OTTAWA - The Kremlin has lost touch with reality in accusing the West of plotting to control Ukraine, Foreign Affairs Minister John Baird said Friday.

Baird ramped up the war of words with Russia from Latvia, his latest stop on a multi-country eastern European tour aimed at demonstrating Canadian solidarity with some of Russia's worried neighbours and its NATO allies.

Baird said Russia faces further sanctions that will only isolate it further unless it stops its provocative actions in eastern Ukraine, where pro-Russian gunmen have exerted their authority following last month's Russian annexation of the Crimean Peninsula.

"There is no doubt that Russia continues to ramp up its propaganda machine all the while accusing the West of some sort of plot to control Ukraine," Baird said.

"Such ridiculous statements show just how out of touch — and out of touch with reality — the leaders are in the Kremlin."

He was responding to remarks made a few hours earlier by his Russian counterpart, Sergey Lavrov, who accused the West of seeking to control Ukraine to further its own political ambitions.

"The West wants — and this is how it all began — to seize control of Ukraine because of their own political ambitions, not in the interests of the Ukrainian people," Lavrov said in Moscow on Friday.

Baird said halting Russia's dangerous actions remains a priority for the free world.

Prime Minister Stephen Harper also reiterated that concern during remarks to a business audience in Kitchener-Waterloo, Ont.

"This is really for the first time since the 1930s, since the events that led to the Second World War, where you have a major power now articulating that it has a right — for ethnic reasons, essentially, but other reasons — to essentially seize and control and take over territory adjacent to it," Harper said.

"In a case like this, regardless of some short-term economic consequences for ourselves as well as for the Russians, we simply cannot ignore this development. This is very threatening, and the guy who's doing it runs a very large security operation that is potentially a very significant menace to the region and to the wider world."

Baird accused Russia of reneging on the deal that was reached last week in Geneva to defuse the crisis.

"Russia has not taken one concrete move to uphold the commitments it made at Geneva," he said.

Russian President Vladimir Putin, Baird continued, "thinks he has the authority or the duty to expand his empire and redraw the boundaries of Europe. In the 21st century this won't stand."

He said the international community is succeeding in isolating Russia politically and economically. He said there has been a "tremendous flight of capital from the country" along with instability with the Russian currency, the ruble, and its stock market.

The ratings agency Standard & Poor's cut Russia's credit rating Friday to one level above "junk status" because investors were pulling money out of country.

"The Russian Federation should know that we stand ready to strengthen our sanctions regime and isolate them further at a moment's notice," Baird said.

"If Russia wants to join the international community, it needs to call off its provocateurs … and withdraw their forces from the confrontational posture."

Baird has had frequent meetings with Lavrov since becoming foreign minister nearly three years ago, but he refused to speculate on whether his conspiracy accusation against the West diminished the chances for a diplomatic solution to the crisis.

"A political and diplomatic solution is preferable," Baird said, but added Canada will continue to deliver "forceful" messages to Russia.

U.S. President Barack Obama said Friday he was "deeply encouraged" by the consistent condemnation of Russian actions that he is seeing across Europe, North America and elsewhere.

Obama also said Russia has not lived up to the agreement struck in Geneva. He said Europe and the U.S. were working on broader sanctions in the event Russian forces crossed into Ukraine.

"We'll continue to keep some arrows in our quiver in the event we see further deterioration," Obama said during a news conference in South Korea.

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