Leaders of the Group of Seven major economies agreed to impose extra sanctions on Russia over its intervention in Ukraine, where armed pro-Moscow separatists detained a group of international observers and accused them of being NATO spies.A pro-Russian armed man stands guard at a barricade near the state security service building in Slaviansk

The United States said as part of the new punitive measures, which U.S. officials said would target “cronies” of Russian President Vladimir Putin, could be unveiled as early as Monday unless Russia moved fast to defuse the Ukraine crisis.

Meeting in South Korea, the G7 leaders said Russia had not taken any concrete steps to implement an accord, signed in Geneva, that was intended to rein in illegal armed groups.

“Instead, it has continued to escalate tensions by increasingly concentrating on rhetorics and threatening military manoeuvre on Ukraine’s border,” the G7 leaders in Seoul, who included U.S. President Barack Obama, said in a statement after their meeting.

“We have now agreed that we will move swiftly to impose additional sanctions on Russia,” it said. “We have committed to act urgently to intensify targeted sanctions and measures to increase the costs of Russia’s actions.”

But it added: “We underscore that the door remains open to a diplomatic resolution of this crisis.”

Russia denies it is to blame for the crisis in eastern Ukraine, where armed pro-Russian separatists have taken control of about a dozen official buildings and are defying the rule of the Western-backed government in the capital, Kiev.

The Kremlin argues that the crisis began when a new leadership took over in Kiev, in what Moscow calls a coup d’etat, and started persecuting the Russian-speaking community in the east for wanting closer ties with Russia.

The crisis has brought relations between Russia and the West to their lowest level since the Cold War, and is increasingly turning into a military stand-off.

Russia has massed troops and helicopters on the border with Ukraine where it says they are conducting exercises, while NATO has deployed extra forces in eastern Europe, saying they are needed to reassure its allies.

OBSERVERS HELD

The international observers were being held in the eastern city of Slaviansk, a flashpoint between the Moscow-backed separatists who control the city, and Kiev’s forces who are trying to squeeze them out.

They were part of a German-led monitoring mission visiting the area under the aegis of the Organization for Security and Cooperation in Europe (OSCE), a Vienna-based body whose 57 member states include Russia.

The group was made up of eight observers, including nationals from Germany, Sweden, Denmark, Poland and the Czech Republic, along with several Ukrainian army officers who were accompanying them, the OSCE said.

On Saturday, the separatists invited journalists from Russian media into the building where the observers are being held, and showed military identification cards and military insignia they said were taken from the detainees.

That, the separatists said, was proof that they were not observers but were spying for NATO, according to reports in Russian media. It is standard practice for serving military officers to be seconded to OSCE missions.

“It is critical that we use all diplomatic channels to free this team immediately and unhurt,” German Defence Minister Ursula von der Leyen said.

Russia’s envoy to the OSCE said Moscow would take all steps to free the observers, Russian news agencies reported.