The diplomatic and military situation in the Ukraine continues to evolve, with Estonian Defense Minister Urmas Reinsalu releasing an emailed statement saying the events in Ukraine “clearly show that the Russian Federation only accepts force,” and that Russia is “preparing to invade” Eastern Ukraine. This development comes at the same time as U.S. Secretary of State John Kerry is meeting with his Russian counterpart Sergei Lavrov in London to discuss the crisis.

Russian soldiers

Russia’s latest moves

Earlier today, Russia released a statement warning that Ukraine’s government has lost control of the country and that is continued to reserve the right to intervene to protect Russian citizens and “compatriots” from violence. The statement prompted a quick denial from Kiev, but fueled international concerns that Putin may be planning a more extensive military intervention.

The Russian military has also been ostentatiously conducting large-scale military troop movements, including paratroopers at several border crossings with Ukraine. There were also reports yesterday of a tense standoff when Russian troops tried to force Ukrainian soldiers out of a military base in Crimea.

Russia’s stock markets were pummeled again given today’s developments, losing more than 5% at one point, and the cost of insuring Russian debt soared. Pro-Moscow authorities in Crimea are planning to hold a referendum on whether to join Russia over the weekend. Political analysts say this means that U.S. and European Union sanctions will be announced on Monday.

Initial U.S. and European sanctions

European officials speaking anonymously told press sources the EU was working on a list of 120 to 130 Russians who would have assets frozen and suffer travel bans. It was unclear whether the entire list would be released when the measures take effect at the start of next week, or only aim at a smaller number at first and expand the list if Russia continues its violations of international law.

Germany’s Das Bild reported that the EU sanctions list would include Alexei Miller, the CEO of natural gas monopoly Gazprom OAO (ADR) (OTCMKTS:OGZPY) (MCX:GAZP), and Igor Sechin, the head of Russia’s biggest oil firm Rosneft’ NK OAO (MCX:ROSN) (OTCMKTS:RNFTF), as well as a number of senior government ministers and Kremlin aides. No direct sanctions on Putin are expected.

German Chancellor Angela Merkel also criticized Russia in unusually blunt terms yesterday, warning that the consequences for the country’s illegal actions in Ukraine would be severe.