Obama: Russia's actions in Ukraine put Putin on the 'wrong side of history'

US president Barack Obama on Monday called Russia’s actions in Ukraine a violation of international law that place Russia on “the wrong side of history” as the State Department prepared to draw up sanctions against Moscow.

Obama said he expected to work with Congress on a package of economic assistance to Ukraine and warned Russia of worldwide isolation if it persisted with its aggression.

“The strong condemnation that Russian has received around the world indicates the degree to which Russia is on the wrong side of history,” he said in brief remarks to reporters during a meeting with the Israeli prime minister in the Oval Office.

“There are two paths that Russia can take at this point. Actions on the ground in Crimea are deeply troubling but what is also true is that over time, this will be a costly proposition for Russia. Now is the time to consider whether they can further their interests with diplomacy as opposed to force.”

He added that if Russia continues on present path, the US will take a “series of steps – economic, diplomatic – that will isolate Russia.”

His comments came hours after state department officials said it was “highly likely” that the US would impose sanctions against Moscow unless Russia changes course and withdraws its troops from Crimea.

The White House was reviewing its entire portfolio of trade and co-operation with Russia, preparing a raft of possible US sanctions targeting senior government and military officials implicated in the invasion of the Ukrainian peninsula.

“At this point we’re not just considering sanctions, given the action Russia is taking,” said Jen Psaki, the State Department’s press secretary. “It is likely that we will put those in place and we are preparing that right now.”

Officials from the US Treasury and State Department were understood to be drafting possible visa travel bans and asset freezes that would be presented to US president Barack Obama in the coming hours. “We are likely moving down that path as things proceed,” Psaki said. “We are far more forward on this than we were even yesterday.”

Obama is expected to use his his executive authority to bypass the US Congress to quickly target senior Russian officials, as doubts emerged over the ability of the Washington to rally support from Europe.

“The most important thing is for us – the United States – to make sure that we don’t go off without the European community,” the majority leader in the Senate, Democrat Harry Reid, told Politico. “We have to work with them. Their interests are really paramount if we are going to do sanctions of some kind. We have to have them on board with us.”

The secretary of state, John Kerry, was preparing to fly to Kiev as a gesture of support for Ukraine’s new government. He was faced with persuading European allies dependent on their economic relationship with Russia to go further than introducing travel restrictions.

Some £34bn was wiped off the value of companies on the Moscow stock exchange on Monday after Russia suffered one of the biggest falls in its stock market in recent history.

The market crash, which hurt the energy industry hardest, came as Russian troops bedded into the Crimean peninsula and adopted an increasingly bellicose stance. According to one report, the commander of the Russian Black Sea Fleet, Alexander Vitko, ordered Ukrainian military forces in Crimea to surrender by 3pm GMT or face attack, though this was subsequently denied by authorities in Moscow.

Psaki said that if true, the report would “constitute a dangerous escalation of the situation that we would hold the Russians directly responsible for”.

Russian president Vladimir Putin has so far ignored US demands for him to pull back forces and he appears unperturbed by the prospect of being politically ostracised by western nations. With military action by the US or its allies out of the question, Washington has concluded that its most effective leverage will be economic.

Privately, one US official said the chances of Russian withdrawal from Crimea are slim. However the Obama administration hopes that a concerted multilateral set of sanctions could change the calculus for Putin, and prevent any further incursion into Ukrainian territory.

Another official confirmed the US was specifically looking at “the vulnerability of Russian banks” with ties to London and Geneva.

Diplomats and foreign policy analysts questioned whether EU states, particularly Germany, would countenance the kinds of far-ranging economic punishment, such as Iran-style trade embargoes or international banking restrictions, that would have the greatest impact on Russia. Part of the problem is that any cessation to trade, particularly in the energy sector, could be as acutely felt in European capitals as Moscow.

One European diplomat told the Guardian: “I expect we will not be 100% in line with the suggestions made by the US so far in relation to sanctions. In the EU there are all sorts of different views about how the problem should be tackled. We might be of the opinion that in order to keep talks with Russian open, we should not yet resort to sanctions at such an early stage.”

The source added that the consequences of imposing sanctions are less severe for the US than in the EU, which is significantly more reliant upon Russian trade and gas exports. Japan, a key member of the G8 group of western nations, is also believed to be anxious about punitive measures that could harm the wider global economy.

Daniel Drezner, a professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University, said that with Europe reluctant to endorse a broad sanctions regime, the kinds of measures being contemplated by the White House were unlikely to be more than an “irritation” to Putin.

“The trade the US has with Russia is pretty minimal,” he said. “And Europe is highly unlikely to restrict the trade that matters – in energy. They can cause Russia a little economic pain but not much.”

In Brussels, EU foreign ministers announced the suspension of visa negotiations with Russia, believed to relate to some 80,000 service passport holders Moscow had wanted to be given free movement in Europe.

Britain’s prime minister, David Cameron, was drawing up plans for a set of EU sanctions against Russia that would be agreed at an emergency meeting before the end of the week. However most analysts did not believe these would include the kinds of muscular trade embargoes or restrictions to energy purchases that would be needed to tip Russia into a recession.

Nicholas Burns, who was undersecretary of state under George W Bush when Russia intervened militarily in Georgia in 2008, said it was “disconcerting to see Germany sending a signal of lacking resolve”.

“Obviously Putin has won the Crimea through brute force. But if you measure this in years - which you really have to in a struggle like this - then the advantage doesn’t go to Putin,” Burns, also a former US ambassador to Nato, told the Guardian.

“We shouldn’t accept what he’s done, and we should continue to argue against it, but understanding the Russians and knowing what Putin is like, the chances are high Putin will never leave Crimea.”

Fiona Hill, a long-time expert on eastern Europe who directs the Center on the United States and Europe at the Brookings Institution thinktank, said Putin had been preparing for this moment for years, and effectively inoculated the Russian economy from western sanctions.

She said the Russian president has quietly but systematically adapted the Russian economy over the last decade to make it less susceptible to outside pressure; divesting assets abroad and relocating key economic interests closer to Moscow.

“Putin has successfully spent years reducing Russia’s vulnerabilities to western pressure and leverage,” she said. “At the same time, he has increased Russian leverage abroad, with investments in Europe and the US. And he has pretty much guaranteed we won’t introduce major sanctions because of the harm it will cause to all of our companies now doing business with Russia.”