US threatens Russia with ‘massive economic measures’ over Ukraine

The US and its allies say they have coalesced around stringent economic penalties and defensive measures on Nato’s eastern flank should Russia up the ante in Ukraine

In this photo released by the Russian Defense Ministry Press Service, a pair of Russian Su-35 fighter jets fly over Russia last year. AP

The United States on Tuesday threatened to impose “massive economic measures” on Russia and to shore up the defence of Nato’s eastern flank should it use the more than 100,000 troops it has amassed on its border to intensify the conflict in Ukraine.

"We will respond with massive economic measures, including those that have not been used before," US Undersecretary of State for Political Affairs Victoria Nuland told reporters at the State Department, threatening "very significant" damage to the Russian economy and financial system.

Secretary of State Antony Blinken reiterated the US vow to retaliate against Russia with harsh economic penalties during a phone call on Tuesday with Ukrainian Foreign Minister Dmytro Kuleba.

State Department spokesman Ned Price noted in a readout of the call that Mr Blinken also vowed to "reinforce Nato's presence in frontline allied states and to increase defensive assistance to Ukraine" should Russia escalate the conflict.

Julianne Smith, the US ambassador to Nato, issued the same warning during a separate press call amid a week of high-profile diplomatic meetings alliance members and Russia.

“We stand united to deter threats against Nato allies and further Russian aggression against our partners in Europe,” said Ms Smith.

"Should Russia follow the path of confrontation and military action, we’ve made it clear to the Kremlin that we will respond resolutely, including with a range of high-impact economic measures.”

“As an alliance, we are prepared to reinforce Nato’s defence on the eastern flank, and we are prepared to impose severe costs for further Russian aggression in Ukraine."

Ms Nuland noted that the economic penalties on Russia would include a previous agreement with Germany to terminate its agreement with Moscow over the Nord Stream 2 oil pipeline.

She said Washington is working with the Germans "to slow their consideration of implementation of the pipeline.

"This German government has taken significant steps to do that, and they've also recommitted to our previous commitment we've had with the previous government with regards to what happens to Nord Stream 2-- namely it's suspended if Russia aggresses against Ukraine."

Ms Nuland travelled to Capitol Hill on Monday to urge senators to vote against a sanctions bill on Nord Stream 2, introduced by Republican Ted Cruz, later this week. She argued that it would disrupt carefully calibrated US diplomacy with Germany on the issue.

The US warnings to Russia came after deputy secretary of state Wendy Sherman met with Nato Secretary General Jens Stoltenberg in Brussels on Tuesday to prepare for high-level talks between the alliance and Moscow scheduled for Wednesday.

Ms Sherman also met with the European Union’s political and security committee and will gather with the Organisation for Security and Cooperation in Europe on Thursday.

A Ukrainian soldier in on the frontlines against Russia-backed separatists near Lugansk village, in Ukraine's Donetsk region. AFP

Her consultations with Nato and European allies came after she met bilaterally with Russian deputy foreign minister Sergie Ryabkov in Geneva on Monday.

“I stress all these consultations to emphasise that the United States remains in lockstep with all of our allies and partners,” said Ms Smith.

“As [Ms Sherman] herself noted last night, we will not make decisions about Ukraine without Ukraine, about Europe without Europe or about Nato without Nato.”

The US has sought to portray a united front among Nato allies in advance of its consultations with Russia, categorically rejecting Moscow's demand that it agrees to halt future expansion of the alliance to palaces such as Ukraine.

Ms Nuland noted that the US and Europe have "a common understanding of the intensive financial measures we'd need to take, and also now in the context of export restrictions, that will have a painful impact on Russia."

"As we've done in the past, the US may take one set of measures and Europe and other allies may take parallel measures that are not exactly the same but also painful to Russia because they have different economic exposure," she said.

Ms Smith also reiterated that the US and its European partners prefer a diplomatic solution to the Ukraine conflict despite their vow to respond to any Russian military escalations.