THE HAGUE - Russia said on Tuesday its suspension from the G8 was counterproductive as Ukraine pulled more troops out of Crimea, effectively acknowledging defeat following Moscow's annexation of the Black Sea peninsula.
"When it comes to contacts with the G8 countries, we are ready for them, we have an interest in them," Kremlin spokesman Dmitry Peskov told the ITAR-TASS news agency.
"But the unwillingness of other countries to continue dialogue -- we consider it counterproductive, both for us and for our partners themselves," President Vladimir Putin's spokesman said.
Russian troops and Kremlin-backed militias have seized control of almost all Ukrainian bases and ships in Crimea in a push ordered by Putin on March 1 in response to the fall in Kiev of a pro-Kremlin regime.
The crisis has sparked the most explosive East-West confrontation since the Cold War era and sparked fears among the fledgling pro-European leaders in Kiev that Putin now intends to push his troops into the heavily Russified regions of southeast Ukraine.
Western leaders sought to ward off any such threat by forging a more forceful response in The Hague after two rounds of only targeted sanctions that hit only specific officials but left Russia's broader economy untouched.
A summit of the Group of Seven most industrialised countries agreed on Monday to deepen Moscow's isolation over the crisis and meet on their own -- without Russia -- in Brussels instead of gathering in Sochi in June.
They also threatened tougher sanctions over Moscow's annexation of the strategic Black Sea peninsula.
"We're united in imposing a cost on Russia for its actions so far," US President Barack Obama said in reference to the travel bans and asset freezes that Washington imposed on key members of Putin's inner circle last week.
The G7 leaders also issued a joint statement meant to demonstrate the scale of Russia's diplomatic isolation at the height the worst East-West standoff since the Cold War.
"We remain ready to intensify actions including coordinated sectoral sanctions that will have an increasingly significant impact on the Russian economy, if Russia continues to escalate this situation," the G7 leaders' statement said.
The G7 "came together because of shared beliefs and shared responsibilities. Russia's actions in recent weeks are not consistent with them. Under these circumstances, we will not participate in the planned Sochi summit.
But Russian Foreign Minister Sergei Lavrov -- who met with both his US and Ukrainian counterparts in The Hague -- immediately shrugged off the decision as no "great tragedy".
"If our Western partners think that this format (the G8) has outlived itself, then so be it," Russian Foreign Minister Sergei Lavrov told reporters.
"We are not trying to hold on to this format, and we see no great tragedy if it does not meet."