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The Nato summit in Wales this September is "the perfect place" for the UK to urge allied forces to step up their response to military aggression from Russia, a member of the defence committee said.
Labour's Gisela Stuart admitted "state on state action was unlikely" but urged Nato to be ready to respond to threats like cyber attacks, "which may be coming from countries like Russia."
A government spokesman said:
– Government spokesman
Since the crisis in Ukraine began, all Nato Allies have contributed to the Alliance's response. As this report recognises, a direct attack by Russia on a Nato state is unlikely, but Russian aggression against Ukraine cannot be ignored.
So the UK is demonstrating our clear commitment to Allies and partners in eastern Europe. We have deployed UK Typhoon aircraft to the Baltic states and over 1,300 UK personnel will participate in a range of major military exercises across eastern Europe.
In addition to this, the further package of economic sanctions against Russia announced this week, across defence, finance and high-tech energy goods, continues to show that there are costs for its actions to destabilise Ukraine.
In the run up to the Nato summit in Wales, the UK are negotiating across the Alliance to ensure Nato can continue to be at the forefront of building stability in a unpredictable world.
House of Commons Defence Committee chair Rory Stewart said:
– Rory Stewart
The risk of attack by Russia on a Nato member state, whilst still small, is significant. We are not convinced that Nato is ready for this threat.
Nato has been too complacent about the threat from Russia, and it is not well-prepared.
Even worse, the nature of Russian tactics is changing fast - including cyber-attacks, information warfare, and the backing of irregular 'separatist groups', combining armed civilians with Russian Special Forces operating without insignia.
We have already seen how these tactics have been deployed by Russia and its proxies in Ukraine to destabilise a Nato partner state, annex part of its territory, and paralyse its ability to respond.
The 28-nation Nato alliance should urgently undertake a "radical reform" to prepare for either eventuality, including by establishing a continuous presence of Nato troops in its "vulnerable" Baltic members Estonia, Latvia and Lithuania and pre-positioning military equipment in the three former Soviet states, a cross-party panel of MPs said.
"Dramatic" improvements should also be made to existing rapid reaction forces, headquarters structures should be established for eastern Europe and the Baltic and large-scale exercises involving military and political leaders from all Nato states should be conducted.
And they said that Nato should reconsider its Article 5 commitment for all members to come to the aid of any member which is attacked, to make clear that this includes countering unconventional threats such as cyber-attacks, information warfare and the use of irregular militia.
Russia's destabilisation of Ukraine has exposed "serious deficiencies" in Nato's preparedness to deal with a military threat from its former Cold War adversary, a parliamentary report has warned.
While the risk of a conventional military assault by Russia on a Nato member state remains "low", the danger of an unconventional attack using the kind of "ambiguous warfare" tactics deployed by President Vladimir Putin in Ukraine is "more substantial", said the House of Commons Defence Committee.
Three long-time Putin associates are among the list of eight individuals who have been hit with new European Union sanctions, including Putin's former judo partner Arkady Rotenberg.
The US and European Union also announced a raft of new penalties to limit the trade of arms and technology that can be used in the oil industry and for military purposes.
The EU also put its capital markets off limits for Russian state-owned banks.
US officials said roughly 30% of Russia's banking sector assets would now be constrained by sanctions.
US and European leaders said they are prepared to intensify sanctions unless it moves to de-escalate the crisis in Ukraine. In a statement this evening, the G-7 leaders said:
– G7 Leaders Statement on Ukraine
Russia still has the opportunity to choose the path of de-escalation, which would lead to the removal of these sanctions. If it does not do so, however, we remain ready to further intensify the costs of its adverse actions.
EU sanctions will "inevitably" lead to higher energy prices on the European market, Russia has claimed.
Russian Foreign Ministry said Brussels itself is "creating barriers" for cooperation in the energy sector.
The European Union and US agreed new sanctions against Russia, targeting financial, oil and defence industries.
Foreign Secretary Philip Hammond said today the European Union sanctions imposed on Russia are hurting the country's economy.
Russia called new US sanctions "destructive and short-sighted" on Wednesday and said they would only aggravate ties between Russia and the United States, already at their lowest point since the end of the Cold War over the Ukraine crisis.
"Such decisions by Washington can bring nothing but further aggravation of U.S.-Russia relations and create an utterly unfavourable environment in international affairs, where the cooperation between our states often plays a decisive role," Russia's Foreign Ministry said in a statement.
"The de-facto losses from this destructive and short-sighted policy will be quite tangible for Washington."
Sanctions imposed on Russia are having an affect on the economy according to Philip Hammond, the Foreign Secretary.
He said Russia's predicted economic growth for this year had gone from 2.5 per cent before sanctions to "roughly zero".
"It is having a cost on Russia it is having a disproportionate cost on the group of people that supports and sustains the Kremlin leadership," Mr Hammond said.
"I hope they will be urging a more considered response by the Russian leadership."
He also said the Government was due to announce a new set of sanctions against Vladimir Putin's government later today.
US President Barracks Obama said a new round of sanctions will continue to ratchet up the pressure on Russia.
The US leader said existing sanctions have already made the Russian economy even weaker.
He added: "If Russia continues on this current path, the costs on Russia will continue to grow."