U.S. Secretary of State John Kerry said Russia is fueling separatist unrest in Eastern Ukraine that could be a "contrived crisis" to justify military intervention and that Moscow faces tougher banking, mining, and energy sanctions if it does not stop undermining Ukraine.
Kerry said President Barack Obama is preparing a far-tougher series of sanctions if Russia does not step back from what he calls its "clear and unmistakable involvement" in destabilizing Eastern Ukraine.
"So Russia has a choice: to work with the international community to help build an independent Ukraine that could be a bridge between East and West not the object of a tug of war, that could meet the hopes and aspiration of all Ukrainians; or they could face greater isolation and pay the cost for their failure to see that the world is not a zero-sum game," he told the Senate Foreign Relations Committee Tuesday.
Pro-Russian separatists in southeastern regions are demanding referenda on splitting with Ukraine, the same kind of vote that took place last month in Crimea after Russian troops took control there.
Russian Foreign Minister Sergei Lavrov said those regions should be included in talks next week with the United States, European Union and Ukrainian government.
Secretary Kerry told U.S. lawmakers it is "not a small matter" that Russia has agreed to those talks. But before then, he says Moscow must disavow separatist actions, pull back troops along the border, and demonstrate that they will do what is necessary to de-escalate.
Republican Senator Bob Corker said the Obama administration is inconsistent by criticizing Russian action while agreeing to include them in talks on Ukraine's future.
"We castigate them on one side. On the other hand we are exchanging paper with them. I am confused about what our policy really is," he told the secretary.
Kerry responded that Washington's preference is a negotiated settlement, but it will not hesitate to use "21st century tools to hold Russia accountable for 19th century behavior."
"These efforts are as ham-handed as they are transparent, frankly," he said. "And quite simply what we see from Russia is an illegal and illegitimate effort to destabilize a sovereign state and create a contrived crisis with paid operatives across an international boundary."
NATO chief Anders Fogh Rasmussen says Moscow's intervention in Ukraine would be a "historic mistake" that would further isolate Russia from the world.
Russia's Foreign Ministry is calling for provisional authorities in Kyiv to halt what it called "military preparations" in southeast regions that could lead to civil war.