Russian President Vladimir Putin signed a decree Monday recognizing Crimea as a "sovereign and independent country," hours after the strategic Black Sea peninsula declared it had broken from Ukraine following a weekend referendum.
The moves triggered the toughest Western sanctions against Russia since the Cold War — with Washington and the European Union retaliating with asset freezes and travel bans and U.S. President Barack Obama vowing to "increase the cost" if the Kremlin does not back down.
Ukraine's turmoil has become Europe's most severe security crisis in years and tensions have been high since Russian troops seized control of Crimea, which has now decided to merge with Russia. Russian troops are also massed near the border with Russian-speaking eastern Ukraine.
Ukraine's acting president raised tensions on the ground by calling for the activation of some 20,000 military reservists and volunteers across the country and for the mobilization of another 20,000 in the recently formed national guard.
In the Crimean capital of Simferopol, ethnic Russians applauded the Sunday referendum that overwhelmingly called for secession and for joining Russia. Masked men in body armor blocked access for most journalists to the parliament session that declared independence, but the city otherwise appeared to go about its business normally.
The U.S., EU and Ukraine's new government do not recognize the referendum held Sunday in Crimea, which was called hastily as Ukraine's political crisis deepened with the ouster of pro-Russia President Viktor Yanukovych following months of protests and sporadic bloodshed. In addition to calling the vote itself illegal, the Obama administration said there were "massive anomalies" in balloting that returned a 97 percent "yes" vote for joining Russia.
Obama warned that Russia could face more financial punishment.
"If Russia continues to interfere in Ukraine, we stand ready to impose further sanctions," Obama said.
One of the top Russian officials hit by sanctions mocked Obama.
"Comrade Obama, what should those who have neither accounts nor property abroad do? Have you not thought about it?" Deputy Prime Minister Dmitry Rogozin tweeted. "I think the decree of the President of the United States was written by some joker."
Moscow considers the vote legitimate and Putin was to address both houses of parliament Tuesday on the Crimean situation.