MOSCOW/DONETSK/WASHINGTON, Feb 22 (Reuters) – Western nations on Tuesday punished Russia with new sanctions for sending troops to breakaway regions in eastern Ukraine and threatened to go further if Moscow was launching an all-out invasion of its neighbour.

The United States, the European Union and Britain have announced plans to target banks and elites while Germany has halted a major gas pipeline project from Russia, which they say has gathered more than 150,000 soldiers near the borders of Ukraine. Moscow denied planning an invasion.

One of Europe’s worst security crises in decades is unfolding as Russian President Vladimir Putin ordered troops to Donetsk and Luhansk to “keep the peace”. Washington called it “nonsense.”

Satellite images from the past 24 hours show several new deployments of troops and equipment in western Russia and more than 100 vehicles at a small airfield in southern Belarus, which borders Ukraine, according to US company Maxar .

Weeks of intense diplomacy have so far failed and on Tuesday US Secretary of State Antony Blinken and French Foreign Minister Jean-Yves Le Drian canceled separate meetings scheduled with their Russian counterpart Sergei Lavrov.

“To put it simply, Russia just announced that it’s carving out a big chunk of Ukraine for itself,” Biden said Tuesday.

“This is the start of a Russian invasion.”

Biden’s announced plans to bolster Estonia, Latvia and Lithuania include sending 800 infantry troops and up to eight F-35 fighter jets to locations along NATO’s eastern flank, said a US official, but this is a redistribution, not additions.

Putin did not watch Biden’s speech and Russia will first consider what the United States described before responding, according to Kremlin spokesman Dmitry Peskov, quoted by Russian news agencies.

Early Wednesday, Putin said he was still open to seeking diplomatic solutions but that “the interests of Russia and the security of our citizens are unconditional for us.”

Moscow demands security guarantees, including a promise that Ukraine will never join NATO, while the United States and its allies offer Putin confidence-building and arms control measures to defuse the dead end.

A meeting between Biden and Putin, brokered by France, “is certainly not planned” at this stage, the White House said on Tuesday.

MORE SANCTIONS TO COME?

US sanctions are being applied to VEB Bank and the Russian military bank, Promsvyazbank, which makes defense deals, Biden said. From Wednesday, sanctions will begin against Russian elites and their family members.

The Tass news agency quoted Promsvyazbank as saying the sanctions would not have a significant effect because it had taken precautionary measures in advance. He did not give details.

Washington also said it was restricting secondary market transactions with Russian sovereign debt for bonds issued after March 1.

But many Western countries withheld the toughest sanctions as they tried to deter a larger Russian assault. Russia’s Sberbank (SBER.MM) and VTB (VTBR.MM) would face sanctions if Moscow invades, a senior US official has said, warning of a blow to the wider economy .

“We are fully prepared with a very large number of countries around the world to implement…export control measures.”

The European Union and Britain have primarily targeted Russian banks and their ability to operate internationally with likely minimal impact. Read more

Lavrov previously dismissed the threat of sanctions.

“Our European, American, British colleagues will not stop and calm down until they have exhausted all their possibilities for the so-called punishment of Russia,” he said.

MARKETS WORRY, SEPARATISTS CELEBRATE

The prospect of an energy supply disruption and fears of war – fueled by reports of shelling in some areas and unmarked tank movements overnight in the city of Donetsk – shook markets and sent the oil prices at their highest level since 2014.

Germany has put the brakes on the new Nord Stream 2 pipeline and Britain has also hit Russian banks with sanctions. The Russian Foreign Ministry called the new measures “illegitimate”.

Germany is Russia’s biggest customer for natural gas, and Chancellor Olaf Scholz’s decision on the pipeline – built but pending approval – was widely seen as one of the strongest moves the government has ever made. Europe can take.

Ukrainian Foreign Minister Dmytro Kuleba welcomed the decision.

“It’s a morally, politically and practically correct step in the current circumstances,” he said. “True leadership means tough decisions in tough times. Germany’s decision proves that.”

The Kremlin said it hoped the delay was temporary. Putin said Russia “aims to continue the uninterrupted supply” of energy to the world.

Following Russia’s recognition of the independence of Donetsk and Luhansk, some Donetsk city residents celebrated, with cars displaying Russian flags and sounding their horns.

But several explosions could be heard at midnight in the center of the separatist-held city, a Reuters witness said.

Russian-backed regions broke away from Ukrainian government control in 2014 and declared themselves independent “people’s republics” after the ousting of a pro-Moscow Ukrainian president in Kyiv.

“I know that the blood I shed with my comrades and our labors and efforts and civilian casualties have not been in vain all this time,” said Dmitry, a former member of a pro-Russian militia. , in Donetsk on Tuesday.

Reports from Reuters offices; Written by Angus MacSwan and Costas Pitas; Editing by Grant McCool

Our standards: The Thomson Reuters Trust Principles.