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Updated: Tue, 25 Mar 2014 14:07:52 GMT | By CBC News, cbc.ca

Ukraine crisis: G7 leaders threaten to 'intensify' sanctions against Russia

U.S. President Barack Obama addresses a news conference at the end of the Nuclear Security Summit in The Hague March 25, 2014. REUTERS/Francois Lenoir (© NETHERLANDS - Tags: POLITICS)

U.S. President Barack Obama addresses a news conference at the end of the Nuclear Security Summit in The Hague March 25, 2014. REUTERS/Francois Lenoir (NETHERLANDS - Tags: POLITICS) - RTR3IJFJ Francois Lenoir/Reuters

Russia will face sanctions designed to harm specific economic sectors if it fails to de-escalate the situation in Ukraine, U.S. President Barack Obama said Tuesday.

Obama, speaking at the end of the Nuclear Security Summit at The Hague, Netherlands, said the sanctions could target Russia’s energy, finance, arm sales and trade sectors.

“We are prepared to take the next step if the situation gets worse,” Obama said.

Potential sectoral sanctions are still being researched, Obama said. Prime Minister Mark Rutte of the Netherlands, standing at a podium alongside Obama, said European countries support the U.S. idea, even though the new sanctions would have global financial repercussions.

"These sanctions would hit Russia very badly," Rutte said.

“And obviously, you can never guarantee that the people in Europe, in Canada, in the U.S. would not be hurt," he added. "But obviously, we will make sure that we will design these sanctions in such a way that they will have maximum impact on the Russian economy."

Obama conceded Russia has a right to station 30,000 of its troops near the eastern Ukrainian border, but urged Vladimir Putin’s government to seek a diplomatic solution with Ukraine.

“This is not a zero sum game,” Obama said, adding there was a place for Russia’s influence in Ukraine.

“It is up to the Ukrainian people to make decisions about how they organize themselves and who they interact with."

Obama stood fast on his insistence that Crimea remains a part of Ukraine, even as the fledgling Ukrainian government in Kiev ordered its troops to pull back from the disputed territory.

"We're not recognizing what is happening in Crimea," Obama said at his first news conference since Russia moved to annex Crimea after a referendum 10 days ago. Obama rejected "the notion that a referendum sloppily organized over the course of two weeks" would "somehow be a valid process."

Obama said he didn't think international recognition of Crimea as part of Russia is "a done deal." But he also said, "It would be dishonest to suggest there is a simple solution to what has already taken place in Crimea," where Russia troops are in control.

Russia booted from G8

Side discussions about Ukraine have overshadowed some of the summit's nuclear agenda. On Wednesday, G7 leaders issued a declaration reiterating their support for Ukraine’s new government and calling Russia’s annexation of Crimea illegal.  

The leaders “reaffirm our support for Ukraine's sovereignty, territorial integrity and independence,” the declaration read.

The G7 countries — Canada, France, Germany, Italy, Japan, the U.K. and U.S. — have suspended what's normally the G8 due to Russia's actions, and have cancelled an upcoming summit set to be held in Sochi. 

Those actions got only a dismissive reaction from Russian Foreign Minister Sergei Lavrov.

"The G8 is an informal club," he said.

"It has no membership tickets, and it can't purge anyone by definition."

The G7 did praise Russia for its decision to allow observers from the Organization for Security and Co-operation in Europe (OSCE) into Ukraine.

Representatives from Ukraine, meanwhile, worked on a deal with the International Monetary Fund to provide a $15-20-billion relief package. 

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