Prime Minister Scott Morrison has condemned the decision to move Russian troops into eastern Ukraine, saying Australia would be "in lock step" with nations imposing sanctions against Russia in response.
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Russian president Vladimir Putin declared he would "recognise" two Russia-backed separatist regions - in Donetsk and Luhansk - as independent and ordered the Russian army into the areas, escalating a situation that Western nations fear could turn into a war.
Mr Morrison on Tuesday condemned Russia's decision to deploy troops and said its claim to be conducting "peacekeeping" operations were nonsense.
"They have moved in on Ukrainian sovereign territory, and while I hope for the best in terms of the diplomatic effort that are being pursued, particularly by the United States and France and other nations in Europe that are trying to avoid what would be an absolutely violent confrontation with terrible human consequences, at the same time, we cannot have threats of violence being used to seek to advantage nations' positions over others," he said.
The Prime Minister warned Russia's action would bring significant costs to the nation.
"Russia should step back. It should unconditionally withdraw, back behind its own borders, and stop threatening its neighbours," Mr Morrison said.
"We've seen this behaviour before, and seeking to take opportunity to threaten a neighbour for their own advantage is just simply not on. It's unacceptable, it's unprovoked, it's unwarranted."
Mr Morrison said like-minded countries should stick together in denouncing the aggression.
"I can assure you that the moment that other countries put in place strong and severe sanctions on Russia, we will be in lockstep with them and we will be moving just as quickly and that is the discussions we have been engaged with now for some time with our partners," he said.
Labor foreign affairs spokeswoman Penny Wong said Russia was acting in violation of international law by "recognising" the separatist territories.
"It is a blatant violation of the territorial integrity of Ukraine, and it is a violation of the Minsk agreements. And this is why the international community have to be united and have to be clear, there is no justification, no matter what Mr Putin says, for a decision to engage in conflict, and a decision, such as that would be, as I think President Biden has pointed out, a decision to enter into and take responsibility for a catastrophic and needless war," she said.
"So we would join with not only the Australian government, but the EU, many European governments and the United States in being very clear, in our view about this being a violation of international law and not providing any justification for conflict in eastern Ukraine."
Treasurer Josh Frydenberg responded to reports of the Russian movement warning an invasion would have a significant knock-on effect, particularly through gas prices, just as the world economy was recovering from the COVID downturn.
Opposition leader Anthony Albanese tweeted on Tuesday saying Australia stood united with the Ukrainian people, and condemned any act of Russian aggression in the strongest terms.
It was not immediately clear the size of the force that Mr Putin was dispatching, when they would cross the border into Ukraine and exactly what their mission would be.
In a lengthy televised address on Monday, Mr Putin - looking visibly angry - described Ukraine as an integral part of Russia's history and said eastern Ukraine was ancient Russian lands and that he was confident the Russian people would support his decision.
Russian state television showed Mr Putin, joined by Russia-backed separatist leaders, signing a decree recognising the independence of the two Ukrainian separatist regions along with agreements on cooperation and friendship.
Defying Western warnings against such a move, Mr Putin had announced his decision in phone calls to the leaders of Germany and France earlier, both of whom voiced disappointment, the Kremlin said.
Moscow's action may well torpedo a last-minute bid for a summit with US President Joe Biden to prevent Russia from invading Ukraine. The rouble extended its losses as Mr Putin spoke, at one point sliding beyond 80 per dollar.
President Biden will issue an executive order soon prohibiting "new investment, trade, and financing by US persons to, from, or in" the two breakaway regions, the White House said.
The European Union "will react with sanctions against those involved in this illegal act," President of the European Commission Ursula von der Leyen and European Council President Charles Michel said in a joint statement.
British foreign minister Liz Truss said in a Twitter post that on Tuesday the government will announce new sanctions on Russia in response to Mr Putin's decision.
NATO Secretary-General Jens Stoltenberg accused Russia of continuing to fuel the conflict in eastern Ukraine and "trying to stage a pretext" for a further invasion. Russia annexed Crimea from Ukraine in 2014.
In his address, Mr Putin delved into history as far back as the Ottoman empire and as recent as the tensions over NATO's eastward expansion - a major irritant for Moscow in the present crisis.
With his decision, Mr Putin brushed off Western warnings that such a step would be illegal, would kill off peace negotiations and would trigger sanctions against Moscow.
"I deem it necessary to make a decision that should have been made a long time ago - to immediately recognise the independence and sovereignty of the Donetsk People's Republic and the Luhansk People's Republic," Putin said.
He said earlier that "if Ukraine was to join NATO it would serve as a direct threat to the security of Russia."
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Mr Putin has for years worked to restore Russia's influence over nations that emerged after the collapse of the Soviet Union, with Ukraine holding an important place in his ambitions.
Russia denies any plan to attack its neighbour, but it has threatened unspecified "military-technical" action unless it receives sweeping security guarantees, including a promise that Ukraine will never join NATO.
Despite swift sanctions threats, it was not immediately clear how closely Western governments would coordinate their actions. Earlier this week, US and European officials said the United States and allies were not totally in agreement about how to respond in case of stepped-up support for pro-Russian separatists.
Mr Putin's move will also narrow the diplomatic options to avoid war, since it is an explicit rejection of a seven-year-old ceasefire mediated by France and Germany, touted as the framework for future negotiations on the wider crisis.
Separately, Moscow said Ukrainian military saboteurs had tried to enter Russian territory in armed vehicles leading to five deaths, an accusation dismissed as "fake news" by Kyiv.
Both developments fit a pattern repeatedly predicted by Western governments, who accuse Russia of preparing to fabricate a pretext to invade by blaming Kyiv for attacks and relying on pleas for help from separatist proxies.
Washington says Russia has massed a force numbering 169,000-190,000 troops in the region, including the rebels in the breakaway regions, and could invade within days.
European financial markets tumbled at the signs of increased confrontation, after having briefly edged higher on the glimmer of hope that a summit might offer a path out of Europe's biggest military crisis in decades. The price of oil - Russia's main export - rose, while Russian shares and the rouble plunged.
- with AAP
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