President Vladimir Putin says he will decide within hours on a request by two regions of eastern Ukraine held by Russian-backed separatists to be recognised as independent – a move that could give Russia a reason to openly send troops.
Separately, Russia said Ukrainian military saboteurs had tried to enter Russian territory in armed vehicles leading to five deaths, an accusation dismissed as “fake news” by officials in Kyiv.
The developments fit a pattern repeatedly predicted by US and allied governments, who accuse Russia of preparing to fabricate a pretext to invade Ukraine by blaming Kyiv for attacks and relying on pleas for help from separatist proxies.
The US says Russia has now massed a force numbering 169,000-190,000 troops in the region, including pro-Russian rebels in eastern Ukraine.
Russia denies any plan to attack its neighbour that it had controlled until the Soviet Union collapsed in 1991.
But Russia has threatened unspecified “military-technical” action unless it received sweeping security guarantees, including a promise that Ukraine will never join NATO.
European financial markets tumbled at the signs of increased confrontation after having briefly edged higher on the glimmer of hope that a summit might offer a path out of Europe’s biggest military crisis in decades.
The price of oil – Russia’s main export – rose while Russian shares and the rouble plunged.
At a televised meeting of his Security Council, which normally meets behind closed doors, Mr Putin restated Russia’s demands, insisting that it was not enough for the US and its allies to say Ukraine was not ready to join NATO at present.
He also said he would make a decision on Monday on the request made a few hours earlier by the leaders of the Luhansk and Donetsk regions, which broke away from Ukraine’s control in 2014.
Shelling has intensified since last week along a long-simmering frontline between the rebels and Ukrainian forces in east Ukraine.
On Friday the rebels abruptly started bussing out tens of thousands of civilians to Russia, accusing Ukraine of planning an attack which officials in Kyiv deny as propaganda.
Ukraine and its allies consider the rebels to be Russia’s proxies and have been warning for weeks that Russia might use them to construct a case for war.
The US says it is absurd to suggest that it would be Ukraine that is choosing to escalate now, with Russian troops massed at its border.
The televised security council meeting in Moscow allowed Mr Putin and his top advisors to outline their case.
Dmitry Medvedev, the Security Council’s deputy chairman, told the meeting it was “obvious” that Ukraine did not need the two regions and that a majority of Russians would support their independence.
Russia already offers passports to residents of the two regions and Medvedev said there were now 800,000 Russian citizens there.
After talks in Brussels with NATO Secretary-General Jens Stoltenberg, British foreign minister Liz Truss said the military alliance was preparing for a “worst-case scenario”.
The airlines Lufthansa, KLM and Air France all cancelled flights to Kyiv.
Hours earlier, French President Emmanuel Macron gave hope of a diplomatic solution, saying Mr Putin and his US counterpart Joe Biden had agreed in principle to meet.
Mr Putin said Mr Macron had told him the US had changed its stance on Russia’s security demands, without specifying how.
The White House said Mr Biden had accepted the meeting “in principle” but only “if an invasion hasn’t happened”.
The US, which heads the NATO alliance, has flatly rejected the idea of excluding Ukraine for good or reversing NATO’s eastward enlargement of the last three decades but has offered talks on weapons deployments and other security issues.
Kremlin spokesman Dmitry Peskov said a call or meeting between Mr Putin and Mr Biden could be set up at any time but there were no concrete plans yet for a summit.
Mr Macron’s office and the White House said details would be worked out by US Secretary of State Antony Blinken and Russian Foreign Minister Sergei Lavrov later this week.
Mr Lavrov confirmed that he planned to meet Mr Blinken in Geneva on Thursday, and said there had been some progress in talks on European security.
Ukraine’s Foreign Minister Dmytro Kuleba said on Monday he had asked member states of the United Nations Security Council to hold urgent discussions on practical steps to guarantee his country’s security and on de-escalating the tensions with Russia.
Russia’s military said a group of saboteurs had crossed the frontier from Ukraine near the Russian city of Rostov on Monday morning, followed by two armoured vehicles coming to take them back.
It said five members of those forces had been killed when Russian forces repelled them.
Officials in Ukraine said the report was fake news and that no Ukrainian forces were present in Russia’s Rostov region.”