U.S., EU Threaten 'Very Serious' Response over Crimea as Kiev Sees Chance to Resolve Crisis Peacefully

Washington warned Russia on Thursday it was preparing a "very serious" response together with Europe to a breakaway vote in Ukraine's Crimea that has sparked the most explosive East-West standoff since the Cold War, as Kiev said it was still possible to resolve the crisis with Russia peacefully.

U.S. Secretary of State John Kerry said Russia needed to show immediate flexibility over the Black Sea peninsula's Sunday referendum on switching over to Kremlin rule -- a vote backed by Moscow but not recognized by Kiev or much of the international community.

"If there is no sign of any capacity to be able to move forward and resolve this issue, there will be a very serious series of steps on Monday in Europe and here with respect to the options that are available to us," Kerry told lawmakers in Washington.

His blunt comments came shortly after Ukraine's parliament voted to set up a huge volunteer force that could keep Russian troops from advancing beyond the region of two million people they seized at the start of the month.

Russia on Thursday launched its own military maneuvers at its neighbor’s doorstep and also dispatched fighter jets to Belarus in a show of military muscle that betrayed no willingness to compromise.

The tangible danger of war breaking out on the EU's eastern frontier prompted German Chancellor Angela Merkel to tell Russian President Vladimir Putin his country faced long-term political and economic damage unless he showed an immediate willingness to compromise.

U.S. President Barack Obama had a day earlier also thrown his full weight behind the new Ukraine's leaders' decision to distance themselves from Putin and seek a closer alliance with the European Union.

National Security and Defense Council chief Andriy Parubiy said Ukraine's new 60,000-strong National Guard would "ensure state security, defend the borders, and eliminate terrorist groups" -- a term many in Kiev use to describe the well-armed militias who patrol Crimea alongside Russian troops.

Ukraine's conventional army of 130,000 soldiers -- half of them conscripts with aging equipment -- is dwarfed by an 845,000-strong Russian force that is backed by nuclear arms.

Russia's tanks and artillery units were training on Thursday across three regions neighboring Ukraine while 4,000 paratroopers began performing drills in the central region of Rostov.

The Russian defense ministry said it was "increasing the intensity of field training exercises" that involve more than 8,000 artillerymen an undisclosed number of other soldiers.

Moscow also confirmed sending six fighters and three transport jets to Belarus in response to NATO's decision to start flying reconnaissance aircraft over Poland and Romania as part of the Western military alliance's attempts to monitor the movement of Russian troops.

The Unites States has also dispatched six additional F-15 fighters to Lithuania and 12 F-16s for aviation training in Poland.

A defense source in Moscow told Interfax that concern over the sudden buildup of troops and jets around Ukraine prompted a private telephone conversation between army Russian General Valery Gerasimov and his NATO counterpart Knud Bartels.

The flaring crisis between two of the former Soviet Union's biggest states was sparked by the ouster last month of a pro-Kremlin regime that in November rejected an historic EU deal that would have pulled Kiev out of the Kremlin's orbit for the first time.

The more nationalist and Western-leaning team that rose to power on the back of a bloody popular revolt is viewed with derision by Putin and increasing warmth by Washington and EU states.

Putin's March 1 decision to order troops into Crimea for the "protection" of the Russian-speaking majority there now threatens to invite a host of political and economic sanctions that could leave the Kremlin more isolated from the West than at any point since the 1989 fall of the Berlin Wall.

Merkel -- a fluent Russian speaker whose upbringing in Communist East Germany shaped both her cautious approach to Moscow and understanding of the importance of keeping relations with the Kremlin on track -- delivered her most ominous warning to date in an appearance before the German parliament.

"If Russia continues its course of the last weeks, it would not only be a catastrophe for Ukraine," the German chancellor told the chamber.

"It would not only change the relationship of the European Union as a whole to Russia. No, it would also, and I am firmly convinced of this, massively damage Russia both economically and politically."

Merkel accused Russia of using the "failed" expansionist tactics of the previous two centuries.

The European Union will debate travel bans and asset freezes on Monday against Russian officials held responsible for threatening Ukraine's territorial integrity.

The measures also cover some top figures close to the ousted Kiev regime. Austria took the lead by announcing the arrest of Ukranian tycoon Dmytro Firtash -- one of the top backers of deposed president Viktor Yanukovych -- on suspicion of bribery and forming a criminal organization.

The White House has been moving toward punitive measures faster than its European allies -- their financial and energy sectors intertwined tightly with Russia -- and has already approved visa restrictions and financial penalties on Moscow officials.

Obama told Ukraine's visiting Prime Minister Arseniy Yatsenyuk on Wednesday that Washington was willing to move much further still if Putin failed to soften his stance immediately.

"There's another path available and we hope President Putin is willing to seize that path," Obama told reporters after awarding Yatsenyuk -- whose legitimacy Putin rejects -- the honor of a government leader by meeting him in the Oval Office.

"But if he does not, I'm very confident that the international community will stand firmly behind the Ukrainian government."

The White House said on Sunday that even Moscow's key diplomatic ally Beijing supported Ukraine's "sovereignty and territorial integrity" after talks between Obama and Chinese President Xi Jinping.

U.S. officials say Moscow will have its best chance to show a willingness to compromise and avert even more punishing Western measures on Friday during talks in London between Kerry and Russian Foreign Sergei Lavrov.

Russia's top diplomat is also expected to meet British Foreign Secretary William Hague -- a harsh critic of Putin's position who on Sunday called the Kremlin troops' deployment in Crimea a "serious miscalculation."

Later on Thursday, Ukraine's interim PM Yatsenyuk told an emergency session of the U.N. Security Council that it was still possible to resolve the crisis with Russia peacefully.

"We still believe that we have a chance to resolve this conflict in a peaceful manner," Yatsenyuk told the Council, one day after talks with Obama in Washington.

"We urge the Russian Federation to pull back its military forces deployed in Crimea to barracks and to start real talks and negotiations in order to tackle this conflict," he said.

"We want to have talks. We don't want to have any kind of military aggression," added the premier, before turning to address Russian ambassador Vitaly Churkin directly in Russian.

Yatsenyuk also told the Security Council that nuclear non-proliferation was at risk unless his country and Russia could resolve their crisis.

Yatsenyuk said that, unless Russia agrees to a real dialogue, the crisis could undermine global security and nuclear non-proliferation.

"As after these actions it would be very difficult to convince anyone in the globe not to have nuclear weapons," he said.