US President Barack Obama on Sunday said the United States and Europe must join forces to impose sanctions on Russia to stop it destabilising Ukraine, where armed pro-Russian separatists were for a third day holding eight international observers prisoner.
Washington and Brussels are expected, possibly as early as Monday, to name new people and firms close to Russian President Vladimir Putin who will be hit by punitive measures, but there is no consensus yet on wider economic sanctions.
Speaking during a visit to Malaysia, Obama said any decision on whether to slap sanctions on sectors of the Russian economy at a later time would depend on whether the United States and its allies could find a unified position on how to proceed.
"We're going to be in a stronger position to deter Mr. Putin when he sees that the world is unified and the United States and Europe is unified rather than this is just a U.S.-Russian conflict," Obama told reporters.
The stand-off over Ukraine, an ex-Soviet republic of about 45 million people, has dragged relations between Russia and the West to their lowest level since the end of the Cold War.
Obama said Russia had not "lifted a finger" to get pro-Russian separatist rebels in Ukraine to comply with an international agreement to defuse the crisis.
"In fact, there's strong evidence that they've been encouraging the activities in eastern and southern Ukraine," he said.
Washington is more hawkish on further sanctions than Brussels, and this has caused a degree of impatience among some U.S. officials with the European response.
Many European countries are worried about the risks of imposing tougher sanctions, not least because Europe has extensive business ties with Moscow and imports about a quarter of its natural gas from Russia.
British Foreign Secretary William Hague said that in the coming days there would be "an expansion of existing sanctions, measures against individuals or entities in Russia".
Since Ukrainians demanding closer links with Europe toppled their pro-Russian president in February, Russia has annexed Ukraine's Crimean peninsula and massed tens of thousands of troops on the country's eastern border. NATO has responded by sending reinforcements to eastern Europe.
The Western-backed government in Kiev accuses the Kremlin of planning to invade the east of Ukraine, and of preparing the ground by training and supporting the armed separatists who have seized about a dozen public buildings around the region.
Moscow denies interfering. It says Ukraine's east is rising up in a spontaneous protest against what it calls an illegitimate government in Kiev which is mounting a "criminal" operation to suppress dissent.
Separatists who control the eastern Ukrainian city of Slaviansk are holding eight European observers who were in the area under the auspices of the Vienna-based Organisation for Security and Cooperation in Europe (OSCE).
The observers, from Germany, Sweden, Denmark, Poland and the Czech Republic, are accused by their captors of spying for NATO and using the OSCE mission as a cover.
Vyacheslav Ponomaryov, de facto mayor of Slaviansk, told reporters on Saturday: "They were soldiers on our territory without our permission. Of course they are prisoners."
He said the separatists were ready to exchange the captured monitors for fellow rebels now in the custody of the Ukrainian authorities.
"Prisoners have always been coins to exchange during times of war. It's an international practice," he said.
European capitals condemned the detention of the observers and issued demands for them to be released immediately. In Kiev, the government said one of the group was ill and needed urgent medical attention. An OSCE delegation was due to meet Ponomaryov on Sunday.
Russia, an OSCE member, said it would do what it could to help get the observers released.
Ponomaryov said he had not been in contact with the Russian authorities about the observers. He said they were being provided with food and medicine, and that all their needs were being taken care of.
He said his men had overnight captured three officers with Ukraine's state security service who, he said, had been mounting an operation against separatists in the nearby town of Horlivka.
The Russian television station Rossiya 24 showed footage it said was of a colonel, a major and a captain. They were shown seated, with their hands behind their backs, blindfolded, and wearing no trousers. At least two had bruises on their faces.
Ukraine's State Security Service said the three had been part of a unit which went to Horlivka to arrest a suspect in the murder of Volodymyr Rybak, a pro-Kiev councillor whose body was found last week in a river near Slaviansk.
On Saturday, German Foreign Minister Frank-Walter Steinmeier spoke by telephone with Sergei Lavrov, his Russian opposite number, about possible diplomatic steps to defuse the crisis.
There was no word what these might be. Two previous attempts to negotiate a way out of the stand-off - in Kiev in February and in Geneva earlier this month - produced fragile deals which were then overtaken by events on the ground.
The diplomatic discussions were taking place against a backdrop of growing military tensions.
Ukrainian Prime Minister Arseny Yatseniuk said Russian military aircraft entered Ukrainian airspace seven times between Friday night and Saturday morning.
"The only reason is to provoke Ukraine ... and to accuse Ukraine of waging war against Russia," the prime minister told reporters before cutting short a visit to Rome, where he met Pope Francis and asked him to pray for Ukraine.
In a bid to reassure nervous NATO allies on Russia's western flank, Washington deployed 150 paratroopers to Lithuania on Saturday. A total of 600 U.S. troops have now arrived in Poland and the former Soviet Baltic states.
"As threats emerged, we see who our real friends are," Lithuanian President Dalia Grybauskaite said as she greeted the troops at the Siauliai air base.
(Additional reporting by Maria Tsvetkova in Donetsk, Ukraine, Natalia Zinets in Kiev, Nigel Stephenson and Lidia Kelly in Moscow, Kylie MacLellan in London and Andrius Sytas in Vilnius; Writing by Christian Lowe; Editing by Giles Elgood)
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