West hits back with sanctions as Putin orders Russian troops into Ukraine

World leaders have hit back with sanctions after Russian president Vladimir Putin ordered troops into separatist regions of Ukraine.

Germany made the first big move, taking steps to halt certification of the Nord Stream 2 gas pipeline from Russia – a massive, lucrative project long sought by Moscow but criticised by the US for increasing European reliance on Russian energy supplies.

In Washington, US president Joe Biden announced financial sanctions on banks and Russian officials close to Mr Putin as well as their sons as punishment for what he called “the beginning of a Russian invasion of Ukraine”.

He said the US would impose “full blocking” on two large Russian financial institutions and “comprehensive sanctions” on Russian debt.

“That means we’ve cut off Russia’s government from Western finance,” Mr Biden said.

“It can no longer raise money from the West and cannot trade in its new debt on our markets or European markets either.”

The US leader promised that more sanctions would be coming if Mr Putin continues with the invasion.

The European Union announced sanctions taking aim at the 351 Duma legislators who voted in favour of recognising separatist regions in Ukraine, as well as 27 other Russian officials and institutions from the defence and banking world.

The bloc also sought to limit Moscow’s access to EU capital and financial markets.

EU foreign policy chief Josep Borrell said after chairing a meeting of EU foreign ministers in Paris: “This package of sanctions … will hurt Russia and it will hurt a lot.”

EU Commission president Ursula von der Leyen added: “We will make it as difficult as possible for the Kremlin to pursue its aggressive policies.”

Australia said it would align with the US and UK by targeting two Russian banks. It also imposed sanctions and travel bans on eight members of Mr Putin’s security council.

The country’s prime minister Scott Morrison said these are a first batch of measures in response to Russian aggression towards Ukraine.

Japan also announced sanctions, with prime minister Fumio Kishida saying his government will ban new issuance and distribution of Russian government bonds in Japan.

He said Japan will also ban travel by people linked to the two Ukrainian rebel regions and freeze their assets in Japan, as well as banning trade with the two areas.

If Mr Putin pushes further into Ukraine, Nato chief Jens Stoltenberg insisted, “there will be even stronger sanctions, even a higher price to pay”.

The US and other Western nations have pressed for diplomatic efforts to head off a dangerous military confrontation.

But the failure of that effort was underlined as US secretary of state Antony Blinken cancelled plans for a meeting in Geneva on Thursday with his Russian counterpart Sergei Lavrov, saying Russia’s actions showed there was no point.

Western powers have long made clear the fate of Ukraine must not lead to a direct military confrontation with Russia and the potential of a world war, so sanctions were the limited option.

“No lows too low, no lies too blatant, no red lines too red to cross,” Lithuanian prime minister Ingrida Simonyte said, in summing up the political disgust over Mr Putin’s actions felt by nations from Europe to North America and the democracies hugging Russia’s borders in Asia, such as Japan and South Korea.

However, Mr Putin continued to knock the world off-kilter with a strategy that has led to confusion about his plans and possible actions.

Russia said it was sending what it called “peacekeepers” into eastern Ukraine, but EU foreign policy chief Mr Borrell stressed they were “troops” on sovereign Ukrainian territory.

“I wouldn’t say that’s a fully fledged invasion, but Russian troops are on Ukrainian soil,” Mr Borrell said.

The two major Russian banks targeted by the US sanctions are Vnesheconombank (VEB) and Promsvyazbank Public Joint Stock Company (PSB).

VEB is crucial to Russia’s ability to raise funds, and PSB is critical to Russia’s defence sector.

The two hold more than 80 billion dollars (£59 billion) in assets combined and will be cut off from carrying out transactions in the US and European banking systems.

Hopes are dwindling that a major conflict can be averted. Mr Putin’s directive came hours after he recognised the two Ukrainian separatist regions as independent, setting up Russian military support and antagonising Western leaders who regard his actions as a breach of world order.

Mr Putin has blamed Nato for the current crisis and called the US-led alliance a threat to Russia.

With an estimated 150,000 Russian troops massed on three sides of Ukraine, the US warned that Moscow has already decided to invade.

However, Mr Biden and Mr Putin have tentatively agreed to a possible meeting brokered by French president Emmanuel Macron in a last-ditch effort to avoid war in Europe.