Merkel warns of ‘catastrophe’ as Russia holds new war games on Ukraine border

Russia launched new military exercises near its border with Ukraine on Thursday, showing no sign of backing down on plans to annex its neighbour’s Crimea region despite a stronger than expected drive for sanctions from the EU and United States.

In an unusually robust and emotional speech, German Chancellor Angela Merkel warned of "catastrophe" unless Russia changes course, while a man was killed in Ukraine in fighting between rival protesters in a mainly Russian-speaking city.

At the UN Security Council, the United States circulated a draft resolution that would declare illegal Sunday’s planned referendum on independence for Ukraine’s Crimea region.

But Russia, one of the Security Council’s five veto-wielding permanent members, made clear it opposed the draft.

"Russia announced they will kill it," a senior Western diplomat told Reuters.

In Berlin, Merkel removed any suspicion she might try to avoid a confrontation with Russian President Vladimir Putin.

"We would not only see it, also as neighbours of Russia, as a threat. And it would not only change the European Union’s relationship with Russia," she told parliament. "No, this would also cause massive damage to Russia, economically and politically."