Nato's secretary general said he has seen no evidence that Russia is withdrawing its forces from the border with eastern Ukraine as promised.
"Unfortunately, I cannot confirm that Russia is withdrawing its troops," Anders Fogh Rasmussen told reporters today ahead of a meeting of Nato foreign ministers in Brussels. "This is not what we are seeing."
Rasmussen said Russia had undermined the principles on which a Nato-Russia partnership had been built, and that as a result there could be no more "business as usual".
Russia responded by warning Ukraine against integration with the defence alliance.
"(Past attempts) led to a freezing of Russian-Ukrainian political contacts, a headache between Nato and Russia and ... to a division in Ukrainian society," the Russian Foreign Ministry said.
An unusually frank Nato Secretary General issued an unequivocal warning on the course of events should Russia attack Latvia or Estonia.
The West responds with sanctions and closer political ties with Ukraine as Russia's President seals the annexing of Crimea to much fanfare.
Supporters of the controversial fracking industry believe shale gas could be America's most potent weapon in the stand-off with Russia.