The East-West faceoff over Ukraine escalated dramatically on Tuesday, with Russian lawmakers authorising President Vladimir Putin to use military force outside his country and US President Joe Biden and European leaders responding by slapping sanctions on Russian oligarchs and banks.

Both leaders signalled that an even bigger confrontation could lie ahead. Putin has yet to unleash the force of the 150,000 troops massed on three sides of Ukraine, while Biden held back on even tougher sanctions that could cause economic turmoil for Russia but said they would go ahead if there is further aggression.

The measures, accompanied by the repositioning of additional US troops to the Baltic nations on Nato’s eastern flank bordering Russia, came as Russian forces rolled into rebel-held areas in eastern Ukraine after Putin said he was recognising the independence of the separatist regions in defiance of US and European demands.

Speaking at the White House, Biden said the Kremlin had flagrantly violated international law in what he called the “beginning of a Russian invasion of Ukraine”. He warned of more sanctions if Putin went further.

“We are united in our support of Ukraine,” Biden said. “We are united in our opposition to Russian aggression.” When it comes to Russian claims of a justification or pretext for an invasion, Biden said, “None of us should be fooled. None of us will be fooled. There is no justification.”

Hopes for a diplomatic resolution to the threat of invasion, which US officials have for weeks portrayed as all but inevitable, appeared to evaporate. US Secretary of State Antony Blinken cancelled plans for a Thursday meeting in Geneva with his Russian counterpart, saying it would not be productive and that Russia’s actions indicated Moscow was not serious about a peaceful path to resolving the crisis.

Western nations sought to present a united front, with more than two dozen European Union members unanimously agreeing to levy their own initial set of sanctions against Russian officials. Germany also said it was halting the process of certifying the Nord Stream 2 gas pipeline from Russia — a lucrative deal long sought by Moscow but criticised by the US for increasing Europe’s reliance on Russian energy.

The US, meanwhile, moved to cut off Russia’s government from Western finance, sanctioning two of its banks and blocking it from trading in its debt on American and European markets. The administration’s actions hit civilian leaders in Russia’s leadership hierarchy and two Russian banks considered especially close to the Kremlin and Russia’s military, with more than $80 billion in assets. That includes freezing all of those banks’ assets under US jurisdictions.

Biden, though, did hold back some of the broadest and toughest of the financial penalties contemplated by the US, including sanctions that would reinforce the hold that Germany put on any startup of the Nord Stream 2 pipeline; an export ban that would deny Russia US high tech for its industries and military; and sweeping bans that could cripple Russia’s ability to do business with the rest of the world.

Biden said he was moving additional US troops to the Baltics, though he described the deployments as purely “defensive”, asserting, “We have no intention of fighting Russia.” The US is sending about 800 infantry troops and 40 attack aircraft to Nato’s eastern flank from other locations within Europe, according to a senior defence official. In addition, a contingent of F-35 strike fighters and AH-64 Apache attack helicopters will also be relocated.

Three conditions to end crisis

Earlier on Tuesday, members of Russia’s upper house, the Federation Council, voted unanimously to allow Putin to use military force outside the country — effectively formalising a Russian military deployment to the rebel regions, where an eight-year conflict has killed nearly 14,000 people.

Shortly afterwards, Putin laid out three conditions to end the crisis that has threatened to plunge Europe back into war, raising the spectre of massive casualties, energy shortages across the continent and global economic chaos.

Putin said the crisis could be resolved if Kyiv recognises Russia’s sovereignty over Crimea, the Black Sea peninsula that Moscow annexed after seizing it from Ukraine in 2014, renounces its bid to join Nato and partially demilitarises. The West has decried the annexation of Crimea as a violation of international law and has previously flatly rejected permanently barring Ukraine from Nato.

Asked whether he has sent any Russian troops into Ukraine and how far they could go, Putin responded: “I haven’t said that the troops will go there right now.” He added that “it’s impossible to forecast a specific pattern of action — it will depend on a concrete situation as it takes shape on the ground.”

West hits back with sanctions

The EU announced initial sanctions aimed at the 351 Russian lawmakers who voted for recognising the two separatist regions in Ukraine, as well as 27 other Russian officials and institutions from the defence and banking sectors. They also sought to limit Moscow’s access to EU capital and financial markets.

With tensions rising and a broader conflict looking more likely, the White House began referring to the Russian deployments in the region known as the Donbas as an “invasion” after initially hesitating to use the term — a red line that Biden had said would result in severe sanctions.

“We think this is, yes, the beginning of an invasion, Russia’s latest invasion into Ukraine,” Jon Finer, principal deputy national security adviser, said on CNN. “An invasion is an invasion, and that is what is underway.”

The White House announced limited sanctions targeting the rebel regions on Monday evening soon after Putin said he was sending in troops. A senior Biden administration official, who briefed reporters about those sanctions, noted “that Russia has occupied these regions since 2014” and that “Russian troops moving into Donbas would not itself be a new step.”

Western leaders have long warned Moscow would look for cover to invade — and just such a pretext appeared to come on Monday when Putin recognised the independence of the Donetsk and Luhansk separatist regions. The Kremlin then raised the stakes further by saying that recognition extends even to the large parts of those two regions now held by Ukrainian forces, including the major Azov Sea port of Mariupol. He added, however, that the rebels should eventually negotiate with Ukraine.

Condemnation from around the world was quick. In Washington, lawmakers from both parties in Congress vowed continued US support for Ukraine, even as some pushed for swifter and even more severe sanctions on Russia. Senators had been considering a sanctions package but held off as the White House pursued its strategy.

Ukrainian President Volodymyr Zelenskyy said he would consider breaking diplomatic ties with Russia, and Kyiv recalled its ambassador in Moscow.

If Putin pushes farther into Ukraine, Nato chief Jens Stoltenberg insisted the West would move in lockstep. “If Russia decides once again to use force against Ukraine, there will be even stronger sanctions, even a higher price to pay,” he said.

British Prime Minister Boris Johnson said the UK would slap sanctions on five Russian banks and three wealthy individuals. He warned a full-scale offensive would bring “further powerful sanctions”.

Zelenskyy said he was calling up some of the country’s military reservists but added there was no need for a full military mobilisation.

In an address to the nation, Zelenskyy said his decree applied only to those assigned to the so-called operational reserve, which is typically activated during ongoing hostilities and covers “a special period of time”, without clarifying what that means.

“Today there is no need for a full mobilisation. We need to quickly add additional staff to the Ukrainian army and other military formations,” he said. The head of the National Security and Defence Council, Oleksii Danilov, said earlier this year that Ukraine can call up to 2.5 million people.

Putin says Russia's interests 'non-negotiable'

Russian President Vladimir Putin said on Wednesday that Moscow was ready to look for “diplomatic solutions” amid raging tensions with the West over Ukraine but stressed that the country's interests were non-negotiable.

“Our country is always open for direct and honest dialogue, for the search for diplomatic solutions to the most complex problems,” Putin said in a video address to mark the Defender of the Fatherland Day, a public holiday in Russia.

But he added: “The interests of Russia, the security of our citizens, are non-negotiable for us.”

In the video address, Putin congratulated the country's men and said he was certain of the “professionalism” of the Russian military and that they will stand up for the country's national interests.

He praised the battle-readiness of the Russian army and said the country would continue to develop state-of-the-art weapons.

“We will continue to develop advanced weapon systems, including hypersonic and those based on new physical principles, and expand the use of advanced digital technologies and elements of artificial intelligence,” the Kremlin strongman added.

“Such complexes are truly the weapons of the future, which significantly increase the combat potential of our armed forces.”