Tough new EU sanctions came into effect against Russia over the Ukraine conflict on Friday, with Moscow accusing its foes of trying to derail the push for peace in the former Soviet state.
US President Barack Obama has also announced that Washington will intensify punitive measures to further isolate the Kremlin over its "illegal actions" in Ukraine, sending East-West relations spiralling further downward.
The Western actions come despite a fragile ceasefire signed by Kiev and pro-Russian separatists a week ago that appears to have largely halted the deadly fighting across eastern Ukraine.
President Petro Poroshenko, still struggling to keep his country united in the face of the insurgency, unveiled steps to cement Kiev's ties with the European Union and seek the protection of NATO.
Both Kiev and the Western military alliance say around 1,000 Russian troops are still in Ukraine after allegedly crossing the border in what has been described as an invasion by stealth to bolster the separatist revolt.
Ukrainian authorities have admitted the insurgents extended their control over territory on the eastern border to the Sea of Azov after a lightning surge reportedly backed by elite Russian forces just days before the truce deal.
The EU's latest restrictions target major Russian energy, finance and defence companies including oil giant Rosneft and arms-maker Kalashnikov.
The bloc also imposed asset freezes and visa bans on a host of Russian figures including allies of President Vladimir Putin as well as rebels in Ukraine and annexed Crimea.
The Russian ruble sank to a new historic low against the dollar as the sanctions hit.
- 'Disconnected from reality' -
EU nations finally approved the measures after deep divisions about whether they should still be implemented since the ceasefire was declared.
However, European Council President Herman Van Rompuy said the 28-member bloc could "amend, suspend or repeal" them after reviewing the truce at the end of September.
"By taking this measure, the EU has practically decided against the process of a peaceful settlement of the Ukrainian crisis," the Russian foreign ministry said Thursday.
Parliament speaker Sergei Naryshkin also denounced the US sanctions as "disconnected from reality".  
Moscow has threatened to retaliate by barring EU airlines from its airspace, and has drawn up a list targeting imports of consumer goods and second-hand cars from the West.
Russia's neighbours in eastern Europe have also accused energy giant Gazprom of slashing gas deliveries in what analysts say was a message directed at Brussels, although Moscow denied such a move.
The stepped-up EU restrictions reflect deep Western suspicions over Moscow's territorial ambitions in the former Soviet state after the seizure of Crimea in March in the chaotic weeks that followed the ouster of a pro-Kremlin leader in Kiev.
- 'Special status' with NATO -
And Poroshenko announce fresh moves that would pull his country further out of Russia's orbit, with the Ukrainian and European parliaments meeting on Tuesday to jointly ratify a historic association agreement.
He also told an international conference in Kiev he hoped to secure a "special status" for Ukraine with NATO during a visit to Washington Thursday when he meets US President Barack Obama and delivers a keynote address to Congress.
The ceasefire -- the first backed by both Kiev and Moscow since the insurgency erupted across Ukraine's industrial heartland in April -- has so far held, despite accusations of violations on both sides.
The conflict has killed more than 2,700 people and forced at least half a million from their homes but Poroshenko said earlier this week the situation had dramatically improved since the truce.
Kiev also acknowledged Thursday that in the days before the ceasefire the rebels had made a dramatic push south from their stronghold in Donetsk, giving them control of the border all the way to the Sea of Azov and potentially a direct land route to Crimea.
The sudden shift in fortunes, reversing a series of Ukrainian military successes, prompted suggestions that Kiev had negotiated the peace deal from a position of weakness.
Poroshenko pledged Wednesday he would submit a bill to parliament granting parts of the east temporary self-rule, although he insisted this did not mean that Ukraine would be partitioned.
However leaders of the self-declared "people's republics" in mainly Russian-speaking Donetsk and Lugansk say they have no intention of abandoning the fight for full independence.
And the Eurasia Group think tank said that despite the ceasefire, political tensions on both sides could scupper any longer-term peace deal.
"A resumption of hostilities is likely in the short term, which will lead to a non-negotiated 'frozen conflict' over the next six months," it warned.