Moscow (DPA) - President Vladimir Putin warned the U.S. and European Union yesterday of "consequences" if they impose sanctions on Russia over its military intervention in Ukraine, adding that the Kremlin reserves the right to use force. "What could trigger the possible use of force? It's only in an extreme case," he said, hours after ordering military exercises near the border with Ukraine end on Friday.

"The legitimate president, [Viktor] Yanukovych, requested Russia to use military force to save lives and protect the welfare of the local population," Putin said of the ousted Ukrainian leader. Western powers have upped pressure on Russia over its bloodless takeover of the Ukrainian region of Crimea, which the new leaders in Kiev want back. Putin said Russia had no partners in Ukraine until new elections were held, describing Yanukovych's toppling as "unconstitutional." "Those who are going to introduce sanctions against Russia should think about their consequences as damage will be mutual,"

Putin was quoted as saying by the Itar-Tass news agency. His decision to end military drills this week appeared to be designed to allay fears of war in Crimea, which Russia seized after Ukrainian protesters toppled Yanukovych and installed pro-Western interim leaders. The announcement pushed share prices higher on the Moscow stock exchange after sharp losses Monday. About 150,000 soldiers taking part in the Russian military drills involving airplanes, tanks and ships will return to their bases on Friday, Russian Defence Minister Sergei Shoigu told the Interfax news agency.

Ukraine's new leaders said Russia's takeover of Crimea, where the Russian army has bases, is an act of war. Putin said Russia intervened in the Black Sea peninsula, which has a Russian-speaking majority, for "humanitarian reasons." The crisis in Ukraine erupted in November after Yanukovych walked away from a trade agreement with the EU and sought closer ties with Moscow. Financial markets in Moscow fell and the ruble hit a record low against the dollar Monday as the EU and US threatened sanctions.

US President Barack Obama said his administration was considering diplomatic and economic measures to isolate Russia.

The EU threatened to suspend visa liberalization talks with Russia. The White House also announced 1 billion dollars in energy aid to Ukraine, in the form of loan guarantees to protect the most vulnerable Ukrainians from lower energy subsidies. The announcement was made after the Russian gas monopoly, Gazprom, said it was raising prices for Ukraine at the start of next month and demanded gas debts be paid. The country could not pay its February bill and is in debt to Gazprom to the tune of 1.53 billion dollars, Gazprom chief Alexei Miller said in Moscow, according to the Interfax news agency.

He said that if Ukraine failed to pay, Gazprom would revoke its 30-per-cent rebate, which would make its gas bill 400 dollars per 1,000 cubic meters at the beginning of April instead of the current 268.5 dollars.
US Secretary of State John Kerry is in Kiev to support the interim government and reassure them of Washington's support.

Putin said Yanukovych, who fled to Russia after he was removed from office, had no political future. He also said that opposition leader Yulia Tymoshenko was "welcome" to visit Moscow if she wanted to. Under tough questioning from reporters on his changing stance about the use of force in Ukraine, Putin wagged his finger at the media and said: "Listen to me closely. I want you to understand - if we make this decision, we will make it to protect the people of Ukraine."

The European Commission is due Wednesday to unveil economic aid for Ukraine, a spokeswoman from the EU executive said.
The block will also hold a summit on the crisis Thursday, which will be attended by Ukraine's interim prime minister, Arseniy Yatsenyuk.
NATO ambassadors were meeting Tuesday for the second time in three days to discuss the crisis.

The alliance will also discuss the crisis with a Russian representative Wednesday. German Foreign Minister Frank-Walter Steinmeier warned that unless Russia helped form a contact group of stakeholders by Thursday, then "sanctions will be decided" in Brussels. Russia Foreign Minister Sergei Lavrov called during a visit to Tunis for a unity government in Kiev that represents all Ukrainian regions.