President Vladimir Putin says Russia has reserved the right to use all options in Ukraine, but that Moscow would use force only as a last resort.
President Vladimir Putin said on Tuesday Russia reserved the right to use all options in Ukraine to protect compatriots living in "terror" but that Moscow would use force only as a last resort.
Breaking his silence on events in Ukraine since the removal of Russian-backed President Viktor Yanukovich, Putin skirted questions about Russian servicemen taking control of the Crimea region, saying armed men who seized buildings were local forces.
He also distanced himself from Yanukovich and said retaliation against Russia over Ukraine would be counterproductive, warning that anyone imposing sanctions should think of the damage they would incur.
"There can be only one assessment of what happened in Kiev, in Ukraine in general. This was an anti-constitutional coup and the armed seizure of power. No one argues with this. Who can argue with it?" said Putin, looking relaxed as he sat before a small group of reporters at his residence near Moscow.
"As for bringing in forces. For now there is no such need but such a possibility exists," he said.
"What could serve as a reason to use military force? It would naturally be the last resort, absolutely the last."
Putin said Russia would not encourage separatist moves in Ukraine, where many people in eastern and southern regions are Russian speakers and have closer ties to Russia than to the leaders in Kiev seeking stronger ties with the European Union.
"We are not going to meddle. But we think all Ukraine's citizens, no matter where they live, should have the same rights to ... determine the future of their country," he said.
He said Russia was ready to host a G8 summit as planned this year but if Western leaders did not want to come "they don't need to".
He also said a threat to pull Russia's ambassador out of Washington over the events in Ukraine, which Putin blames on Western interference, would be a last resort and that he would not like this to happen.
Denying rumours on the internet that Yanukovich had died of a heart attack,Putin said he had met the ousted leader two days ago in Russia, where he fled following his removal form power by Parliament.
He also said he had told Yanukovich that he had no political future.
Meanwhile, US Secretary of State John Kerry will propose ways for a negotiation between Russia and Ukraine to be overseen by a multilateral organisation when he visits Kiev on Tuesday.
Nato allies will hold emergency talks on the crisis on Tuesday, for the second time in three days.
In further pressure on Kiev, Russia's top gas producer Gazprom said it would remove a discount on gas prices for Ukraine from April, Interfax news agency cited the company's chief as saying on Tuesday.
However, Gazprom chief Alexei Miller also said the company could offer Ukraine a loan of $2-3-billion to pay off the country's debt of more than $1.5-billion after Ukraine said it was unable to pay in full for gas deliveries in February, Interfax news agency said.
Putin said at the weekend that he had the right to invade Ukraine to protect Russian interests and citizens after Yanukovich's downfall following months of popular unrest. Russia's Black Sea Fleet has a base in Crimea.
But the military exercises in central and western Russia, which began last week and raised fears that Russia might send forces to Russian-speaking regions of east Ukraine, were completed on schedule. "The supreme commander of the armed forces of the Russian Federation, Vladimir Putin, gave the order for the troops and units, taking part in the military exercises, to return to their bases," Kremlin spokesperson Dmitry Peskov was quoted as saying by Russian news agencies.
Although the end of the exercises had been planned, the announcement sent a more conciliatory message than much of the rhetoric from Russian officials, who say Moscow must defend national interests and those of compatriots in Ukraine.
Putin is dismayed that the new leadership in Ukraine, the cradle of Russian civilisation, has plotted a course towards the European Union and away from what had been Moscow's sphere of influence during generations of Soviet Communist rule.
Moscow's UN envoy told a stormy meeting of the security council that Yanukovich had sent a letter to Putin requesting he use Russia's military to restore law and order in Ukraine.
Ukraine said observers from the Organisation for Security and Cooperation in Europe, a pan-European security body, would travel at its invitation to Crimea in an attempt to defuse the military standoff there.
The United States has begun spelling out its response to Russia's incursion, announcing a suspension of all military engagements with Russia, including military exercises and port visits, and freezing trade and investment talks with Moscow.
President Barack Obama met national security advisers on Monday to discuss how the United States and its allies could "further isolate" Russia, a White House official said. "Over time this will be a costly proposition for Russia," Obama told reporters.
The state department said the US was preparing to impose sanctions on Russia, although no decisions had yet been made.
Members of the US Congress are looking at options including sanctions on Russia's banks and freezing assets of Russian public institutions and private investors, but they said they wanted European states to step up their involvement.
A Kremlin aide said that if the United States did impose sanctions, Moscow might drop the dollar as a reserve currency and refuse to repay loans to US banks.
An International Monetary Fund mission is in Kiev to discuss financial assistance for Ukraine to help it avoid bankruptcy.
Kiev's new leaders want a financial package worth at least $15-billion, with a quick release of some of the cash.
The European Union has threatened unspecified "targeted measures" unless Russia returns its forces to their bases and opens talks with Ukraine's new government.
Western leaders have sent a barrage of warnings to Putin against armed action, threatening economic and diplomatic consequences, but are not considering a military response.
There was no immediate sign of any new movements by Russian forces in Crimea overnight although Ukraine's acting president said on Monday that Russia's military presence on the Black Sea peninsula was growing.
Ukrainian officials said Russia was building up armour on its side of the 4.5km-wide Kerch strait between the Crimean peninsula and southern Russia.
Russian forces shipped three truckloads of troops by ferry into Crimea after taking control of the border post on the Ukrainian side, Ukraine's border guards spokesperson said.
Kiev's UN ambassador, Yuriy Sergeyev, said Russia had deployed roughly 16 000 troops to Crimea since last week. Both sides have avoided bloodshed, but the market turmoil on Monday highlighted damage the crisis could wreak on Russia's vulnerable economy, making it harder to balance the budget and potentially undermining business and public support for Putin.
EU foreign ministers held out the threat of sanctions if Moscow fails to withdraw its troops from Ukraine, while offering to mediate, alongside other international bodies.
EU leaders will hold an emergency summit on Thursday. – Reuters