the sanctions, but US officials said they could announce measures by Monday.

The West accuses Russia of leading a secession rebellion in Ukraine’s east, months after it annexed Crimea. Moscow denies the allegations.

Meanwhile, negotiators are trying to secure the release of international observers seized by pro-Russia gunmen.

Forces in the city of Sloviansk are still holding the eight European military observers and several Ukrainian army personnel who they seized on Friday and accuse of espionage.

The observers were taking part in a mission linked to the Organization for Security and Co-operation in Europe (OSCE).

Forces in Sloviansk are holding eight European military observers and several Ukrainian army personnel

Forces in Sloviansk are holding eight European military observers and several Ukrainian army personnel (photo AFP)

Rebel militia continue to occupy official buildings in a dozen eastern cities, defying the government in Kiev.

Russia has tens of thousands of troops deployed along its side of the border with Ukraine and has said it would act if its interests were threatened.

The US accused Russian jets of violating Ukraine’s airspace on Friday in a further sign of escalation.

Pentagon spokesman Col. Steven Warren said Russian aircraft had entered Ukrainian airspace several times in the past 24 hours.

Meanwhile, the G7 praised Ukraine for acting with restraint in dealing with the “armed bands” that had occupied government buildings.

But the group, which includes the US, UK, Germany, Japan, France, Canada and Italy, condemned Russia’s “increasingly concerning rhetoric and ongoing threatening military maneuvers”.

“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,” said the statement.

The US and EU already has assets freezes and travel bans in place target a number of Russian individuals and firms accused of playing a part in the annexation of Crimea.

On Friday, Ukraine’s interior ministry said armed separatists had seized OSCE representatives, who were believed to be military observers from Germany, Denmark, Poland, Sweden and the Czech Republic.

Pro-Russian leaders in Sloviansk confirmed the bus had been stopped near the town of Sloviansk and said they were checking the identities of those on board.

The self-proclaimed mayor of Sloviansk, Vyacheslav Ponomaryov, said at least one passenger had been carrying maps showing separatist checkpoints in the area, which suggested “their involvement in espionage”.

Last weekend, Vyacheslav Ponomaryov broadcast an appeal to President Vladimir Putin asking for Russian troops to protect the city from “fascists” after three of his men died in a gunfight.

Russia’s OSCE envoy Andrei Kelin promised to take “all possible steps” to free the representatives, according to Russian media reports.

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Standard & Poor’s has downgraded Russia’s rating to “BBB-“from “BBB” – one notch above “junk” status.

The move comes as foreign investors continue to take money out of the country amid tensions over the situation in Ukraine.

Also on Friday, Russia’s central bank raised its key interest rate from 7% to 7.5% as it sought to defend the value of the rouble.

Announcing the downgrade, S&P said: “In our view, the tense geopolitical situation between Russia and Ukraine could see additional significant outflows of both foreign and domestic capital from the Russian economy.”

The credit ratings agency said this could “further undermine already weakening growth prospects”.

Standard & Poor's has cut Russia's rating to one notch above "junk" status

Standard & Poor’s has cut Russia’s rating to one notch above “junk” status (photo CBC)

S&P warned that further downgrades were possible if the West imposed tighter sanctions against Moscow.

Investors have been pulling money out of Russia since last year when the country’s economy ran into trouble, but this process has intensified in recent weeks amid concerns over Ukraine.

In the first quarter of this year, foreign investors have withdrawn $63.7 billion from Russia, and economic growth has slowed significantly – it is expected to grow at no more than 0.5% during 2014.

Russian shares, which have traded lower this week, fell further following the downgrade, with the MICEX stock index slipping over 1.6% at one stage.

Russia’s central bank said its rate rise was because of a higher inflation risk and the weakness of the rouble. The Russian currency has lost nearly 8% against the dollar this year.

The bank said its move would enable it to lower inflation to 6% by the end of 2014 and added it did not plan on cutting rates in coming months.

Russia’s Economy Minister Alexei Ulyukayev dismissed S&P’s move, saying that “partially, it is kind of a politically motivated decision”.

However, analysts said other credit rating agencies were likely to follow suit.

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Russia and the US have accused each other of failing to ease tensions in Ukraine after Kiev launched raids on pro-Moscow separatists.

Russia said the US should make Kiev stop the attacks in the east, saying “nothing has been done to resolve this urgent crisis so far”.

The US said Moscow had “actively stoked tensions in eastern Ukraine”.

Russia ordered new military exercises on its border following the raids, drawing condemnation from Ukraine.

Pro-Russian separatists are occupying key buildings in a dozen eastern Ukrainian towns, defying the central government.

The Russian foreign ministry issued a statement urging the US to “use all its influence with the interim government in Kiev to bring it to reason and convince it to refrain from rash steps that will plunge Ukraine even deeper into the depths of crisis”.

It urged Washington to “understand the full measure of its responsibility for what is going on”.

Russia and the US have accused each other of failing to ease tensions in Ukraine after Kiev launched raids on pro-Moscow separatists

Russia and the US have accused each other of failing to ease tensions in Ukraine after Kiev launched raids on pro-Moscow separatists (photo AP)

Both the US and Russia cited the April 17 Geneva agreement under which illegal armed groups, including those who have seized public buildings, must return home.

The Russian foreign ministry said: “We hope the USA will at last take urgent measures in the interests of de-escalating the situation in accordance with the provisions of the Geneva statement.”

But US state department spokeswoman Jennifer Psaki said Russia had “failed not only to provide public support for the de-escalation of tensions, but has actively stoked tensions in eastern Ukraine by engaging in inflammatory rhetoric”.

Jennifer Psaki said Secretary of State John Kerry had spoken to Russian Foreign Minister Sergei Lavrov “six times since Geneva, and he has never once taken responsibility for the implementation of Russia’s Geneva commitments”.

She added: “There will be additional sanctions if Russia does not make good on this priority.”

Pentagon spokesman Steve Warren told reporters: “The Russian announcement of additional exercises on the Ukrainian border is exactly opposite of what we have been calling on the Russians to do, which is to de-escalate the situation.”

The morning raids by Ukrainian commandos on pro-Russian checkpoints around the town of Sloviansk had left at least two separatists dead.

The raids were brief, with Sloviansk itself reported calm and pro-Russian militants still manning barricades in many areas.

Russian Defense Minister Sergei Shoigu said Moscow had been “forced to react” to the raids by ordering new military exercises.

Sergei Shoigu was quoted by Interfax news agency as saying: “If this military machine is not stopped, it will lead to greater numbers of dead and wounded.”

Moscow has tens of thousands of troops along its side of the border.

Russian television quoted the ambassador to the UN, Vitaly Churkin, as saying that Moscow would have “international-legal grounds” to deploy “peacekeepers” to Ukraine, as it had during the Russia-Georgia conflict of 2008.

Ukraine’s acting President, Oleksandr Turchynov, called on Russia to pull back its troops from the border and end what he called its “blackmail”, adding that Kiev would not yield to “Russian-backed terrorists”.

Foreign Minister Andriy Deshchytisa told the Associated Press that Ukrainian forces would fight the Russians if they had to.

“The Ukrainian people and Ukrainian army are ready to do this. Ukraine will confront Russia. We will defend our land.”

UN Secretary General Ban Ki-moon earlier said he was “seriously concerned that the situation could quickly spin out of control with consequences we cannot predict”.

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Russia has accused the Kiev authorities of breaking last week’s Geneva accord on resolving the Ukraine crisis.

Russian Foreign Minister Sergei Lavrov said the Kiev government – not recognized by Moscow – had not moved to disarm illegal groups, especially the ultra-nationalist Right Sector.

“Extremists are calling the tune,” he alleged, condemning a fatal shooting near Sloviansk, in eastern Ukraine.

Sergei Lavrov also condemned the continuing Maidan street protests in Kiev.

He said it was “absolutely unacceptable” that the Ukrainian authorities had failed to end what he called the illegal protests in the capital.

However, Ukrainian Foreign Minister Andriy Deshchytsya said he was “surprised” Sergei Lavrov did “not know what is being done in Ukraine regarding the Geneva agreements”, Kiev-based news agency Unian reported.

Sergei Lavrov has accused the Kiev authorities of breaking last week's Geneva accord on resolving the Ukraine crisis

Sergei Lavrov has accused the Kiev authorities of breaking last week’s Geneva accord on resolving the Ukraine crisis

The government had been having regular consultations with the parties to the agreement in an attempt to find “ways of de-escalating the situation in the east of Ukraine”, Andriy Deshchytsya was reported to have said.

Early on Sunday at least three people were killed in a shooting at a checkpoint manned by pro-Russian separatists near Sloviansk.

The circumstances remain unclear. The local separatists said the attack was carried out by Right Sector militants. Kiev called it a “provocation” staged by Russian special forces.

Sergei Lavrov said the incident proved Kiev did not want to control “extremists”.

He said that the most important demand of the Geneva deal was to “prevent any violence”, and it was not being implemented.

“Steps are being taken – above all by those who seized power in Kiev – which crudely violate the accords reached in Geneva,” Sergei Lavrov told a news conference in Moscow.

The April 17 accord was agreed at talks between Russia, Ukraine, the EU and US. It demanded an immediate end to violence in eastern Ukraine and called on illegal armed groups to surrender their weapons and leave official buildings.

Pro-Russian militants are still holding official buildings in at least nine towns and cities in the Donetsk region of eastern Ukraine.

The interim authorities in Kiev said they had suspended operations against pro-Russian militants over Easter, and appealed for national unity.

They promised to meet some of the demands of pro-Russian protesters, which include the decentralization of power and guarantees for the status of the Russian language.

The Organization for Security and Cooperation in Europe (OSCE) has deployed around 100 monitors across 10 cities in Ukraine to explain the details of the Geneva accord to each side.

Spokesman Michael Bociurkiw said they were having a “mixed experience dealing with checkpoints and so forth and there is a varying reaction to teams”.

He said they were facing a “hardened attitude” in places such as Donetsk and Slaviansk, but other, smaller, areas are “more accommodating”.

Meanwhile, US has warned the next few days will be pivotal and has threatened more sanctions against Russia if it fails to abide by the Geneva accord.

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Orthodox Church patriarchs in Kiev and Moscow have highlighted during their Easter messages the deep division in Ukraine, where a tense stand-off is continuing in the east.

The head of Ukraine’s Orthodox Church Patriarch Filaret accused Russia of “aggression” and “evil”.

Russian Church Patriarch Kirill asked God to end the designs of those who wanted to rip apart Russia and Ukraine.

Pro-Russian activists in the east continue to occupy government offices.

Meanwhile Russia media are reporting several deaths in a gun battle near the eastern town of Sloviansk.

Reports of fatalities in the region have appeared before but have not been independently confirmed.

A mediator from the Organization for Security and Co-operation in Europe (OSCE) is scheduled to hold talks with them on Sunday.

Russian Church Patriarch Kirill asked God to end the designs of those who wanted to rip apart Russia and Ukraine

Russian Church Patriarch Kirill asked God to end the designs of those who wanted to rip apart Russia and Ukraine

Ertogrul Apakan, who heads the special OSCE mission in Kiev, said his deputy would be in Donetsk to try to get them to comply with an agreement reached on Thursday to ease the crisis.

In his Easter message, Patriarch Filaret said: “Against our peace-loving nation, which voluntarily gave up nuclear weapons, there has been aggression, there has been injustice.

“A country which guaranteed the integrity and inviolability of our territory has committed aggression. God cannot be on the side of evil, so the enemy of the Ukrainian people is condemned to defeat.

“Lord, help us resurrect Ukraine.”

In Moscow, Patriarch Kirill appealed for peace, saying it “should reign in the hearts and minds of our brothers and sisters by blood and by faith”.

But he also said Ukraine was “spiritually and historically” at one with Russia, and he prayed for it to have authorities that were “legitimately elected”.

“We are a single people before God,” he said.

Ukraine’s acting President, Oleksandr Turchynov, said in his Easter message: “We are living in a fateful time when the Ukrainian people have decisively affirmed their striving for freedom and justice.”

In an interview to be aired in full later on Sunday on NBC’s Meet the Press, Ukraine’s interim PM Arseniy Yatsenyuk accuses Russian President Vladimir Putin of trying to “restore the Soviet Union”.

If Vladimir Putin succeeded, Arseniy Yatsenyuk says, it would be “the biggest disaster of this century”.

Ukraine has been in crisis since President Viktor Yanukovych was toppled in February.

Russia then annexed the Crimean peninsula – part of Ukraine but with a Russian-speaking majority – in a move that provoked international outrage.

The annexation followed a referendum in Crimea that backed a move to join the Russian Federation.

Pro-Russian activists then occupied buildings in several eastern Ukrainian cities, many calling on Moscow to support them.

Russia, Ukraine, the EU and US agreed during talks in Geneva on Thursday that illegal military groups in Ukraine must be dissolved, and that those occupying government premises must be disarmed and leave.

But the separatists’ spokesman in the city of Donetsk said that the Kiev government was “illegal”, and vowed they would not go until it stepped down.

Pro-Russian militants in Donetsk say they will not leave the government building there, defying the Kiev authorities and threatening a new international deal on Ukraine.

The separatists’ spokesman said that the Kiev government was “illegal”, so they would not go until the Kiev government stepped down.

Russia, Ukraine, the EU and US earlier agreed that illegal military groups in Ukraine must leave official buildings.

They reached the deal in Geneva.

Pro-Russian militants in Donetsk say they will not leave the government building there, defying the Kiev authorities and threatening a new international deal on Ukraine

Pro-Russian militants in Donetsk say they will not leave the government building there, defying the Kiev authorities and threatening a new international deal on Ukraine

Alexander Gnezdilov, spokesman for the self-proclaimed Donetsk People’s Republic, said his group would evacuate the government building in the eastern city only when the “illegal” Kiev government vacated parliament and the presidential administration.

A tense standoff continues in eastern Ukraine, where pro-Russian separatists – many of them armed – are occupying official buildings in at least nine cities and towns.

Another protest leader in Donetsk said the separatists would not leave unless pro-European demonstrators in Kiev’s Maidan Square packed up their camp first.

President Barack Obama cautiously welcomed the Geneva deal, but warned that the US and its allies were ready to impose new sanctions on Russia if the situation failed to improve.

On Friday there were reports of some shooting in Serhiyivka, in Donetsk region.

Ukrainian paratroopers opened fire to remove a protesters’ roadblock in Serhiyivka, Interfax-Ukraine reported, quoting local sources. The details have not been confirmed.

Russia denies fomenting separatism in eastern and southern Ukraine.

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The US is concerned about heightened tension in eastern Ukraine after pro-Russia demonstrators seized government buildings in three eastern cities, Donetsk, Luhansk and Kharkiv.

Secretary of State John Kerry told Russian counterpart Sergei Lavrov in a phone call that any Russian efforts at destabilization “would incur costs”.

They discussed the possibility of direct talks within the next 10 days.

Ukraine is sending security officials to Donetsk, Luhansk and Kharkiv, after buildings there were stormed.

Rebels occupying Donetsk’s regional government building declared a “people’s republic” on Monday and called for a referendum on secession from Ukraine to be held by May 11.

Russia recently annexed the Ukrainian peninsula of Crimea, where the majority of people are Russian speakers, following a referendum that Kiev and the West say was illegal.

Moscow now has thousands of troops massed along its border with eastern Ukraine. Although it insists it has no intention of invading Ukraine, it says it reserves the right to defend ethnic Russians in the country.

The US has warned Russia against stirring separatist sentiment in eastern Ukraine

The US has warned Russia against stirring separatist sentiment in eastern Ukraine

Russia is refusing to recognize the new authorities in Kiev who took power after pro-Moscow President Viktor Yanukovych was ousted in February.

US state department spokeswoman Jennifer Psaki said that in the telephone call, John Kerry “called on Russia to publicly disavow the activities of separatists, saboteurs and provocateurs” in Ukraine.

She said John Kerry noted that the actions in eastern Ukraine “do not appear to be a spontaneous set of events”.

“He made clear that any further Russian efforts to destabilize Ukraine will incur further costs for Russia,” Jennifer Psaki said.

The US and the EU have already imposed targeted sanctions on Russian and Ukrainian individuals over the annexation of Crimea.

Sergei Lavrov, in an article on the website of the UK’s Guardian newspaper, denied Russia was destabilizing Ukraine and accused the West of “groundless whipping-up of tension”.

He also warned authorities in Kiev against any use of force against pro-Russian demonstrators.

Russia’s foreign ministry said it was “closely watching” events in eastern Ukraine, “particularly in Donetsk, Luhansk and Kharkiv regions”.

It reiterated Moscow’s demands for the creation of a federal Ukraine with broader powers for provinces.

“Stop pointing to Russia, blaming it for all of the troubles of today’s Ukraine,” the statement said.

Pro-Russian protesters seized official buildings in Kharkiv, Luhansk and Donetsk on Sunday night. Police said they cleared protesters from the building in Kharkiv but in Luhansk demonstrators had seized weapons.

Ukraine’s interim President Oleksandr Turchynov called the unrest an attempt by Russia to “dismember” Ukraine.

Speaking on national TV, he said it was “the second wave” of a Russian operation to destabilize Ukraine, overthrow the government and disrupt planned elections.

Also on Monday, NATO said it was limiting Russian diplomats’ access to its headquarters in Brussels.

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Pro-Russian protesters have stormed government buildings in eastern Ukrainian cities Donetsk, Luhansk, and Kharkiv.

Protesters clashed with police, waved Russian flags and called for a referendum on independence from Ukraine.

Ukraine’s acting President Oleksandr Turchynov called an emergency security meeting.

The unrest comes amid tensions between Russia and Ukraine over the removal of pro-Moscow President Viktor Yanukovych and Russia’s annexation of Crimea.

In Donetsk, about 50 people broke away from a rally of about 2,000 people in the city centre, and got past a police cordon to enter the regional administration building.

The activists shouted “Donetsk is a Russian city” and raised Russian flags above the building.

Pro-Russian protesters clashed with police, waved Russian flags and called for a referendum on independence from Ukraine

Pro-Russian protesters clashed with police, waved Russian flags and called for a referendum on independence from Ukraine (photo Reuters)

Some called for the region to have a referendum on the region’s independence from Ukraine.

A similar referendum held in the Crimean peninsula in March led to Russia’s annexation.

In Luhansk, near the Russian border, dozens of demonstrators stormed the offices of the state security agency.

Ukrainian media said protesters pelted the building with eggs, a smoke grenade and a firebomb.

Similar incidents were later reported in Kharkiv.

Russia’s President Vladimir Putin has vowed to protect Russian-speaking people in eastern Ukraine.

President Oleksandr Turchynov has cancelled a diplomatic trip to Lithuania to deal with the unrest, according to his press service.

The statement said Oleksandr Turchynov would hold an emergency meeting with the heads of security services.

Tensions are running high between Ukraine and Russia, with thousands of Russian soldiers still said to be deployed along the border.

Viktor Yanukovych was forced from office in February, following months of street protests.

The new administration has faced continuing opposition from Ukraine’s Russian-speaking regions, particularly in the east of the country.

Russia has said it will defend the rights of ethnic Russians in Ukraine – which it claims are under threat under the new government – but has said it will not send troops into the rest of the country.

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McDonald’s has decided to suspend operations at its three Crimean restaurants following ongoing diplomatic tensions in the region.

The company said that it would try to support staff, and hopes to re-open its restaurants in Simferopol, Sevastopol and Yalta as soon as possible.

McDonald’s is the second in the Crimea to alter its operations after heightened tensions between Russia and the west.

Deutsche Post said on Thursday that it was no longer accepting letters for Crimea.

“Due to operational reasons beyond our control, McDonald’s has taken the decision to temporarily close our three restaurants in Simferopol, Sevastopol and Yalta,” McDonald’s said.

A Reuters report said that the company had offered to relocate staff who wished to move to Ukraine.

According to a Kiev-based restaurant consulting group, losing the three restaurants would only result in a 5 percent loss for McDonald’s Ukraine Ltd, where the average daily revenue for each restaurant is about $8,800 (100,000 UAH).

“Calculating net income at about 30 percent of revenue, with the Crimean restaurants remaining closed the American corporation will lose $240,000 [UAH 2.7 million] in profits each month,” Olga Nasonova, director of Restaurant Consulting, told Russia Forbes.

According to Olga Nasonova, McDonald’s has invested about $10 million in the three sites.

A McDonald’s restaurant was first opened on May 24, 1997 in Kiev, and the company now has 79 restaurants in 23 cities across Ukraine.

McDonald’s is the fifth most popular restaurant for Ukrainians, according to Olga Nasonova. There are more than 300 restaurant locations in Russia.

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Ukraine’s former President Viktor Yanukovych says Russia’s annexation of Crimea is “a tragedy” and he hopes it will become part of Ukraine again.

In an interview with the Associated Press and Russian channel NTV, Viktor Yanukovych also said he gave no orders to open fire on protesters in the capital, Kiev.

Viktor Yanukovych fled Kiev after protests in which more than 100 people died.

Russia annexed Crimea in southern Ukraine last month following a controversial referendum branded illegal by Kiev and the West. The peninsula has a majority ethnic Russian population.

Moscow has insisted it has no intention of invading Ukraine.

Ukraine’s former PresidentViktor Yanukovych says Russia's annexation of Crimea is a tragedy

Ukraine’s former PresidentViktor Yanukovych says Russia’s annexation of Crimea is a tragedy (photo Reuters)

Viktor Yanukovych, now in Russia, said he would try to persuade Russian President Vladimir Putin to return Crimea to Ukraine.

“Crimea is a tragedy, a major tragedy,” he said.

“We must set such a task and search for ways to return to Crimea on any conditions, so that Crimea may have the maximum degree of independence possible… but be part of Ukraine.”

Viktor Yanukovych said had he remained in power, he would have tried to prevent the referendum, calling it a “form of protest” against Ukraine’s new pro-Western leaders.

More than 100 people were killed in street protests in Kiev in January and February, many of them by sniper fire, but Viktor Yanukovych said he had no role in their deaths.

He said gunfire came from the opposition camp, not from riot police, and that responsibility for the high number of deaths lay with the opposition.

“I personally never gave any orders to shoot,” he said.

“As far as I know the weapons were never given to those special troops who took part in defending the state buildings and the state bodies – they just complied with their orders.”

He added: “My principles which I always follow are that no authority, no power is worth a drop of blood.”

Unrest in Ukraine began late last year when Viktor Yanukovych rejected an association agreement with the EU in favor of closer ties with Russia.

The interim government in Kiev that took power after Viktor Yanukovych fled has scheduled a presidential and some mayoral elections for May 25.

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NATO has decided to suspend all practical civilian and military cooperation with Russia.

NATO Secretary General Anders Fogh Rasmussen said Russia’s annexation of Ukraine’s Crimea region was the gravest threat to European security for a generation.

There could be no business as usual, he added.

Anders Fogh Rasmussen had earlier categorically denied reports that Russia was pulling its forces back from its border with Ukraine.

Moscow is believed to have massed tens of thousands of troops on Ukraine’s eastern border in recent days, causing alarm in Kiev and the West.

Foreign ministers from the 28-member NATO bloc, gathering in Brussels for their first meeting since Russia’s annexation of Crimea, issued a strongly worded statement in which they condemned Russia’s “illegal” annexation of Ukraine’s Crimea region.

NATO has decided to suspend all practical civilian and military cooperation with Russia

NATO has decided to suspend all practical civilian and military cooperation with Russia

They agreed to suspend NATO co-operation with Russia in a number of bodies but added that dialogue in the NATO-Russia Council could continue, as necessary, at ambassadorial level and above “to allow us to exchange views, first and foremost on this crisis. We will review Nato’s relations with Russia at our next meeting in June”.

They are also looking at options including situating permanent military bases in the Baltic states to reassure members in Eastern Europe. Russia’s actions in Ukraine have caused concern in Estonia, Latvia and Lithuania, which were part of the Soviet Union during the Cold War.

NATO jets will take part in air patrols in the region later in a routine exercise that analysts say has taken on added significance due to the crisis. Several NATO countries, including the UK, US and France, have offered additional military aircraft.

Announcing the formal suspension of ties, Anders Fogh Rasmussen said NATO’s message was clear: it stood by its allies, it stood by Ukraine and it stood by the international system of rules that had developed in recent decades. He urged Russia to be part of a solution “respecting international law and Ukraine’s borders”.

He also said NATO would offer Ukraine greater access to alliance exercises and support the development of its military.

Answering questions from reporters, Anders Fogh Rasmussen said he expected NATO-Russia co-operation over Afghanistan – including counter-narcotics operations – to continue.

Ukrainian ministers were also in Brussels to meet their NATO counterparts. A joint NATO-Ukraine statement issued after their meeting announced that they would intensify co-operation and promote defense reforms in Ukraine through training and other programs.

In Moscow, the Russian foreign ministry warned Kiev against any attempts to join NATO, saying such efforts in the past had “led to a freezing of Russian-Ukrainian political contacts, a <<headache>> in NATO-Russia relations and… a deepening split within Ukrainian society”.

On Monday, Russian President Vladimir Putin told German Chancellor Angela Merkel he had ordered a partial withdrawal of Russian troops from the border with eastern Ukraine.

However, Anders Fogh Rasmussen told reporters: “Unfortunately, I cannot confirm that Russia is withdrawing its troops. This is not what we are seeing.”

Meanwhile, Russian energy firm Gazprom has announced an increase of the price it charges Ukraine for gas from Tuesday.

Gazprom’s chief executive Alexei Miller said the price of Russian gas for Ukraine had gone up to $385.5 per 1,000 cubic metres in the second quarter of 2014 from the previous rate of $268.5.

Alexei Miller added that Ukraine’s unpaid gas bills to Russia stood at $1.7 billion.

According to the German government, Russia’s President Vladimir Putin has ordered a “partial withdrawal” of troops from the border with Ukraine.

Vladimir Putin informed German Chancellor Angela Merkel of the move in a telephone conversation, according to her office.

Thousands of Russian soldiers are still said to be deployed along the border.

Earlier, Ukraine condemned a visit to Crimea by Russia’s PM Dmitry Medvedev and a delegation of government ministers.

Vladimir Putin has ordered a "partial withdrawal" of troops from the border with Ukraine

Vladimir Putin has ordered a “partial withdrawal” of troops from the border with Ukraine (photo Getty Images)

A foreign ministry spokesman in Kiev said the highest-level trip to the Black Sea peninsula by officials from Moscow since its annexation by Russia was a “crude violation” of international rules.

A note protesting against the presence of an official in “the territory of another state without preliminary agreement” had been sent, he added.

Crimeans voted to leave Ukraine for Russia on March 16, in a referendum condemned as illegal by the UN General Assembly.

Dmitry Medvedev announced that he would make Crimea a special economic zone, with tax breaks and reduced bureaucracy to attract investors.

He also vowed to quickly boost salaries and pensions, and to improve education, healthcare and local infrastructure.

Tensions between Russia and the West rose after the overthrow of pro-Kremlin Ukrainian President Viktor Yanukovych in February, following months of street protests.

Russia’s subsequent decision to annex Crimea triggered a crisis in relations.

A Kremlin statement did not mention a partial withdrawal, but said Vladimir Putin and Angela Merkel had discussed “opportunities for international support for the restoration of stability” in Ukraine.

Vladimir Putin had also told Angela Merkel that Ukraine had to enact constitutional reforms to ensure that the interests of all its regions were respected, and called for measures to end the “blockade” of Trans-Dniester, the statement added.

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US Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov have arrived in Paris for crisis talks on Ukraine.

The meeting was hastily arranged after President Vladimir Putin phoned President Barack Obama on Friday.

Russia has annexed Crimea and there are reports of thousands of Russian troops massed close to Ukraine’s borders.

Earlier Sergei Lavrov set out demands for a neutral and federal Ukraine, an idea Kiev called “full capitulation”.

However, Sergei Lavrov has categorically denied any plans for an invasion.

However, the Russian foreign minister has stressed Moscow will protect the rights of ethnic Russians and Russian speakers, after pro-EU protests in Kiev led to the ousting of Ukraine’s President Viktor Yanukovych.

John Kerry and Sergei Lavrov have arrived in Paris for crisis talks on Ukraine

John Kerry and Sergei Lavrov have arrived in Paris for crisis talks on Ukraine

On Sunday, the US ordered its top general in Europe to return early from a trip to Washington.

NATO’s supreme allied commander Europe, General Philip Breedlove, had been due to testify to Congress, but a Pentagon spokesman told Reuters his return was prudent “given the lack of transparency and intent from Russian leadership about their military movements across the border”.

Hours before the Paris talks were due to take place at the Russian ambassador’s residence, Sergei Lavrov told Russian state TV that Ukraine should come up with a new constitution “providing for a federal structure” and neutrality.

The Russian foreign minister said Moscow, the US and EU should act as a support group for Kiev to begin a nationwide dialogue that did not involve the “armed radicals”. Moscow claims that fascists have taken power in Ukraine, jeopardizing the safety of Russian speakers.

In an interview on Saturday, Sergei Lavrov said Russia had been deceived after being promised “there would be no movement of NATO military infrastructure closer to our borders”.

The Ukrainian foreign ministry said it deeply regretted Sergei Lavrov’s “patronizing” remarks.

“At the point of its automatic rifles, this aggressor demands only one thing – Ukraine’s full capitulation, its split and the destruction of Ukrainian statehood,” said a statement carried by Interfax-Ukraine news agency.

NATO’s outgoing Secretary-General Anders Fogh Rasmussen warned on Sunday that Russia’s government was “[flouting] the principle that every state is sovereign and free to choose its own fate”.

Vladimir Putin is also thought to be demanding that Washington accepts Crimea’s independence from Ukraine.

Separately, Moscow is keen to tackle the issue of Trans-Dniester, a pro-Russian separatist region of Moldova on the south-western border of Ukraine. It accuses Ukraine and Moldova of “blockading” the area while the EU and the US stay silent.

US officials are divided over whether Vladimir Putin is seeking to ease tensions or is still planning further military action.

The Pentagon believes Moscow has massed tens of thousands of troops close to Ukraine’s eastern border.

Food, medicines and a field hospital are said to be among the supplies moved into position, officials say, which would not be necessary for any spring military exercise.

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Russian Foreign Minister Sergei Lavrov has said that Moscow has no intention of sending troops into Ukraine.

Sergei Lavrov’s comments came after Vladimir Putin and Barack Obama discussed a possible diplomatic solution to the crisis.

The US-backed plan calls for Russia to halt to its military build-up on the border with Ukraine and withdraw its troops in Crimea to their bases.

Secretary of State John Kerry will meet Russian Foreign Minister Sergei Lavrov in Paris on Sunday.

Reports say John Kerry was flying home from the Middle East on Saturday when he abruptly changed travel plans and instructed his plane to fly to Paris.

Tensions over Ukraine rose following the overthrow of pro-Kremlin Ukrainian President Viktor Yanukovych in February, following months of street protests.

Sergei Lavrov has said that Moscow has no intention of sending troops into Ukraine

Sergei Lavrov has said that Moscow has no intention of sending troops into Ukraine (photo Interfax)

Moscow later intervened in Crimea, a predominantly ethnic Russian region of Ukraine where its troops are stationed, saying the takeover in Kiev was a pro-fascist coup.

Russia then annexed Crimea after the region held a referendum which backed joining the Russian Federation.

Western countries condemned the vote as illegal and imposed sanctions on members of Vladimir Putin’s inner circle.

Meanwhile Ukraine’s interim authorities have been pressing ahead with elections due in May.

On Saturday boxer and opposition leader Vitaly Klitschko pulled out of the race for president.

He announced he was supporting billionaire Petro Poroshenko saying: “The only chance of winning is to nominate one candidate from the democratic forces.”

Former Ukraine’s PM Yulia Tymoshenko has also said she will stand.

In an interview with state TV channel Rossiya 1 on Saturday, Sergei Lavrov said: “We have absolutely no intention of – or interest in – crossing Ukraine’s borders.”

Sergei Lavrov added that Russia was ready to protect “the rights of Russians and Russian-speaking people in Ukraine, using all available political, diplomatic and legal means”.

After the interview was broadcast, it emerged Sergei Lavrov had spoken by phone to John Kerry, in a conversation that Russian officials said was initiated by the US.

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In a new resolution, the UN General Assembly has declared the Moscow-backed referendum that led to Russia’s annexation of Crimea as illegal.

The move comes after the International Monetary Fund (IMF) agreed to a loan deal with Ukraine worth $14-18 billion.

The US Congress also passed legislation on Thursday backing a $1 billion loan guarantee for Ukraine.

Tensions are high between Russia and the West after pro-Russian troops annexed Ukraine’s southern peninsula.

The West has widely condemned the move, with President Barack Obama warning on Wednesday of “deeper” EU and US sanctions against Russia if it carried out further incursions in Ukraine.

UN General Assembly has declared the Moscow-backed referendum that led to Russia's annexation of Crimea as illegal

UN General Assembly has declared the Moscow-backed referendum that led to Russia’s annexation of Crimea as illegal

One hundred countries voted in favor of approving a UN General Assembly resolution declaring the Crimean referendum on March 16 illegal and affirming Ukraine’s territorial integrity.

Eleven nations voted against, with 58 abstentions.

“This support has come from all corners of the world which shows that this (is) not only a regional matter but a global one,” Ukraine’s Foreign Minister Andriy Deshchytsia told reporters after the vote.

Russia’s ambassador to the UN, Vitaly Churkin, said “the fact that almost half” of the UN General Assembly members had not supported the resolution was “a very encouraging trend and I think this trend will become stronger and stronger”.

Given that the resolution was non-binding, the vote was largely symbolic.

But Ukraine hopes the resolution will act as a deterrent and dissuade Moscow from making further incursions into its territory.

Barack Obama said the IMF announcement, which would unlock a further $10 billion in loans for Ukraine, was a “major step forward” to help stabilize the country’s economy and meet the long-term needs of its people.

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The US and EU have decided to imposed “deeper sanctions” against Russia if there are “further incursions into Ukraine”.

President Barack Obama said “energy is obviously a central focus of our efforts”, acknowledging it “will have some impact on the global economy”.

Barack Obama was speaking after talks in Brussels with EU leaders Jose Manuel Barroso and Herman Van Rompuy.

At a news conference the three men spoke of the special relationship between the transatlantic partners.

Barack Obama said: “The world is safer and more just when Europe and America stand as one.”

Herman Van Rompuy, European Council president, called it a “crucial” relationship.

Their talks at the headquarters of the 28-nation EU bloc also covered plans to finalize a transatlantic trade partnership, as well as efforts to tackle Iran’s nuclear program and Syria’s chemical weapons.

Barack Obama praised the EU for the steps it had already taken – along with the US – to penalize Russia. These have included visa bans and asset freezes against a number of Russian officials.

Barack Obama was speaking after talks in Brussels with EU leaders Jose Manuel Barroso and Herman Van Rompuy

Barack Obama was speaking after talks in Brussels with EU leaders Jose Manuel Barroso and Herman Van Rompuy

He said those actions were taken after Russian forces moved in to annex Crimea, and they now must consider “the potential for additional, deeper sanctions” should Moscow attempt to do the same in other parts of Ukraine.

“We recognize that in order for Russia to feel the impact of these sanctions, it will have some impact on the global economy as well as on all the countries represented here today,” Barack Obama said.

Acknowledging that some EU countries are more dependent than others on Russia for energy, he said “this entire event has pointed to the need for Europe to look at how it can further diversify its energy sources”.

Barack Obama said NATO must remain a “regular presence” in those eastern European countries who are now feeling vulnerable to possible Russian intervention. He also voiced concern at the falling defense budgets of some countries.

Herman Van Rompuy called Russia’s actions in Crimea “a disgrace in the 21st century, and we will not recognize it”.

Ukraine’s southern peninsula of Crimea was annexed by Russia earlier this month after a referendum which Kiev and the West considered illegal.

It follows the ousting of Ukraine’s pro-Russian President Viktor Yanukovych at the end of February following months of bloody protests over his decision to seek greater ties with Moscow rather than the EU.

Tensions between Russia and Ukraine remain high. Moscow accused Ukrainian officials on Wednesday of preventing Russian commercial pilots and crew from disembarking at Kiev International Airport.

This is Barack Obama’s first official visit to the EU headquarters in Brussels.

He began his trip to Belgium with a visit to a cemetery in Flanders, where US soldiers killed in World War One are buried.

He paid tribute to fallen US soldiers at the American Cemetery and Memorial in Waregem, to mark 100 years since the start of WW1. Belgian King Philippe and Prime Minister Elio di Rupo were also in attendance.

Following his talks with Herman Van Rompuy and EU Commission President Jose Manuel Barroso, Barack Obama will meet NATO Secretary-General Anders Fogh Rasmussen.

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Russia and Ukraine are holding talks for the first time since Russia’s move into Crimea triggered a diplomatic crisis.

Russian Foreign Minister Sergei Lavrov says his country is unfazed by the prospect of being expelled from the G8.

Other members of the group of industrialized countries have agreed not to hold a planned summit in Russia.

The move comes as Ukrainian troops are leaving Crimea after Russian forces seized military bases in the region.

Earlier this month, Russia annexed Crimea after a referendum considered illegal by Kiev and the West.

Russian Foreign Minister Sergei Lavrov has held talks with his Ukrainian counterpart, Andriy Deshchytsia, for the first time since Crimea annexation

Russian Foreign Minister Sergei Lavrov has held talks with his Ukrainian counterpart, Andriy Deshchytsia, for the first time since Crimea annexation

Sergei Lavrov met Ukraine’s interim Foreign Minister Andriy Deshchytsia on the sidelines on a security summit in The Hague on Monday.

“We set forth our vision to establish good national dialogue taking into account all residents of Ukraine,” Sergei Lavrov told a news conference.

He also said he saw “no great tragedy” if Moscow was expelled from the Group of Eight (G8) club of leading nations for its annexation of Ukraine’s Crimean peninsula.

“If our Western partners think that this format has outlived itself, then so be it. At the very least, we are not trying to cling on to this format,” he told reporters.

The remaining members of the powerful body, who also met on the sidelines of the nuclear summit, agreed that the planned G8 summit in Russia would be called off because Russia’s aggression toward Ukraine.

Several G8 members have also called for Russia’s membership of the group to be suspended.

Secretary of State John Kerry also met Sergei Lavrov on Monday and expressed “strong concern” about the massing of Russian forces on the Ukrainian border, Reuters quoted a senior US state department official as saying.

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