The European Union agreed on a framework on Wednesday for its first sanctions on Russia since the Cold War, a stronger response to the Ukraine crisis than many expected and a mark of solidarity with Washington in the drive to make Moscow pay for seizing Crimea.
U.S. President Barack Obama warned Russia it faced costs from the West unless it changed course in Ukraine, and pledged to "stand with Ukraine" as he met with the country's new prime minister in Washington.
"We will never surrender," Ukrainian Prime Minister Arseny Yatseniuk vowed as he and Obama met in a White House show of support for the embattled leader.
But Obama and Yatseniuk outlined a potential diplomatic opening that could give Russians a greater voice in the disputed Crimean region, where a referendum is scheduled for Sunday on whether it should become part of Russia.
Yatseniuk told a forum in Washington after his White House meeting that his interim government was ready to have a dialogue and negotiations with Russia about Moscow's concerns for the rights of ethnic Russians in Crimea.
The EU sanctions, outlined in a document seen by Reuters, would slap travel bans and asset freezes on an as-yet-undecided list of people and firms accused by Brussels of violating the territorial integrity of Ukraine.
German Chancellor Angela Merkel said the measures would be imposed on Monday unless diplomatic progress was made.
A Russian stock index dropped 2.6% and the central bank was forced to spend $1.5 billion U.S. to prop up the ruble as investors confronted the prospect that Russia could face unexpectedly serious consequences for its plans to annex Crimea.
Russian troops have seized control of the Black Sea peninsula, where separatists have taken over the provincial government and are preparing for Sunday's referendum, which the West calls illegal.
The measures outlined by the EU are similar to steps already announced by Washington, but would have far greater impact because Europe buys most of Russia's oil and gas exports, while the United States is only a minor trade partner. The EU's 335 billion euros ($465 billion U.S.) of trade with Russia in 2012 was worth about 10 times that of the United States.
