US President Joe Biden announced the first wave of sanctions against Russia for what he said was the beginning of an invasion of Ukraine, and vowed steeper punishments ahead if Russia continues its aggression.
The sanctions, among others things, target Russian banks and sovereign debt.
One of the worst security crises in Europe in decades is unfolding as Russian President Vladimir Putin authorised sending what he calls peacekeeping troops to separatist areas of Donetsk and Luhansk after recognising them as independent.
Western nations largely see the action as a pretext for a wider invasion.
"He's setting up a rationale to take more territory by force," Biden said at the White House.
In what he called the "first tranche" of sanctions against Russia, Biden announced moves to block trade involving two large banks - VEB and the Russian Military Bank - and to cut off parts of the Russian economy from international financial systems.
Biden said these moves went "far beyond" previous measures and would cut the Russian government off from Western financing for its sovereign debt.
"I'm going to begin to impose sanctions in response, far beyond the steps we and our allies and partners implemented in 2014," he added, in a reference to Russia's annexation of Crimea from Ukraine.
Europe sanctions
Germany earlier announced it was putting a stop to a key Russian gas pipeline and other Western nations issued sanctions.
Germany halted approval of the Nord Stream 2 pipeline, which it had Nord Stream 2 pipeline has despite opposition from countries such as the US, UK, Poland and Ukraine. It cost €10bn (£8.4bn), with the funding split between Russian and Western energy companies.
But following Putin's order to send troops to Donetsk and Luhansk, Germany announced it was suspending the process of giving the pipeline between it and Russia an operating licence - effectively stopping the project until further notice.
The move is notable as Russia supplies Europe with about 40 percent of its gas, sourced from vast supplies in Russia's east.
A Ukrainian soldier looks at debris after the reported shelling of a kindergarten in the settlement of Stanytsia Luhanska, on February 17, 2022. Photo: AFP / Aleksey Filippov
It is among a number of measures taken by Western powers following Mr Putin's announcement.
The United States banned American people and companies from conducting any trade or investment in the rebel-held regions, before announcing the latest sanctions.
Britain sanctioned five banks - Rossiya, IS Bank, GenBank, Promsvyazbank and the Black Sea Bank - along with three people - Gennady Timchenko, and the brothers Igor and Boris Rotenberg.
But UK Prime Minister Boris Johnson minister refrained from targeting Russia's biggest state banks, cutting off capital for Russian companies or ejecting other prominent so-called Russian oligarchs from Britain.
The British government said Timchenko was a major shareholder in Bank Rossiya, which played a role in the destabilisation of Ukraine after Russia's 2014 annexation of Crimea.
Timchenko is a close ally of Putin, as are billionaires Igor and Boris Rotenberg, Johnson said.
The EU also unanimously agreed its first wave of measures on Tuesday, which includes targeting all members of Russia's parliament who approved the decision. Russian banks are also hit by the new measures, as is Russia's access to EU financial markets.
The Western sanctions announced on Tuesday fall short of what had been threatened in the event of invasion. There had been speculation that Russia could have faced being cut off from the global banking system, denied access to the dollar, or even face import or export restrictions.
Reuters / BBC