Russia conducted new military maneuvers near its border with Ukraine on Thursday, and President Vladimir Putin said the world shouldn't blame his country for what he called Ukraine's "internal crisis."
In Crimea, where the public will vote on Sunday whether to break away from Ukraine and become part of Russia, jittery residents lined up at their banks to withdraw cash from their accounts amid uncertainty over the future of the peninsula, which Russian troops now control. Violence engulfed the eastern Donetsk region, where violent clashes between pro-Russia demonstrators and supporters of the Ukrainian government left at least one person dead.
"These people are afraid their bank will collapse and no one wants to lose their money," said resident Tatiana Sivukhina. "Nobody knows what will happen tomorrow."
U.S. Secretary of State John Kerry and Russian Foreign Minister Sergey Lavrov plan to meet in London on Friday in a last-ditch bid to end the international standoff over the Crimean referendum, which Ukraine and the West have rejected as illegitimate.
In Berlin, German Chancellor Angela Merkel sharply criticized Russia, saying the territorial integrity of Ukraine cannot be compromised.
Speaking to Germany's Parliament, Merkel said Russia risks "massive" political and economic consequences, if it does not enter into "negotiations that achieve results" over the situation in Ukraine.
She said the only way out of the crisis is through diplomacy and that "the use of the military is no option."
On Wednesday, Moscow rejected the Ukrainian government's claim that a massive Russian military buildup near the countries' border was raising the threat of a possible invasion.
But on Thursday Russia's Defense Ministry announced that thousands of Russian troops in the regions of Rostov, Belgorod, Kursk and Tambov bordering Ukraine are involved in the exercises, which will continue until the end of the month.
In the southern Rostov region, the maneuvers involved parachuting in 1,500 troops, the ministry said. The drills included the military conducting large artillery exercises involving 8,500 soldiers and artillery and rocket systems in the south.
During the Ukrainian crisis, the U.S. has sent additional fighter jets to Poland and Lithuania. Russian responded on Thursday by deploying six fighter jets to Belarus, its ally.
Ukraine's parliament voted Thursday to create a 60,000-strong National Guard to help protect the country as its under-staffed and under-funded military was in disarray.
In New York on Thursday, Ukrainian Prime Minister Arseniy Yatsenyuk condemned Russia's "military aggression," but told the U.N. Security Council he doesn't believe Moscow wants a conflict. "If we start real talks with Russia, I believe we can be real partners," he said.
Putin, who has received his parliament's permission to use the Russian military in Ukraine, has warned that he reserves the right to "use all means" to protect Russian speakers in Ukraine from violent nationalists, even though there have been no signs they are facing such a threat.
In recent weeks, pro-Russia demonstrators in eastern Ukraine have seized government buildings and engaged in clashes with supporters of the Ukrainian government. Violence erupted late Thursday in the city of Donetsk, where people rallying in support of the central authorities were attacked by pro-Russia crowds.
At least one person died and 17 others were wounded, according to the local health department.
On Thursday, Putin did not sound conciliatory about Ukraine when he convened a meeting of his Security Council, an advisory body of top defense and security officials, including Lavrov.
"It's foremost Ukraine's internal crisis," Putin said. "But, regrettably, we have been drawn into these events."
"We can't ignore the developments around Ukraine, Crimea and everything related to that uneasy problem, which, I want to underline, has emerged through no fault of ours," he said.
In brief remarks at the start of the session, Putin didn't refer to harsh warnings from President Barack Obama and other Western leaders not to annex Crimea.
Merkel said the European Union and other Western nations would soon freeze bank accounts of Russians and implement travel restrictions, if Moscow refuses to enter "negotiations that achieve results."
"Let me be absolutely clear so that there is no misunderstanding, the territorial integrity of Ukraine is not up for discussion," she said.
If Moscow does not begin to "de-escalate" the situation, Merkel said, the 28 European Union nations, the U.S. and other allies are prepared to take even stronger measures that would hit Russia economically.
"If Russia continues on its course of the past weeks, that will not only be a great catastrophe for Ukraine," Merkel said in the nationally televised address. "It will cause massive damage to Russia, both economically and politically."
Crimea, which hosts Russia's Black Sea Fleet base, became the hotbed of tensions in Ukraine after its pro-Russia president, Viktor Yanukovych, fled last month following protracted anti-government protests and outbursts of violence.
In Crimea, Oleh Serha, a spokesman for Ukraine's largest Privat bank, said Thursday that all banks in Crimea are struggling to deliver more cash to the region. He said, "There is panic in Crimea because nobody understands what will happen later."
Serha said his bank is continuing to service its clients, but that it has imposed a limit of 1500 hryvna ($150) on daily withdrawals across the whole country.
About 60 people lined up to withdraw money from an ATM at Privat Bank near a pedestrian mall in Simferopol, Crimea's capital.
"People are in panic. They have been fooled before. People are confused," said Vyacheslav Leonenko, one of those in the line.
The Ukraine crisis has previously created turmoil in global markets, especially in Russia, where Moscow's Micex stock index fell sharply and the ruble fell to a record low against the dollar. It has since recovered slightly, thanks to massive Central Bank interventions.
The West, meanwhile, intensified efforts to quickly shore up the Ukrainian economy roiled by the political turmoil. Ukraine's finance ministry has said it needs $35 billion for this year and next to avoid default.
The head of the International Monetary Fund said its fact-finding team in Ukraine will begin negotiations with authorities to develop an economic reform program that could lead to financial help from the lending organization. Christine Lagarde said Thursday the team that went to Ukraine March 4 and normally would return to Washington to report to the IMF board will now remain until March 21.