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The world's top industrial powers threatened further sanctions to deter Russian President Vladimir Putin from taking over other parts of Ukraine and suspended Russia from participating in the Group of Eight.
Meeting for the first time since last week's annexation of Crimea by Russia, Group of Seven leaders said on Monday night they wouldn't attend a G8 meeting in Sochi (Russian city), site of the Winter Olympics, and will hold their own summit in June in Brussels.
"We remain ready to intensify actions including coordinated sectoral sanctions that will have an increasingly significant impact on the Russian economy if Russia continues to escalate this situation," the G7 said in an e-mail after a meeting in The Hague on Monday.
Both sides in Ukraine's crisis spent the day calculating what to do next, with Russia consolidating its control over Crimea and maintaining forces along the border with Ukraine in the most serious confrontation between Moscow and the US and its allies since the demise of the Soviet Union.
US and European officials said sanctions were already biting. Russia's Micex stock index has plunged 13.6 per cent this year, worse than the five per cent decline in the MSCI Emerging Markets Index. The rouble has dropped 8.3 per cent, making it the second-worst performer against the dollar among 24 developing-market currencies tracked by Bloomberg.
Investors pulled $5.5 billion from Russian equities and bonds this year through March 20, already approaching the total outflow of $6.1 billion for all of 2013, according to data compiled by EPFR Global, a Cambridge, Massachusetts-based company that tracks fund flows.
"We're united in imposing a cost on Russia for its actions so far," US President Barack Obama told reporters in Amsterdam on Monday at the start of a six-day trip that included a nuclear-security summit in The Hague and a meeting with the heads of European Union institutions in Brussels. With Monday's move, the G7 - the US, Germany, the UK, France, Italy, Canada and Japan - reverted to its Cold War-era format, suspending what became the G8 in 1998 when Russia was welcomed in. The group was all smiles around a Putin-less conference table in a photo posted on Twitter by European Commission President Jose Barroso, who attended along with EU President Herman Van Rompuy.
THE COSTS
Sanctions are biting Russian economy
* 13.6% Fall in Russia's Micex stock index this year, worse than the 5% dip in the MSCI Emerging Markets Index
* $5.5 bn Amount investors pulled from Russian equities and bonds as of March 20
* 8.3% Drop in the rouble, the second-worst performer against the dollar among the 24 developing-market currencies tracked by Bloomberg
* $65-$75 bn Net capital outflow from Russia forecast for the first quarter of the year against $63 billion last year
* 0.3% Rise in GDP in February after gaining 0.1% in January
