The Obama administration said Monday that any Russian threat to Ukraine's navy would be a "dangerous escalation" of an extremely tense situation.

The State Department said that Washington would hold Moscow directly accountable for such an escalation but did not elaborate on potential consequences. Department spokeswoman Jen Psaki said, however, that she could not confirm if Russia had in fact made such threats.

An armed man, believed to be a Russian soldier, stands outside the civilian port in the Crimean town of Kerch. The words read: "Port Crimea". (Thomas Peter/Reuters)

Earlier Monday, a Ukrainian military spokesman said Russia had issued an ultimatum to the crews of two Ukrainian warships in Crimea, demanding that they immediately surrender or be stormed and seized.

Four Russian navy ships in Sevastopol harbour were blocking the Ukrainian anti-submarine warship Ternopil and the command ship Slavutych from leaving the dock, waiting for their commanders' responses, spokesman Maksim Prauta said.

Vladimir Anikin, a Russian defence ministry spokesman in Moscow, dismissed the report of a Russian ultimatum as nonsense but refused to elaborate.

U.S. Secretary of State John Kerry is leaving for Ukraine late Monday and then will travel to France and Italy. He had planned to see his Russian counterpart in Paris, but Psaki said that meeting was no longer certain.

A Cold War reprise

The U.S. and its allies are weighing sanctions on Moscow, in what amounts to a sudden reprise of Cold War sensibilities. One consideration is whether to bolster defences in Europe in response to Russia's military advances on Ukraine. Kerry said Sunday that world leaders "are prepared to go to the hilt in order to isolate Russia with respect to this invasion."

This is absolutely the most serious test of our alliances since the Cold War ended - Ohio Democratic representative Marcy Kaptur

Kerry was heading to Ukraine on Tuesday after demanding that Russian President Vladimir Putin pull back from "an incredible act of aggression."

Much as when superpower tensions ruled world affairs, missile defence systems and troop levels in Europe have again become urgent questions in Washington and beyond, a renewed reality that may force U.S. President Barack Obama's administration to give up its intended foreign policy shift to Asia indefinitely.

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Also echoing the era of East-West confrontation, there appears to be little if any taste in the West for a direct military response to Russia's provocation.

Putin gave no indication that he would heed the West's warnings. Hundreds of armed men surrounded a Ukrainian military base in Crimea, a pro-Russian area. In Kyiv, Ukraine's capital, Prime Minister Arseniy Yatsenyuk alerted allies that "we are on the brink of disaster."

"This is absolutely the most serious test of our alliances since the Cold War ended," Ohio Democratic representative Marcy Kaptur said in a nationally broadcast interview Monday.

A Ukraine mission to the UN on Monday said they believe 16,000 Russian troops have massed in Crimea.

A statement from the Ukraine mission said access to the Black Sea was blocked by 10 Russian Navy vessels, including vessels of Baltic Fleet.

6,000 Russian troops believed to be in Crimea

Senior Obama administration officials said they believe Russia now has complete operational control over Crimea and has more than 6,000 forces in the region.

Russian troops controlled all Ukrainian border posts Monday in Crimea, as well as all military facilities and a key ferry terminal. Now, fears in the capital Kyiv and beyond were that Russia might target and seize other parts of Ukraine, in particular parts of its pro-Russian east, the country's industrial powerhouse and agricultural breadbasket.

As diplomats met in Brussels, Kyiv and Geneva, warnings about the threat posed by Russia's military invasion were issued from a host of European capitals.

"We are in the most serious crisis for Europe since the fall of the [Berlin] Wall. Twenty-five years after the end of the conflict between east and west, there's a real danger of a split in Europe," German Foreign Minister Frank-Walter Steinmeier said in Brussels.

"Anyone who follows the news can see that the escalation isn't stopping. On the contrary, the threats from the Russian side are only getting louder," he added.

Earlier in the day, Russian Foreign Minister Sergey Lavrov, in Geneva to attend UN meetings, explained the reasoning behind Russia's military invasion of Crimea.

"This is a question of defending our citizens and compatriots, ensuring human rights, especially the right to life," he said.

There have been no reports, however, of any hostilities toward Russian-speakers in Ukraine during the country's four months of political upheaval.

CBC News is in Ukraine CBC correspondents Susan Ormiston @Ormistononline, Nahlah Ayed @NahlahAyed and Margaret Evans @mevansCBC are in Ukraine. Follow their reports online and on air with CBC News.

CBC correspondent Nahlah Ayed said Monday from Crimea that the fast-moving developments were not immediately obvious in the regional capital.

"You do see armed guards at the airport, and you get a sense of a bit of tension, but there are also shops open and people going back to work," she said.

The Russian Foreign Ministry pressed hard Monday for Ukrainian politicians to return to the Feb. 21 agreement that promised to create a new unity government which would rule until an early election no later than December. The proposal seemed to be a non-starter for the West, however, for it would void the new government that Ukraine installed last week.

In Kyiv, Ukraine's new prime minister admitted his country had "no military options on the table" to reverse Russia's military move into its Crimea region.

While Prime Minister Arseniy Yatsenyuk appealed Monday for outside help and insisted that Crimea still remained part of his country, European foreign ministers held an emergency meeting on a joint response that could include economic sanctions against Russia.

"Any attempt of Russia to grab Crimea will have no success at all. Give us some time," Yatsenyuk said at a news conference with British Foreign Secretary William Hague in the Ukrainian capital of Kyiv.

"The UK is not discussing military options," Hague said. "Our concentration is on diplomatic and economic pressure."

Like its NATO allies, Canada has ruled out military action. However, the Canadian ambassador to Russia has been recalled, and Canadian diplomats will not take part in preparations for June G8 meetings in Sochi.

"Invading a neighbouring country is certainly an incredibly provocative measure," Foreign Affairs Minister John Baird said on Sunday. "Simply put, none of the explanations that Russia and Putin are putting forward carry any weight."

A motion condemning Russia for deploying troops to Ukraine and supporting Ukraine's sovereignty passed unanimously in the House of Commons Monday. The motion, introduced by Conservative MP Ted Opitz, condemned "provocative military intervention" by Russia in Ukraine and called for the withdrawal of Russian forces.

Russian forces control Crimea

In the meantime, Russian forces were clearly in charge in Crimea, home to two million mostly Russian-speaking people and landlord for Russia's critical Black Sea Fleet at Sevastopol.

In addition to seizing barracks and border posts, troops also controlled a ferry terminal in the Ukrainian city of Kerch, just 20 kilometres across the water from Russia. That intensified fears in Kyiv that Moscow will send even more troops into the peninsula via that route.

Ukrainian seamen stand guard on Monday on the Ukrainian navy ship Slavutich at the harbour of Sevastopol, Ukraine. The Ukrainian defence ministry said that Russian forces that have overtaken Ukraine's strategic region of Crimea are demanding that the ship's crew surrender. (Andrew Lubimov/Associated Press)

Border guard spokesman Sergei Astakhov said the Russians were demanding that Ukrainian soldiers and guards transfer their allegiance to Crimea's new pro-Russian local government.

"The Russians are behaving very aggressively. They came in by breaking down doors, knocking out windows, cutting off every communication," he said.

He said four Russian military ships, 13 helicopters and 8 transport planes had arrived in Crimea in violation of agreements that permit Russian to keep its Black Sea fleet at the naval base in Sevastopol.

Ukraine is also struggling on the financial front. The treasury is almost empty and its currency is under pressure after years of running large deficits. The International Monetary Fund said a fact-finding mission would visit Ukraine starting Tuesday for 10 days. Ukraine has asked the IMF for rescue loans and says it needs $35 billion US to pay its bills over the next two years.

Markets roiled

Market reaction to the Russian invasion of Crimea was immediate Monday. In European trading, gold and oil rose while the euro and stock markets fell. The greatest impact was felt in Moscow, where the main RTS index was down 12 per cent at 1,115 and the dollar spiked to an all-time high of 37 rubles.

Russia's central bank hiked its main interest rate 1.5 percentage points Monday to seven per cent, trying to stem financial outflows.

Gazprom, the Russian energy giant, was also a big loser, its share price down 13 per cent as investors worried about how it would get its gas to Europe if hostilities kept up, since much of it goes through Ukrainian pipelines.

Putin has rejected calls from the West, insisting that Russia has a right to protect its interests and those of Russian-speakers anywhere in Ukraine. His confidence is matched by the knowledge that Ukraine's 46 million people have divided loyalties — while much of western Ukraine wants closer ties with the 28-nation European Union, its eastern and southern regions like Crimea look to Russia for support and trade.

NATO held an emergency meeting in Brussels and the U.S., France and Britain debated the possibility of boycotting the next Group of Eight economic summit, to be held in June in Sochi, the host of Russia's successful Winter Olympics.