President Vladimir Putin told his government to draw up a plan to replace Ukrainian imports and said Russia couldn't subsidise its cash-strapped neighbour forever - a move that could sharply hurt Ukraine, which is already on the verge of bankruptcy.
Russia "doesn't accept the powers-that-be in Kiev as legitimate, but continues to provide economic support and subsidise Ukraine's economy with hundreds of millions, billions of dollars", Putin told a cabinet meeting outside Moscow yesterday. "This situation, of course, can't go on forever."
Putin's remarks came as four-way talks between US and EU diplomats, Russia and Ukraine was announced to defuse Europe's worst security crisis in decades. The talk looks set for next Thursday in Vienna.
EU foreign policy chief Catherine Ashton's office on Tuesday confirmed she would meet US Secretary of State John Kerry, Russian Foreign Minister Sergei Lavrov and his Ukrainian counterpart Andriy Deshchytsya in a European capital.
Further details of the meeting, which will be held at an unspecified location in Europe, were still being worked out, an EU source said.
Separately, an EU diplomat said the EU planned to set up a special support group to help Ukraine stabilise its precarious economy and political situation.
In a phone call on Monday, Kerry and Lavrov had discussed convening direct talks in the next 10 days between Ukraine, Russia, the United States and the European Union to defuse tensions, the US State Department said.
The EU's confirmation of the meeting came soon after Kerry accused Russian agents and special forces of stirring separatist unrest in eastern Ukraine and said Moscow could be trying to prepare for military action as it had in Crimea.
Authorities in Kiev meanwhile warned they were prepared to use force to clear several government buildings seized by pro-Russian separatists in the east of the country.
Interior Minister Arsen Avakov said the stand-off in Luhansk and the two neighbouring Russian-leaning regions of Donetsk and Kharkiv must be resolved within the next two days.
"I want to repeat that there are two options: political settlement through negotiations and the use of force," Avakov said. "We are ready for both options."
As he spoke, anti-government protesters in Luhansk erected high barricades along a thoroughfare running in front of the security service premises.
All the cities affected by the uprisings are in Ukraine's industrial Russian-speaking heartland in the east, which has a large population of ethnic Russians and where ties to Russia are strong. Many residents are suspicious of the government that took power in February.
In a sign of the public relations battle between the two nations, some Russian media - including state-run RIA Novosti - switched their description of those occupying the buildings from pro-Russian protesters to "supporters of federalisation".
Protesters continued to occupy the headquarters of Ukraine's Security Service in the eastern city of Luhansk, with hundreds camped outside and shouting "Putin! Putin!" overnight.
The security agency had said the separatists inside the building, armed with explosives and other weapons, were threatening hostages inside. The hostages - 56 in all - were allowed to leave the building overnight, it said. Local police disputed that claim, however, saying there had been no hostages.
Serhiy Tyhipko, a Ukrainian lawmaker associated with ousted pro-Russian president Viktor Yanukovych's government, urged the new authorities in Kiev not to storm the building in Luhansk but rather to negotiate a peaceful resolution. He said the protesters wanted Ukraine to turn into a federal state with broad regional autonomy, not for their region to secede.
"The people are not bringing up the issue of breaking off from Ukraine and are not calling for the help of foreign countries," Tyhipko said on his Facebook page.
But turning Ukraine into a federation is Russia's key demand — one that Ukraine's new government has refused to discuss, calling it a precursor to a break-up.
Associated Press, Reuters