US President Barack Obama and major industrialized allies have warned Russia it faces damaging economic sanctions if President Vladimir Putin takes further action to destabilize Ukraine following the seizure of Crimea.

Leaders of the Group of Seven nations, meeting without Russia, agreed to hold their own summit this year instead of attending a planned G8 meeting in the Russian Olympic venue of Sochi, along the Black Sea coast from Crimea, and to suspend their participation in the G8 until Russia changes course.

On a day when Kiev ordered its remaining troops to withdraw from Crimea and Russian forces captured a Ukrainian marine base and a landing ship in the region, leaders of the United States, Germany, France, Britain, Italy, Japan and Canada condemned what they called "Russia's illegal attempt to annex Crimea in contravention of international law".

They also agreed their energy ministers would work together to reduce dependence on Russian oil and gas and increase energy security, the Reuters news agency reported.

"We remain ready to intensify actions including coordinated sectorial sanctions that will have an increasingly significant impact on the Russian economy, if Russia continues to escalate this situation," they said in a joint statement.

The G7 leaders, who met on the sidelines of a nuclear security summit in The Hague, said they would convene again in Brussels in early June, the first time since Russia joined the G8 in 1998 that it will have been shut out of the annual summit of industrialized democracies.

They also urged the International Monetary Fund to reach a rapid agreement with Ukraine to unlock urgently needed financial aid for the country's shattered economy.

Russian unruffled

Obama, who has imposed tougher sanctions on Moscow than European leaders over its takeover of the strategic Crimean peninsula, told reporters: "Europe and America are united in our support of the Ukrainian government and the Ukrainian people".

"We're united in imposing a cost on Russia for its actions so far," he said of the visa bans and asset freezes slapped on senior Russian and Crimean officials.

Russian Foreign Minister Sergey Lavrov played down the G8 snub.

"If our Western partners believe the format has exhausted itself, we don't cling to this format. We don't believe it will be a big problem if it doesn't convene," he told reporters.

PHOTO CAPTION

Russia's Foreign Minister Sergey Lavrov, right, meets with Ukrainian Foreign Minister Andriy Deshchytsia at the Nuclear Security Summit (NSS) in The Hague, Netherlands, Monday, March 24, 2014.

Aljazeera