German Chancellor Angela Merkel has said Russia will face escalating EU sanctions if it does not take steps to ease the crisis over Crimea.
Mrs Merkel, speaking ahead of an EU summit in Brussels, said the current political situation also meant the G8 effectively no longer existed.
Tensions remain high in Crimea after its leaders signed a deal with Moscow to split from Ukraine and join Russia.
Pro-Russian forces took over at least two military bases there on Wednesday.
Ukraine’s navy commander, Serhiy Hayduk, was detained, but has now been released.
Crimean leaders signed a treaty with Moscow on Tuesday to absorb the peninsula – an autonomous republic in southern Ukraine – into Russia, following a referendum which the West and Kiev say was illegal.
The treaty has now been approved by Russia’s lower house of parliament – the Duma – and is expected to be ratified by the upper house on Friday.
Speaking ahead of the vote in the Duma, Russia’s Foreign Minister Sergei Lavrov described possible sanctions as “illegitimate” and “not based on international law”.
Mr Lavrov said the treaty to absorb Crimea into the Russian Federation would “be a turning point in the fate of the multi-ethnic peoples of Crimea and Russia, who are linked by the close ties of historical solidarity”.
He reiterated Moscow’s position that the annexation is necessary to protect ethnic Russians from “nationalists, anti-Semites and other extremists on whom the new [Ukrainian] authorities depend”.
In a resolution on Thursday, Ukraine’s parliament said the country would “never and under no circumstances end the fight to free Crimea of occupants, no matter how difficult and long it is”.
Western leaders have denounced Russia’s actions in Crimea as a violation of Ukraine’s sovereignty and a breach of international law.
The EU has already imposed sanctions on 21 people connected to Moscow’s intervention in Crimea, and is expected to discuss expanding the sanctions when it meets on Thursday to include political and military figures close to Russian President Vladimir Putin.
Speaking in Berlin, Mrs Merkel said the EU would “make clear that we are ready at any time” to increase sanctions against Russia “if there is a worsening of the situation”.
The EU would also, she said, “draw consequences for political relations between the EU and Russia, as well as for relations between the G7 and Russia”.
The G8 – comprising seven of the world’s leading industrialised nations, and Russia – is scheduled to hold a summit in the southern Russian city of Sochi in June.
But Mrs Merkel said it was “obvious, as long as the political context for such an important format like the G8 does not apply, as is the case at the moment, the G8 doesn’t exist anymore, neither does the summit nor the format as such”.
The BBC’s Matthew Price in Brussels say some believe the first stage of a seismic shift in EU-Russian relations is taking place.
But this will take years, not days, to come about, he adds, and if the leaders are serious they will need to reduce Europe’s reliance on Russian gas.
The US has also ordered a freeze of assets and travel bans on 11 individuals, and has said it is considering expanding these.
In other developments:
- UN Secretary General Ban Ki-moon will meet President Putin in Moscow on Thursday before travelling to Kiev on Friday
- Russia has reportedly taken control of a confectionery factory in Lipetsk, Russia, owed by Ukrainian tycoon Petro Poroshenko. He was a key supporter of the protests against President Viktor Yanukovych
- President Barack Obama ruled out military involvement in Ukraine, saying the US “do not need to trigger an actual war”
- Ukraine’s ambassador to the UN, Yurii Klymenko, told diplomats in Geneva there are “indications that Russia is on its way to unleash a full blown military intervention in Ukraine’s east and south”. Russia dismissed the warning
- Crimea’s PM says a 17-year-old Ukrainian has been arrested over an incident in Simferopol on Tuesday in which a Ukrainian soldier and a member of the pro-Russia self-defence force were killed
The crisis comes nearly a month after Ukraine’s pro-Russian President Viktor Yanukovych was replaced by Western-leaning interim authorities.
Pro-Russian troops took control of Crimea in late February.
At least two bases – in Sevastopol and Novo-Ozyorne – were taken over by pro-Russian forces on Wednesday.
Ukraine has said it is drawing up plans to withdraw its thousands of soldiers and their families from Crimea for their own safety, and redeploy them on the mainland.
A number have already accepted Russia’s offer to change sides, but many are still in their bases refusing to surrender.