SLAVYANSK, Ukraine - The US and Europe are set to slap new sanctions on Russia as early as Monday over the crisis in Ukraine where tensions spiked over the kidnapping of a team of international observers.
The Group of Seven top economies and the European Union signalled Saturday they would step up economic pressure on Moscow early this coming week.
Ukrainian Prime Minister Arseniy Yatsenyuk claimed Russia had violated his country's airspace seven times overnight Friday with an aim "to provoke" Ukraine into starting a war.
US Secretary of State John Kerry told his Russian counterpart Sergei Lavrov that Washington was concerned about "provocative" troop movements along Russia's border with Ukraine and its support for the separatists, which he said "are undermining stability, security and unity in Ukraine".
Yatsenyuk cut short a visit to the Vatican as concern grew that the tens of thousands of Russian troops conducting military drills on the border could soon be ordered to invade.
But Moscow denied any transgression by its warplanes, with Lavrov calling for "urgent measures" to calm the crisis, which has plunged East-West relations to their lowest point since the Cold War.
A Western diplomat warned: "We no longer exclude a Russian military intervention in Ukraine in the coming days."
The diplomatic source noted that Russia's UN envoy, Vitaly Churkin, "has been recalled urgently to Moscow" for consultations.
Meanwhile, international efforts were underway to secure the release of a 13-member mission from the Organisation for Security and Cooperation in Europe held hostage by pro-Russian militants in the flashpoint city of Slavyansk.
The chief of the insurgents' self-styled "Republic of Donetsk", Denis Pushilin, accused them of being "NATO spies" and said they would only be released in a prisoner swap for militants detained by Ukrainian forces.
As indignant Western powers demanded their release, Russia's envoy to the OSCE said Moscow would "take all possible steps in this case".
"We believe that these people should be released as soon as possible," said Andrei Kelin, Russia's envoy.
Russian's foreign ministry added that Moscow was "taking measures" to resolve the situation, but blamed the Ukrainian authorities for the hostage crisis.
"They were invited by the Ukrainian authorities" and their safety "rests fully with the receiving side", the foreign ministry in Moscow said.
The OSCE observers were sent to Ukraine to monitor an April 17 accord signed in Geneva between Russia, Ukraine, the US and EU that was meant to take the heat out of the crisis in the ex-Soviet republic.
An OSCE spokeswoman at the group's Vienna headquarters told AFP there were eight monitors from the mission: four Germans, a Dane, a Pole, a Swede and a Czech.
Poland and the Czech Republic both strongly condemned the kidnapping and urged "all parties involved in the conflict to undertake the necessary steps" for their release.
The monitors were accompanied by five Ukrainian army personnel, said Kiev's defence ministry.
Speaking to reporters in Rome, Yatsenyuk said the detention was "unbelievable and unacceptable".
"This is another proof and evidence that these so-called peaceful protesters with Russian ideas are terrorists," he said.
Ukraine's own secret services said one of those detained "urgently" needed medical help.
The hostages were being held in "inhuman conditions" and were likely to be used as "a human shield effectively terrorising the whole international community", said the Kiev authorities.
As the West and Russia traded barbs, the G7 group agreed on the need for further sanctions on the government of President Vladimir Putin.
In a joint statement, the G7 consisting of Britain, Canada, France, Germany, Italy, Japan and the US said it would "move swiftly to impose additional sanctions on Russia".
"These sanctions will be coordinated and complementary, but not necessarily identical. US sanctions could come as early as Monday," a senior US administration official said.
The US and EU have already targeted Putin's inner circle with visa and asset freezes and imposed sanctions on a key Russian bank.
US officials said the next round would target "individuals with influence on the Russian economy, such as energy and banking" and could be bolstered if the situation escalated.
EU sources in Brussels said senior diplomats from the 28-member European bloc would also hold talks Monday to consider new sanctions.
An EU diplomat said a list adding 15 people to the 55 Russians and Ukrainians already blacklisted by the EU had been approved in principle.
'Choose a peaceful resolution'
The crisis heightened after Russia refused to accept the legitimacy of Kiev's new pro-EU government, which came to power after four months of street protests forced the ouster of the Kremlin-backed president, Viktor Yanukovych.
Last month, Moscow annexed Ukraine's Crimean peninsula after deploying troops, sparking international outrage.
While President Barack Obama has ruled out sending US or NATO forces into Ukraine, Washington has begun deploying 600 US troops to bolster NATO's defences in nearby eastern European states.
Ukraine has stepped up its offensive against insurgents it claims are supported by Moscow, who have seized towns in the east of the country.
Ukrainian army units are besieging Slavyansk with sporadic fighting at checkpoints but authorities have pledged a measured response to avoid civilian casualties.
The insurgents have also conducted their own operations. On Friday, they blew up an army helicopter on the ground with a rocket-propelled grenade, wounding the pilot.
Lavrov has claimed the push against the rebels was part of a US plot to "seize" Ukraine for its own "geopolitical ambitions".
But the White House has urged Moscow to "choose a peaceful resolution to the crisis" by implementing the Geneva deal, which calls for "illegal armed groups" to lay down weapons.